AICPA CPA Auditing and Attestation Set 2

Before performing a review of a nonissuer's financial statements, an accountant should:
A. Complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions.
B. Apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.
C. Obtain a sufficient level of knowledge of the accounting principles and practices of the industry in which the entity operates.
D. Inquire whether management has omitted substantially all of the disclosures required by generally accepted accounting principles.

Which of the following is not true about documentation requirements related to a review of a nonissuer's financial statements? 
A. Written documentation from a compilation engagement may be used to provide support for the review report.
B. A management representation letter should be included in the documentation files.
C. The auditor must document evidence obtained about the operating effectiveness of controls.
D. Documentation should include the results of analytical procedures.

An accountant performing a compilation or review of the financial statements of a nonissuer should:
A. Be able to justify departures from SSARS.
B. Never depart from SSARS guidelines.
C. Exercise professional judgment in applying SSARS, since they are considered recommendations as opposed to standards.
D. Not depart from Statements on Auditing Standards.

When performing an engagement to review a nonissuer's financial statements, an accountant most likely would:

A. Obtain an understanding of the entity's internal control.
B. Limit the distribution of the accountant's report.
C. Confirm a sample of significant accounts receivable balances.
D. Ask about actions taken at board of directors' meetings.

Which of the following should be the first step in reviewing the financial statements of a nonissuer?

A. Comparing the financial statements with statements for comparable prior periods and with anticipated results.
B. Completing a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions.
C. Obtaining a general understanding of the entity's organization, its operating characteristics, and its products or services.
D. Applying analytical procedures designed to identify relationships and individual items that appear to be unusual.

An accountant has been asked to issue a review report on the balance sheet of a nonissuer without reporting on the related statements of income, retained earnings, and cash flows. The accountant may issue the requested review report only if:

A. The balance sheet is not to be used to obtain credit or distributed to the entity's creditors.
B. The balance sheet is part of a comprehensive personal financial plan developed to assist the entity.
C. There have been no material changes during the year in the entity's accounting principles.
D. The scope of the accountant's inquiry and analytical procedures has not been restricted.

An accountant is asked to issue a review report on the balance sheet, but not on other related statements. The scope of the inquiry and analytical procedures has not been restricted, but the client failed to provide a representation letter. Which of the following should the accountant issue under these circumstances?

A. Review report with a qualification.
B. Review report with a disclaimer.
C. Review report and footnote exceptions.
D. Compilation report with the client's consent

Which of the following procedures is usually the first step in reviewing the financial statements of a nonissuer?

A. Make preliminary judgments about risk and materiality to determine the scope and nature of the procedures to be performed.
B. Obtain a general understanding of the entity's organization, its operating characteristics, and its products or services.
C. Assess the risk of material misstatement arising from fraudulent financial reporting and the misappropriation of assets.
D. Perform a preliminary assessment of the operating efficiency of the entity's internal control activities

An accountant's standard report issued after compiling the financial statements of a nonissuer should state that:

A. I am not aware of any material modifications that should be made to the accompanying financial statements.
B. A compilation consists principally of inquiries of company personnel and analytical procedures.
C. A compilation is limited to presenting in the form of financial statements information that is the representation of management.
D. A compilation is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.

Which of the following would be used on a review engagement?

A. Examination of board minutes.
B. Confirmation of cash and accounts receivable.
C. Comparison of current-year to prior-year account balances.
D. Recalculation of depreciation expense.