Deck 25: Other Assurance Services

Question 1

All of the following are steps that should be performed in a review engagement except for

A)understand the company's ownership structure.
B)read the company's financial statements.
C)perform analytical procedures.
D)assess fraud risk.

Answer 1

D

Question 2

Evidence for a review engagement consists primarily of

A)
B)
C)
D)

Answer 2

B

Question 3

Which of the following statements is True regarding review and audit services?

A)A review requires more substantive evidence than an audit.
B)An audit requires less evidence related to internal control than a review.
C)A review requires less evidence than an audit.
D)None of the above statements is True.

Answer 3

C

Question 4

The concept of limited assurance is provided for in which of the following engagements?

A)audit
B)review
C)compilation
D)agreed-upon procedures

Question 5

In a review service where the client has failed to follow applicable accounting standards,the accountant is

A)not required to determine the effect of a departure if management has not done so,but that fact must be disclosed in the report.
B)required to determine the effect of a departure if management has not done so,and that fact must be disclosed in the report.
C)not required to determine the effect of a departure if management has not done so,and that fact need not be disclosed in the report.
D)required to determine the effect of a departure if management has not done so,and that fact need not be disclosed in the report.

Question 6

For compilations,an accountant does which of the following?

A)
B)
C)
D)

Question 7

An accountant has accepted an engagement in which the audit procedures of inquiry and analytical procedures will be employed.These procedures will form the basis for issuance of

A)a compilation report.
B)an audit report on supplemental information issued by the client.
C)a management advisory report requested by the audit committee.
D)a review report on financial statements for a nonpublic company.

Question 8

The highest level of assurance is provided for in which one of the following engagements?

A)review
B)compilation
C)audit
D)preparation service

Question 9

One of the first steps that should be performed for a review of a nonpublic entity's financial statements is to

A)read the financial statements.
B)obtain knowledge of the accounting principles and practices of the client's industry.
C)inquire whether management has omitted substantially all of the disclosures required by applicable accounting standards.
D)apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.

Question 10

The statement that "We are not aware of any material modifications that should be made to the accompanying financial statements" expresses which of the following?

A)disclaimer of an opinion
B)negative assurance
C)negative confirmation
D)shared opinion

Question 11

Your accounting firm has accepted a compilation engagement from a client in which your firm is not independent.In that case you

A)may not accept the engagement.
B)may accept the engagement and disclose the lack of independence.
C)may accept the engagement and not disclose the lack of independence.
D)may accept the engagement and disclose the lack of independence and the reason for the lack of independence.

Question 12

When the accountant has performed a review and has determined that no material changes to the financial statements are needed,the first paragraph of the review report

A)expresses positive assurance about the financial statements.
B)notes the accountant's responsibility to conduct the review.
C)identifies the entity and the period of financial statements subject to the review.
D)specifies that management is responsible for the financial statements.

Question 13

Compilation reports may be of all except which of the following types?

A)compilation with limited independence
B)compilation with full disclosure
C)compilation without independence
D)compilation that omits substantially all disclosures

Question 14

The standards for preparation,compilation,and review engagements of financial statements are the

A)AICPA's Code of Professional Conduct.
B)Statements on Auditing Standards (SASs).
C)Statements of Standards on Attestation Engagements (SSAEs).
D)Statements on Standards for Accounting and Review Services (SSARS).

Question 15

An accountant who reviews the financial statements of a nonpublic entity should issue a report stating that a review

A)is substantially equivalent in scope to an audit.
B)is substantially more in scope than a compilation.
C)is substantially less in scope than an audit.
D)provides only minimal assurance that the financial statements are fairly presented.

Question 16

A CPA firm can issue a compilation report

A)only if the partners are independent.
B)only if all the partners and the staff in the office performing the engagement are independent.
C)if the partners have no material or direct immaterial interest in client.
D)even if it is not independent.

Question 17

You are preparing to issue a report on the compilation of financial statements for a nonpublic company.Prior to issuing the report you should

A)read the financial statements to determine if they are free from obvious material errors.
B)perform analytical procedures to determine if they are free from material misstatements.
C)perform tests of balances on selected accounts to determine if they are free from material misstatements.
D)perform limited control tests to determine if there are any material misstatements.

Question 18

Practitioners who perform preparation,compilation,or review engagements are referred to in the Statements on Standards for Accounting and Review Services (SSARS)standards as

A)bookkeepers.
B)accountants.
C)auditors.
D)CPAs.

Question 19

Two of the types of services provided in connection with the Statements on Standards for Accounting and Review Services are

A)audit and examination services.
B)compilation and review services.
C)examination and review services.
D)management advisory services and compilations.

Question 20

Which of the following would not be included in a CPA's report based upon a review of the financial statements of a nonpublic entity?

A)a statement that the review was in accordance with generally accepted auditing standards
B)a statement that all information included in the financial statements is the representation of management
C)a statement that the review primarily consists of analytical procedures and inquiries
D)a statement that the accountant has conducted a review

Question 21

Which of the following is a correct statement regarding review,compilation,and preparation services?

A)A written engagement letter is not needed for a review,compilation or preparation service.
B)The Statements on Standards for Accounting and Review Services (SSARS)clarity project used international standards as the base standard when revising the SSARS.
C)CPAs must be independent of the client in a review service engagement and for an audit engagement.
D)The amount of evidence accumulated in a review is minimal.

Question 22

When performing compilation services,the accountant is not required to obtain an understanding of the client's internal control.

Question 23

When performing a review service and the accountant becomes aware that fraud may have occurred,the accountant must withdraw from the engagement.

Question 24

When performing a review service,auditors must make inquiries of management.Which of the following inquiries are typically made of management?

A)Is each account on the financial statements prepared in conformity with accounting standards and consistently applied?
B)What unusual or significant transactions occurred this year?
C)Do you have knowledge of an actual or suspected fraud?
D)All of the above are inquiries typically made of management.

Question 25

Discuss each of the three types of compilation reports and the circumstances in which each should be used.

Question 26

If an auditor performs a compilation but lacks independence,an additional paragraph must be added which states that: "We are not independent with respect to XYZ Company."

Question 27

A financial statement review conducted in compliance with Statements on Standards for Accounting and Review Services (SSARS)requires the accountant to obtain evidence to express negative assurance.One of these procedures is to "perform analytical procedures." List three other procedures the accountant must perform.

Question 28

When performing a review (SSARS review)of financial statements,the accountant is required to obtain a letter of representation from management.

Question 29

Review reports are normally dated as of the client's balance sheet date.

Question 30

Statements on Standards for Accounting and Review Services (SSARS)govern the CPA's association with unaudited financial statements of nonpublic companies.

Question 31

Each page of the financial statements reviewed for a nonpublic entity should include the reference

A)"These financial statements are unaudited."
B)"We express no assurance on these financial statements."
C)"See independent accountant's review report."
D)"See the audit opinion for the review procedures performed."

Question 32

In a preparation service engagement,

A)the CPA's responsibilities are similar to those performed during a review.
B)the CPA does not provide any assurance of the financial statements.
C)the CPA must issue a preparation service engagement report.
D)the CPA must be independent.

Question 33

A financial statement review conducted in compliance with Statements on Standards for Accounting and Review Services (SSARS)includes obtaining an understanding of internal control.

Question 34

Statements on Standards for Accounting and Review Services (SSARS)are issued by the SEC.

Question 35

The last paragraph of the accountant's review report

A)details the responsibilities of management.
B)details the responsibilities of the accountant.
C)expresses limited assurance in the form of negative assurance.
D)lists the analytical procedures performed.

Question 36

Discuss the six Statements on Standards for Accounting and Review Services (SSARS)requirements that must be met when an accountant is performing a compilation of financial statements.

Question 37

CPAs must be independent to issue a review report.

Question 38

CPAs must be independent to issue a compilation report.

Question 39

A nonaudit engagement in which the accountant undertakes to present,in the form of financial statements,information that is the representation of management,without undertaking to express any assurance on the statements is called a review engagement.

Question 40

Draft a report that would be appropriate when an independent accountant has performed a compilation of financial statements with disclosures in accordance with accounting principles generally accepted in the United States of America.

Question 41

Which of the following is not a standard contained in both the Attestation Standards and Generally Accepted Auditing Standards?

A)The examination is to be performed by a person having adequate technical training.
B)An independence in mental attitude is to be maintained.
C)Sufficient evidence is to be obtained.
D)The practitioner must obtain a sufficient understanding of the client's internal control.

Question 42

When performing a preparation service,the CPA must issue a report and must be independent.

Question 43

The Securities and Exchange Commission requires quarterly financial information as a part of the

A)10-K report.
B)10-Q report.
C)8-K report.
D)auditor's report.

Question 44

The distribution of which of the following types of reports is unrestricted?

A)examinations and reviews
B)reviews and agreed-upon procedures
C)examinations and agreed-upon procedures
D)examinations,reviews,and agreed-upon procedures

Question 45

Which of the following is an attestation standard under the standards of reporting?

A)The practitioner must have adequate technical training.
B)The practitioner must adequately plan the work.
C)The practitioner must evaluate internal controls.
D)The practitioner must identify the subject matter or assertion being reported on.

Question 46

For a preparation service,each page of the financial statements,should indicate,at a minimum,that "no assurance is provided" on the financial statements.

Question 47

The auditor must obtain evidence that the interim financial information agrees or reconciles with the accounting records for a public company interim review.

Question 48

When performing a review of interim information for a public company,the accountant ordinarily does not perform tests of the accounting records,independent confirmations,or physical examinations.

Question 49

In a preparation service,if the financial statements are expected to be used by a third party,the accountant must provide at least minimal assurance on the financial statements.

Question 50

Reports on agreed-upon procedures are intended to be distributed

A)to only the involved parties,who would have the requisite knowledge about those procedures and the level of assurance resulting from them.
B)to only the involved parties,who would have the requisite knowledge about those procedures but not the level of assurance resulting from them.
C)to any party to whom the client wishes.
D)only to the stockholders of the client.

Question 51

As a CPA,you have been engaged to perform an attestation engagement.You would typically

A)express a conclusion about an assertion.
B)provide management consulting services.
C)prepare financial forecasts to secure in preparation for receiving debt funding.
D)compile financial statements for the client.

Question 52

Which of the following attestation engagements result in a conclusion that represents positive assurance?

A)review
B)compilation
C)examination
D)agreed upon procedure engagement

Question 53

The quarterly reports submitted to the SEC by the client

A)have to be audited and the CPA firm must be identified.
B)do not have to be audited,but the CPA firm which does the annual audit must be identified.
C)have to be audited,but the CPA firm does not have to be identified.
D)do not have to be audited,but the CPA firm which does the annual audit must review the quarterly statements before they are submitted to the SEC.

Question 54

Which of the following is not one of the types of engagements and related forms of conclusions that are defined by the attestation standards?

A)reviews
B)compilations
C)examinations
D)agreed-upon procedures

Question 55

A CPA firm can issue a compilation report even if it is not independent with respect to the client.

Question 56

Distribution of which of the following types of reports is limited?

A)audit
B)review
C)agreed-upon procedures
D)examination

Question 57

Statements on Standards for Attestation Engagements are established by the

A)Securities and Exchange Commission.
B)Public Company Accounting Oversight Board.
C)Auditing Standards Board of the AICPA.
D)Accounting and Review Services Committee.

Question 58

A review results in a conclusion that represents ________ assurance.

A)limited assurance
B)negative
C)positive
D)unequivocal

Question 59

An interim review of the financial information for public companies is performed following standards of the

A)American Institute of Certified Public Accountants (AICPA).
B)Public Company Accounting Oversight Board (PCAOB).
C)Securities and Exchange Commission (SEC).
D)Statements on Standards for Accounting and Review Services (SSARS).

Question 60

Which of the following is a generally accepted attestation standard for fieldwork?

A)The practitioner must state in the report that the report is intended solely for the information and use of specified parties.
B)The practitioner must state all of their significant reservations about the engagement.
C)The practitioner must adequately plan the work and must properly supervise any assistants.
D)The practitioner must exercise due professional care in the planning and performance of the engagement and the preparation of the report.

Question 61

When a CPA performs an examination engagement under the attestation standards,the amount of evidence gathered is ________ and the level of assurance is ________.

A)extensive;varying
B)significant;high
C)extensive;high
D)significant;moderate

Question 62

What type of SOC report is intended to meet the needs of a broad range of users who need information and assurance about controls at s service organization that affect the security,availability,and processing integrity of the systems the service organization uses to process users' data and the confidentiality and privacy of the information processed by these systems?

A)SOC 1 report
B)SOC 2 report
C)SOC 3 report
D)none of the above

Question 63

The use of positive assurance is appropriate in a review attestation report.

Question 64

What type of SOC report is intended to meet the needs of entities that use service organizations and their auditors,who are responsible for understanding internal controls over financial reporting at service organizations?

A)SOC 1 report
B)SOC 2 report
C)SOC 3 report
D)none of the above

Question 65

Which of the following services is performed under the attestation standards?

A)
B)
C)
D)

Question 66

Which of the following is not one of the five Trust Services principles?

A)security
B)confidentiality
C)completeness
D)availability

Question 67

When performing an attestation engagement,a CPA is required to adhere to the Statements on Standards for Attestation Engagements.Describe below the Standards of Field Work for attestation engagements.

Question 68

WebTrust services are performed under the direction of the SSARS.

Question 69

The AICPA has discontinued the SysTrust seal program.

Question 70

Statements on Standards for Attestation Engagements (SSAEs )are issued by the Auditing Standards Board of the AICPA.

Question 71

Briefly describe each of the five Trust Services principles.

Question 72

An agreed-upon procedures engagement is one in which

A)the CPA and management agree that procedures will be applied to all accounts and circumstances.
B)the CPA and management agree that procedures will not be applied to all accounts and circumstances.
C)the CPA,the responsible party making the assertions,and the specific persons who are the intended users of the CPA's report agree to all the procedures the CPA will perform.
D)the CPA,the responsible party making the assertions,and the specific persons who are the intended users of the CPA's report agree that the CPA will apply his judgment to determine the procedures to be performed.

Question 73

In a WebTrust attestation engagement the client engages a CPA to provide what level of assurance that the company's website complies with Trust Services principles?

A)absolute
B)reasonable
C)limited
D)moderate

Question 74

Who developed the WebTrust service?
Briefly explain this service.

Question 75

The WebTrust service requires that a CPA update its testing of the e-commerce aspects of an entity's website at least every

A)ninety days.
B)month.
C)six months.
D)twelve months.

Question 76

The service auditor's Type 2 report contains

A)an opinion on the reasonableness of the financial statements.
B)the two opinions about the description and suitability of the design of controls that are issued in a Type 1 report plus an additional opinion about the operating effectiveness of controls throughout the period.
C)an opinion only on the operating effectiveness of the controls.
D)an opinion on the service company's website.

Question 77

Which of the following types of engagement reports would provide positive assurance?

A)an examination
B)a review
C)an agreed-upon procedures engagement
D)a compilation

Question 78

Of the three types of attestation engagements,examination engagements provide a higher level of assurance than agreed-upon procedures engagements but less than review engagements.

Question 79

Auditors of the financial statements of public companies must follow the guidelines in the SSAEs.

Question 80

Examination attestation engagements result in a conclusion that is in a positive form,whereas review attestation engagements result in a conclusion in the form of a negative assurance.