SSARS

Question 1

in a review, an accountant performs

Answer 1

inquiry and analytical procedures

Therefore, he or she would most likely inquire about actions taken by the board

Question 2

A CPA may accept an engagement to compile pro forma financial information provided

Answer 2

it is in a document that also contains or refers to the historical financial statements on which the pro forma information is based, which were compiled, reviewed, or audited.

Question 3

intro paragraph of review report:

Answer 3

The introductory paragraph of the review report

• identifies the financial statements reviewed,
• indicates that they were reviewed,
• date/period fs covered
• specifies that a review consists of inquiries and analytical procedures
• that it is substantially less in scope than an audit
• no opinion is expressed

Question 4

disclaimer of opinion
adverse opinion
qualified opinion

Answer 4

only for audits.

Question 5

Statements on Standards for Accounting and Review Services (SSARS) relate to

Answer 5

preparation (no independent required)
compilation (independent of not, must disclose in compilation report)
reviews (independent)

Question 6

the accountant is required to assess the risk of fraud in

Answer 6

audit

Question 7

An accountant is permitted to report on ONE financial statement so long

Answer 7

as the scope of the work is not limited.

Scope of the inquiry and analytical procedures has not been restricted

Question 8

procedures of an audit:

Answer 8

1. Observing a year-end inventory count
2. assessing internal control
3. examining subsequent cash receipts
4. development of accounting estimates

Question 9

procedures of a review:

Answer 9

1. performing analytical procedures

2. making inquiries of management (including inquiries about actions taken at board meetings)

Question 10

when fs are not in accordance to GAAP (cash basis) and its not disclosed, what should accountant do

Answer 10

should disclose the basis of accounting used in compilation report

Question 11

when fs are not in accordance to GAAP (cash basis) and it IS disclosed, what should accountant do

Answer 11

should quantify the effects of the differences between GAAP and the cash basis and disclose them in the notes of the financial statements

Question 12

management rep letter is required for

and Inquiries and analytical procedures

Answer 12

audits and reviews

Question 13

testifying as expert witness is

Answer 13

subject to Standards for Consulting Services

Question 14

compilation of prospective financial statements is

Answer 14

nonattest engagement subject to SSARS

Question 15

if theres omission of disclosure should CPA still take compilation engagement?

Answer 15

yes

if Omission is not undertaken to mislead the users of the financial statements and is properly disclosed in the accountant’s report

Question 16

implicit factor in the compilation report

Answer 16

independence

if not independent, must explicitly state in compilation report

Question 17

compilation report should include paragraph that:

Answer 17

the financial statements have not been audited or reviewed and, accordingly, the accountant does not express an opinion or any other form of assurance on them

Question 18

compilation: there’s omission of disclosure required by GAAP. accountant report should include

Answer 18

Information alerting readers about omission of the disclosures and notification that the omission may influence the user’s conclusions about the financial statements

Question 19

Statements on Standards for Attestation Engagements

SSAE

Answer 19

provide guidance for attestation engagements, which include

1. examinations,
2. reviews, and
3. agreed-upon procedures engagements.

ERA

Question 20

analytical procedures involves

Answer 20

Analytical procedures involve comparing client data to the accountant’s expectations and may be applied to financial and NONfinancial data

comparing ratios developed from recorded amounts to the accountant’s expectations,

Question 21

limited assurance

Answer 21

the accountant is not aware of any material modifications that should be made to the financial statements for them to conform to accounting principles generally accepted in the U.S

Question 22

inquires involve

Answer 22

Inquiries will be designed to enable the accountant to determine if the client’s accounting can be relied upon,

Question 23

steps in a review

Answer 23

1. have or obtain an understanding of the client and its industry, including an understanding of the accounting principles and practices that are generally followed
2. evaluate review evidence obtained as a basis for providing limited assurance
3. perform analytical procedures, comparing client data to expectations, which may be derived from prior periods, and makes inquiries

Question 24

date of compilation

Answer 24

date the compilation was completed

Question 25

compilation report should include

Answer 25

statement that accountant did not perform an audit or review and that no opinion, conclusion, or other type of assurance is provided

Question 26

review of PUBLIC company is regulated by

Answer 26

Auditing standards issued by the Public Company Accounting Oversight Board (PCAOB)

Question 27

preparation report

Answer 27

there is no preparation report

Question 28

preparation no assurance

Answer 28

1. indicate on every page that no assurance is provided or

2. to allow the accountant to attach a disclaimer so indicating

Question 29

Each page of the entity’s reviewed financial statements should

Answer 29

make reference to the accountant’s review report.

“See Independent Accountant’s Review Report”

Question 30

who adds footnote

Answer 30

client

Question 31

requirement of preparation engagement

Answer 31

1. communicate with management regarding any incomplete or incorrect information that does come to the accountant’s attention.
2. required to understand the client’s significant accounting policies.
3. When financial statements are prepared in accordance with a special-purpose framework (other than GAAP), a description of the framework should be included on the face of the financial statements or in a note to the statements.

Question 32

how to obtain sufficient knowledge of the industry

Answer 32

By consulting AICPA guides, industry publications, or individuals knowledgeable about the industry

Question 33

A compilation requires the accountant to

Answer 33

read the financial statements and, using that knowledge, evaluate whether there are obvious mistakes in the application of accounting principles

consider whether the financial statements are free from obvious material mistakes in the application of accounting principles

Question 34

The compilation report includes the sentence,

Answer 34

“We have performed a compilation engagement in accordance with
Statements on Standards for Accounting and Review Services (SSARS) promulgated by the Accounting and Review Services Committee (ARSC) of the AICPA.”