SSARS- Review Engagement

Question 1

Define a review?

Answer 1

engagement that involves limited assurance

Question 2

What needs to be included in the terms of engagement for a review?

Answer 2

• Engagement objective
• Management responsibilities
• Accountant Responsibilities
• Limitations of the engagement
• Identification of the framework
• The expected form and content of the review report

Question 3

As apart of the pre-engagement, the auditor should understanding the industry and knowledge of the entity?

Answer 3

TRUE

Question 4

What are the elements of designing and performing a review engagement?

Answer 4

1) Risk assessment: Review procedures in the areas believed to be higher risk of material misstatement
2) Analytical procedures- Use analytical procedures about relationships that appear unusual and should investigate significant differences
3) Inquiries of management (should but not required to)
4) Read the F/S
5) Reconcile to underlying records
6) Incomplete or unsatisfactory records- Verify that all F/S agree to accounting records
7) Written Representation- Obtain written representations for management

Question 5

What is the format of the Review Engagement Report?

Answer 5

TITLE: “INDEPENDENT ACCOUNTANTS REVIEW REPORT”

APPROPRIATE ADDRESSEE

INTRODUCTION PARAGRAPH: Identifies the F/S that were reviewed. Review consists of analytical procedures, inquiries, and states that the review is substantially less in scope that an audit.

MANAGEMENT RESPONSIBILITY: Management responsibilities for the financial statements and internal controls

ACCOUNTANT RESPONSIBILITY: References SSARS promulgated by the ARSC of the AICPA and referee to “limited assurance”

CONCLUSION: Negative assurance

Question 6

How does a special purpose framework impact the accountants review report?

Answer 6

Should include a “emphasis of matter” paragraph stating the financial statements were prepared in accordance with a special purpose framework

If regulatory or contractual basis: State the purpose for which the financial statements were prepared

Question 7

If modifying the accountants review report is not an adequate way of communicating deficiencies, what should happen?

Answer 7

The accountant should withdrawal

Question 8

What is the language used in the accountants conclusion?

Answer 8

“We are not aware of any material modifications that should be made”

Question 9

T/F: You can express an adverse option for a review?

Answer 9

NOPE! FALSE!!

Question 10

What are the two primary procedures for a review engagement?

Answer 10

1) ANALYTICAL PROCEDURES

2) INQUIRIES OF MANAGEMENT