Reviews & Compilations Flashcards
To compile financial statements, the accountant should possess a general understanding of the nature of the entity’s operations. This includes what?
1) nature of the entity’s business transactions
2) the form of its accounting records
3) the stated qualifications of its accounting personnel
4) the accounting basis on which the financial statements are to be presented
5) the form and content of the financial statements
When a CPA previously audited a client (PY) and is now doing a review (CY), what additional paragraph will be added in the report and what details will be included in that paragraph?
This separate paragraph must contain the following information:
- That the financial statements of the prior period were audited previously
- The date of the previous report
- The type of opinion expressed previously
- The reasons for an opinion that was other than unqualified
- That no auditing procedures were performed after the date of the previous report
When an auditor is engaged to perform a service in relation to prospective financial statements and his report or the prospective financial statements is expected to be used by a third party or parties what services can the auditor perform?
1) Examination
2) Compilation
3) Agreed-Upon Procedures
When an auditor is engaged to perform a service in relation to prospective financial statements and his report or the prospective financial statements is expected to be used by a third party or parties what services can the auditor NOT perform?
A Review
When the basic financial statements are accompanied by information presented for supplementary analysis purposes in a compilation or review engagement, the accountant should do what?
Clearly indicate the degree of responsibility, if any, he or she is taking with respect to the supplemental information
T/F
a practitioner should not accept an engagement to perform a review of an entity’s compliance with specified requirements or about the effectiveness of an entity’s internal control over compliance or an assertion thereon
TRUE
T/F
Changes in accounting principles need to be disclosed, but the SSARSs do not directly address any report modifications for them.
TRUE
T/F
The procedure, “The accountant should modify the accountant’s report if there is a change in accounting principles that is adequately disclosed,” is required for a compilation and a review
FALSE
It is not required for either a compilation or a review
What does OCBOA stand for
Other Comprehensive Basis Of Accounting
T/F
Accountant’s reports on financial statements prepared in conformity with an OCBOA are restricted regarding use
FALSE
Not all “Other Basis” reports are restricted in use
T/F
In a review, the accountant should assess the risk that a material misstatement could occur in a financial statement assertion
FALSE
Reviews generally do not require this
T/F
In a review, the accountant should confirm with the entity’s lawyer that material loss contingencies are disclosed
FALSE
Reviews generally do not include any communication with the entity’s lawyer
T/F
In a review, the accountant should develop audit programs to determine whether the entity’s financial statements are fairly presented
FALSE
An “Audit” program is not required because a review is being performed
When an independent CPA has reviewed the interim financial statements of a public client, which procedure is least likely to have been performed?
a) obtaining written representations from management for all interim financial information presented
b) observing the interim count of inventory
c) reading the financial statements for obvious material misstatements
d) performing analytical procedures related to sales
B
The objective of a review of interim financial information of a public entity (issuer) is to provide an accountant with a basis for reporting whether…
Material modifications should be made to conform with GAAP
