Compilation and review of financial statements
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| 543866183 | What are the two levels of service an auditor may perform for a nonissuer in respect to unaudited f/s? | Compilation and review | |
| 543866184 | What is the objective of a compilation? | To present information in the form of f/s without expressing any assurance | |
| 543866185 | Is a compilation an assurance or attest engagement? | Attest | |
| 543866186 | What is the objective of a review? | To express limited assurance that there are no material modifications that should be made to the f/s in order to be in conformity with the applicable financial reporting framework. | |
| 543866187 | Is a review an assurance or attest engagement? | Both | |
| 543866188 | If an accountant performs more than one service, he should issue a report that is? | Appropriate for the highest level of service rendered. | |
| 543866189 | SSARS is an acronym for? | Statements on standards for accounting and review services. | |
| 543866190 | Who is the authoritative body designated to issue pronouncements in connection with the unaudited f/s of nonissuers? | The Accounting and Review Services Committee of the AICPA | |
| 543866191 | What are the 5 elements of compilation/review engagements? | - Three-party relationship - Financial reporting framework - Financial statements or financial information - Sufficient appropriate evidence - Written communication or report | |
| 543866192 | Who are the 3 parties involved in compilation/review engagements? | - management - accountant - intended users | |
| 544033524 | The intended users are: | People who understand the limitations of the compilation/review engagement and f/s | |
| 544033525 | What is the financial reporting framework? | The financial accounting standards established by an authorized or recognized standards setting body. | |
| 544033526 | Examples of financial reporting framework are: | - US GAAP established by FASB - GASB - FASAB - IFRS issued by IASB - OCBOA | |
| 544033527 | The financial reporting framework determines: | What constitutes a complete set of f/s | |
| 544033528 | Who's responsibility is it to obtain evidence in a compilation report? | Not the auditor's | |
| 544033529 | Who's responsibility is it to obtain evidence in a review? | The auditor's | |
| 544033530 | What is required if an accountant performs a compilation or review? | A report or written communication. | |
| 544033531 | Materiality is based on what and affected by what? | Based on the auditor's professional judgement and affected by the needs of the user's of the f/s | |
| 544037479 | Misstatements are considered material if: | They can be expected to influence the economic decisions made by f/s users | |
| 544037480 | Name the 4 compilation requirements: | - Knowledge of industry accounting principles and practices - Understanding of client's business - Reading the f/s - Fraud, illegal acts, going concern, subsequent acts | |
| 544037481 | If a client refuses to provide additional requested information, the accountant should do what? | Withdraw from the compilation engagement | |
| 544037482 | Documentation in a compilation engagement should include: | - the engagement letter - significant findings or issues - oral/written communications regarding fraud or illegal acts | |
| 544037483 | An accountant's compilation report should include the following: | - Title - Addressee - Introductory paragraph - Management responsibility paragraph - Accountant's responsibility paragraph - Accountant signature - Date of Accountant's report | |
| 544139978 | What must an accountant do when compiling f/s included in a prescribed form that calls for a departure from the applicable financial reporting framework? | Use an alternative form of standard report and add an additional paragraph | |
| 544139979 | Compiled f/s that omit GAAP disclosures are acceptable if: | - f/s are otherwise in conformity with GAAP - reason for omission was not to deceive - compilation report warns user of missing disclosure | |
| 544139980 | Departures from the applicable financial reporting framework leave an accountant two options: | Disclosure or withdrawal | |
| 544139981 | Can an accountant lack independence and still compile f/s for an entity? | Yes with disclosure | |
| 544145834 | An accountant is exempt from SSARS when compiling unaudited personal f/s if: | - client agrees and the report states that the f/s will not be used for any other purpose other than developing financial plans - the f/s will not be used to obtain credit | |
| 544145835 | An engagement letter can replace a compilation report if the unaudited f/s: | Are not expected to be used by a third party | |
| 544145836 | When an engagement letter is used in lieu of a compilation report, the accountant should: | - Include a reference on each page of the f/s restricting their use - Include a written communication discussing services to be performed and limitation of use of f/s | |
| 544145837 | A review is a higher level of service than a compilation because: | It results in an expression of limited assurance. | |
| 544145838 | Review procedures should be: | Tailored to the specific engagement. | |
| 544145839 | Performance requirements applicable to a review are: | ULIARCPA | |
| 544145840 | ULIARCPA is an acronym for | - Understanding with client established - Learn/obtain sufficient knowledge - Inquiries addressed - Analytical procedures performed - Review other procedures - Client representation letter obtained - Professional judgement - Accountant communicates results | |
| 544149913 | Review analytical procedures consist of comparing: | - prior period statements - statements with budgets or forecasts - financial and relevant nonfinancial information - ratios and indicators with other entities in the industry - relationships among elements in the f/s with prior periods | |
| 544177658 | An accountant can request an updated representation letter whenever: | - a significant time has passed - there has been a material subsequent event - a former client requests a reissued prior period report | |
| 544177659 | Management's failure to provide a representation letter results in: | An incomplete review | |
| 544177660 | A review that is incomplete will prevent: | The issuance of a review report | |
| 544177661 | Review documentation should include: | - engagement letter - significant findings - matters inquired about - analytical procedures performed - unusual matters - communications - management representation letter | |
| 544177662 | A review report should include: | - title - addressee - Introductory paragraph - management's responsibility paragraph - accountant's responsibility paragraph - engagement results paragraph - accountant signature - date of report | |
| 544417587 | A review's introductory paragraph should include: | AMISAD | |
| 544417588 | AMISAD is an acronym for: | - applying analytical procedures to - management's financial data and making - inquiries of company management - statement that a review is substantially less in scope than - an audit - does not express such an opinion | |
| 544417589 | A review's management responsibility paragraph should include: | MRFI | |
| 544417590 | MRFI is an acronym for: | - management's responsibility - fair presentation of financials - maintaining internal control | |
| 544779715 | A review's accountant responsibility paragraph should include: | RSALA | |
| 544779716 | RSALA is an acronym for: | - accountant's responsibility - accordance with SSARS issued by AICPA - limited assurance | |
| 544779717 | Each page of a review should be marked: | "See Independent Accountant's Review Report." | |
| 544779718 | In order to issue a review report, an accountant must be what? | Independent | |
| 544779719 | If an accountant wants to modify a review or compilation, he should: | Add a separate paragraph disclosing the departure to the end of the report. | |
| 544779720 | If the financials for a compilation or review are in need of revision, the accountant must: | Modify the report or withdraw | |
| 544779721 | If modifying a review or compilation is not adequate, the accountant must: | Withdraw | |
| 544784515 | If an accountant discovers subsequent facts, he should: | - advise the client to issue revised f/s - advise the client to make necessary disclosures/revisions | |
| 544784516 | If the effect of subsequent events cannot be determined on a timely basis, the accountant should: | Provide notification that the f/s and report should not be relied on | |
| 544785961 | If a client refuses to follow procedures, the accountant should: | Take additional steps to prevent further reliance | |
| 544785962 | Additional steps to prevent further reliance includes notifying: | - the client that the accountant's report must no longer be associated with the f/s - any regulatory agencies - persons known to be relying on the f/s | |
| 544796155 | If a client asks the accountant to change the engagement, the accountant must consider: | - the reason for the request - the effort required to complete the engagement - the estimated additional cost | |
| 544796156 | 3 reasons for changing an engagement: | - acceptable reasons - unacceptable reasons - scope limitations | |
| 544796157 | 2 acceptable reasons for changing an engagement include: | - change in client requirements - misunderstanding of service to be rendered | |
| 544796158 | 2 unacceptable reasons for changing an engagement: | - uncovering errors or fraud - attempting to create misleading/deceptive f/s | |
| 544799501 | 2 unacceptable scope limitations for changing an engagement: | - the client refuses to allow correspondence with legal counsel - the client refuses to prove a signed representation letter | |
| 547682105 | Management representations for reviews must cover what periods? | All periods being reported on. | |
| 547682106 | SSARS do not apply to other accounting services such as: | - preparing a few AJE's - preparing tax returns - bookkeeping or data processing | |
| 547834542 | If an accountant decides to change the engagement, he should mention what about the original engagement? | Nothing |
