Question 1

When unaudited financial statements are presented in comparative form with audited financial statements,such statements should be ________.

Accepted Answer

A

Question 2

An accountant's review engagement report would NOT include a statement that ________.

Accepted Answer

An accountant's review engagement report would not include a statement that the engagement was performed in accordance with generally accepted auditing standards (GAAS) because a review engagement is not an audit and does not require the same level of testing and evidence gathering as an audit. The accountant would instead state that the review was performed in accordance with generally accepted review standards (GARS).

Question 3

XYZ Ltd.has prepared financial statements that are not in accordance with GAAP.The review report should ________.

Accepted Answer

If financial statements are not prepared in accordance with GAAP, the review report should contain a reservation describing the nature of the departure from GAAP. This alerts the users of the financial statements to the fact that there are departures from GAAP and the nature of the departure.

Question 4

CA is a minority shareholder in ABC Co. ,and has just completed a compilation engagement for the company.The Notice to Reader should ________.

Accepted Answer

The Notice to Reader should include a statement that CA is not objective because CA is a minority shareholder in ABC Co., which could impair their objectivity.

Question 5

An accountant's communication on the financial statements in a compilation engagement would NOT include a statement that ________.

Accepted Answer

The answer of An accountant's communication on the financial statements...

Question 6

With a compilation service,the procedures performed by a professional accountant can be described as ________.

Accepted Answer

A compilation service is the least extensive service provided by an accountant. It involves organizing and presenting financial information provided by the client in the form of financial statements. The accountant does not express any assurance on the accuracy or completeness of the information provided. Therefore, the procedures performed are few, if any.

Question 7

Which of the following statements about a compilation engagement is NOT true?

Accepted Answer

The answer of Which of the following statements about a...

Question 8

Which of the following procedures should an accountant perform during an engagement to review the financial statements of a private company?

Accepted Answer

Obtaining a letter of representation signed by top-level management is a requirement during a review engagement, as it provides evidence that management has acknowledged its responsibility for the financial statements and related disclosures. Choices A, C, and D are procedures that would be performed during an audit engagement, not a review engagement.

Question 9

If an accountant is engaged to compile the financial statements of a private entity and the statements omit substantially all disclosures required by GAAP,which of the following alternatives is correct?

Accepted Answer

According to the statement, the omissions result in misleading financial statements, and if the matter cannot be resolved, the accountant should withdraw from the engagement. Option A is the only choice that suggests the appropriate action. Option B suggests using a different basis of accounting, which is not appropriate in this case. Option C suggests that the accountant did not follow compilation and review engagement standards, which is incorrect. Finally, option D suggests that the statements are not comparable to prior periods, which is not relevant in this case.

Question 10

In providing guidance to accountants,which ranks highest?

Accepted Answer

The answer of In providing guidance to accountants,which ranks highest?
...

Question 11

Ordinarily,which of the following procedures should be applied when an independent accountant conducts a review of interim financial information of a publicly held company?

Accepted Answer

The answer of Ordinarily,which of the following procedures should be...

Question 12

The auditor learned the following in the course of an audit engagement.Which of the items,discovered by the auditor,need NOT be communicated to the audit committee?

Accepted Answer

The answer of The auditor learned the following in the...

Question 13

With compilation engagements,the minimum standard is that financial statements ________.

Accepted Answer

In compilation engagements, the minimum standard is that financial statements not be false or misleading. The focus is on ensuring that the financial statements do not contain material misstatements or errors that would mislead the users of the statements. There is no requirement for the accountant to verify the accuracy or fairness of the financial statements, nor is there a requirement for the statements to be prepared in accordance with GAAP, although they often are.

Question 14

An auditor has been engaged to report on management's report on internal control.Management's report points to a material weakness in its system of internal controls over inventory.The auditor's report should be a(n)________.

Accepted Answer

The answer of An auditor has been engaged to report...

Question 15

The level of assurance provided by a review engagement can best be described as ________.

Accepted Answer

A review engagement provides a moderate level of assurance, which is lower than the high level of assurance provided by an audit but higher than the nonexistent assurance provided by a compilation engagement.

Question 16

Which of the following best describes a CA's engagement to report on an entity's internal controls over financial reporting?

Accepted Answer

A CA's engagement to report on an entity's internal controls over financial reporting typically involves an assurance engagement to examine and report on management's written assertions about the effectiveness of its internal control system, as required by auditing standards. This is known as an attestation engagement or an audit of internal control over financial reporting. Option B is incorrect because the CA is not rendering an opinion on the entity's financial statements, but rather on its internal control system. Option C is incorrect because this is not a prospective engagement, but rather a current assessment of the effectiveness of internal controls. Option D is incorrect because this is not a consulting engagement where the CA provides constructive advice, but rather an assurance engagement where the CA provides an opinion on the effectiveness of the internal control system.

Question 17

Which of the following procedures would not be performed in a review of the financial statements of a private company?

Accepted Answer

Obtaining a lawyer's letter about claims and possible claims is typically not necessary for a review of the financial statements of a private company. This procedure may be more relevant for an audit, which involves a higher level of assurance than a review. The other options (enquiring about the accounting system and bookkeeping procedures, performing analytical procedures, and studying the financial statements for conformance with GAAP) are all relevant procedures for a review of financial statements.

Question 18

The primary purpose for the development of standards by the Criteria of Control Committee was to ________.

Accepted Answer

The Criteria of Control Committee was established to develop a set of standards for the evaluation of controls within an organization. These standards were intended to provide a basis for reporting on controls in a manner similar to GAAP, which provides a basis for reporting on financial statements. Therefore, the primary purpose of the development of standards by this committee was to provide a basis similar to GAAP for reporting on controls.

Question 19

Snow,CA,was engaged by Master Limited to examine and report on management's written assertion about the effectiveness of Master's internal control system over financial reporting.Snow's report should state that ________.

Accepted Answer

The report should include a statement indicating the inherent limitations of any internal control system, which means that errors or irregularities may still occur despite having a system in place.

Question 20

When compiling the financial statements of a private company,an accountant should ________.

Accepted Answer

When compiling financial statements of a private company, it is important for the accountant to study and understand the client's business in order to properly reflect the financial transactions in the statements. While the other options listed may also be important for the accountant to consider, understanding the client's business is the most crucial aspect in compiling accurate financial statements.

Quiz 17: Other Public Accounting Services and Reportsreviews and Compilations