AICPA CPA Auditing and Attestation Set 4

The standard report issued by an accountant after reviewing the financial statements of a nonissuer should state that:

A. A review is limited to presenting in the form of financial statements information that is the representation of management.
B. A review consists of inquiries of company personnel and analytical procedures applied to financial data.
C. The accountant does not express an opinion or any other form of assurance on the financial statements.
D. The accountant did not obtain an understanding of the entity's internal control or assess control risk.
 

While auditing the financial statements of a nonissuer, a CPA was requested to change the engagement to a review in accordance with Statements on Standards for Accounting and Review Services (SSARS) because of a scope limitation. If the CPA believes the client's request is reasonable, the CPA's review report should:
I. Refer to the scope limitation that caused the change.
II. Describe the auditing procedures that have already been applied.

Clark, CPA, compiled and properly reported on the financial statements of Green Co., a nonissuer, for the year ended March 31, 20X1. These financial statements omitted substantially all disclosures required by generally accepted accounting principles (GAAP). Green asked Clark to compile the statements for the year ended
March 31, 20X2, and to include all GAAP disclosures for the 20X2 statements only, but otherwise present both years' financial statements in comparative form.
What is Clark's responsibility concerning the proposed engagement?

Davidson, CPA, is performing a review under auditing standards of Gold's interim financial information. As part of planning, Davidson reads the audit documentation from the preceding year's annual audit. Which of the following is least likely to affect Davidson's review?

A. A summary of both corrected and uncorrected misstatements.
B. Identified risks of material misstatement due to fraud.
C. Significant weaknesses in internal control.
D. Scope limitations that were overcome through acceptable alternative procedures.
 

The annual financial statements of a publicly held company have been audited, and its interim financial statements have been reviewed. Which of the following is true about the application of professional standards to this review?
A. PCAOB standards apply.
B. Statements on Standards for Accounting and Review Services apply.
C. Both PCAOB standards and SSARS apply.
D. None of the above
 

Which of the following is not a required procedure in an engagement to review the interim financial information of a publicly held entity?
A. Obtaining corroborating evidence about the entity's ability to continue as a going concern.
B. Comparing disaggregated revenue data for the current interim period with that of comparable prior periods.
C. Obtaining evidence that the interim financial information reconciles with the accounting records.
D. Inquiring of management about their knowledge of fraud or suspected fraud.
 

In which case would the accountant be least likely to perform a review of interim financial information under PCAOB (auditing) standards?
A. Quarterly reports are required to be filed with the SEC.
B. Selected quarterly financial data is included in an annual report.
C. Quarterly financial data is included in the financial statements of a nonissuer.
D. The accountant is performing an initial audit of financial statements that include selected quarterly data.
 

The quarterly data required by SEC Regulation S-K have been omitted. Which of the following statements must be included in the auditor's report?

A. The auditor was unable to review the data.
B. The company's internal control provides an adequate basis to complete the review.
C. The company has not presented the selected quarterly financial data.
D. The auditor will review the selected data during the review of the subsequent quarterly financial data.

Which of the following matters is covered in a typical comfort letter?

A. Negative assurance concerning whether the entity's internal controls operated as designed during the period being audited.
B. An opinion regarding whether the entity complied with laws and regulations under Government Auditing Standards and the Single Audit Act of 1984.
C. Positive assurance concerning whether unaudited condensed financial information complied with generally accepted accounting principles.
D. An opinion as to whether the audited financial statements comply in form with the accounting requirements of the SEC.
 

Comfort letters ordinarily are signed by the client's:

A. Independent auditor.
B. Underwriter of securities.
C. Audit committee.
D. Senior management.