Question 1

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

Accepted Answer

Nonpublic entity financial statements that have been reviewed by an independent accountant should include a reference to the accountant's review report on each page. This can be accomplished by including a statement such as "See independent accountant's review report." This reference lets readers of the financial statements know that an independent accountant has reviewed the financial statements and that there is a report available if they want to see it. The other options are not appropriate for a review engagement as they imply a level of assurance that is not provided in a review.

Question 2

A financial statement review conducted in compliance with SSARS includes obtaining an understanding of internal control.

Accepted Answer

A financial statement review under SSARS does not require obtaining an understanding of internal control; it is less extensive than an audit and primarily involves inquiry and analytical procedures.

Question 3

Draft a report that would be appropriate when an independent accountant has performed a compilation of financial statements which substantially omits all disclosures and the statement of cash flows required by accounting principles generally accepted in the United States of America.

Accepted Answer

The answer of Draft a report that would be appropriate...

Question 4

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

Accepted Answer

According to the AICPA's Statements on Standards for Accounting and Review Services (SSARS), a CPA firm can issue a compilation report even if it is not independent with respect to the client, as long as the lack of independence is disclosed in the report. However, a lack of independence may limit the usefulness of the report for certain purposes.

Question 5

SSARS are issued by the SEC.

Accepted Answer

SSARS (Statements on Standards for Accounting and Review Services) are issued by the American Institute of CPAs (AICPA), not the SEC (Securities and Exchange Commission). The SEC has authority over the financial reporting of publicly traded companies and issues its own set of regulations and guidance.

Question 6

CPAs must be independent to issue a review report.

Accepted Answer

According to the AICPA's Professional Standards, a CPA must be independent to issue a review report on financial statements. Independence means that the CPA is unbiased and not influenced by any relationships or financial interests with the client.

Question 7

CPAs must be independent to issue a compilation report.

Accepted Answer

CPAs do not need to be independent to issue a compilation report, but they must disclose any lack of independence in the report.

Question 8

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

Accepted Answer

Review reports are typically dated as of the completion date of the review, not the client's balance sheet date.

Question 9

A financial statement review conducted in compliance with 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.

Accepted Answer

The answer of A financial statement review conducted in compliance...

Question 10

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

Accepted Answer

According to SSARS, when performing a review of financial statements, the accountant is required to obtain a written representation letter from management.

Question 11

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

Accepted Answer

SSARS provides guidance to CPAs when performing review or compilation services for unaudited financial statements of nonpublic companies.

Question 12

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."

Accepted Answer

This is correct according to the AICPA's Statement on Standards for Accounting and Review Services (SSARS). If an auditor lacks independence, they must disclose this in their report.

Question 13

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

Accepted Answer

In compilation services, the accountant is not required to obtain an understanding of the client's internal control. However, in audit and review engagements, understanding the client's internal control is necessary.

Question 14

The last paragraph of the accountant's review report:

Accepted Answer

The last paragraph of the accountant's review report typically includes a statement of limited assurance, which indicates that the accountant is not aware of any material modifications that should be made to the financial statements. This statement is often referred to as negative assurance. Therefore, option C is the correct answer. Options A, B, and D are not typically included in the last paragraph of the review report.

Question 15

Discuss the six SSARS requirements that must be met when an accountant is performing a compilation of financial statements.

Accepted Answer

The answer of Discuss the six SSARS requirements that must...

Question 16

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

Accepted Answer

An interim review of the financial information for public companies is performed following standards of the PCAOB (Public Company Accounting Oversight Board), which was established by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies in order to protect investors and enhance the quality of financial reporting. The AICPA (American Institute of Certified Public Accountants) and SSARS (Statements on Standards for Accounting and Review Services) provide standards for non-public companies, while the SEC (Securities and Exchange Commission) is a regulatory agency that oversees public companies but does not provide specific accounting standards.

Question 17

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

Accepted Answer

The answer of Discuss each of the three types of...

Question 18

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.

Accepted Answer

The answer of Draft a report that would be appropriate...

Question 19

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.

Accepted Answer

This description refers to a compilation engagement, not a review engagement. In a review engagement, the accountant performs inquiry and analytical procedures to provide a limited assurance that there are no material modifications that should be made to the financial statements.

Question 20

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

Accepted Answer

The SEC requires quarterly financial information as a part of the 10-Q report, not the annual 10-K report or 8-K report, or the auditor's report. The 10-Q report contains unaudited financial statements and is due 45 days after the end of each fiscal quarter for companies that are publicly traded.

Quiz 25: Other Assurance Services

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

A financial statement review conducted in compliance with SSARS includes obtaining an understanding of internal control.

Draft a report that would be appropriate when an independent accountant has performed a compilation of financial statements which substantially omits all disclosures and the statement of cash flows required by accounting principles generally accepted in the United States of America.

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

SSARS are issued by the SEC.

CPAs must be independent to issue a review report.

CPAs must be independent to issue a compilation report.

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

A financial statement review conducted in compliance with 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.

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

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

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."

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

The last paragraph of the accountant's review report:

Discuss the six SSARS requirements that must be met when an accountant is performing a compilation of financial statements.

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

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

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.

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.

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