CPA AUD A5

According to the PCAOB, each of the following statements is true with respect to the auditor's responsibility to communicate material weaknesses in internal control over financial reporting, except:

All such weaknesses must be communicated in writing to all stockholders. (An auditor is not required to communicate material weaknesses to all stockholders.)

In an audit of an issuer:

Both I and II.(It is management's responsibility to assess and report on internal control, but the auditor is also required to assess and report on internal control.)

Which is true regarding PCAOB standards surrounding internal control?

PCAOB standards surrounding internal control apply only to audits of issuers. (PCAOB standards surrounding internal control apply only to audits of issuers.)

In an integrated audit of a nonissuer, an auditor should issue an adverse opinion on the effectiveness of an entity's internal control in which of the following situations?

A material weakness exists. (An auditor should issue an adverse opinion on the effectiveness of internal control when a material weakness exists.)

Mill, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by Modern Co. regarding Modern's written assertion about its compliance with contractual requirements to pay royalties. Mill's report on these agreed-upon procedures should include a(n):

A description of the procedures performed and Mill's findings. (Mill's report on these agreed-upon procedures should include a description of the procedures performed and Mill's findings.)

Which of the following components is appropriate in a practitioner's report on the results of applying agreed-upon procedures?

A description of the procedures performed, related findings, and a description of any specified materiality threshold established for reporting exceptions. (It is appropriate to include a description of the procedures performed, related findings, and materiality thresholds in the practitioners report in an agreed-upon procedures engagement.)

A CPA was engaged to calculate the rate of return on a specified investment according to an agreed-upon formula and verify that the resultant percentage agrees to the percentage in an identified schedule. The CPA'S report on these agreed-upon procedures should contain:

A disclaimer of responsibility for the sufficiency Of those procedures. (A report on agreed-upon procedures should include a disclaimer of responsibility for the sufficiency of the procedures.）

Which of the following prospective financial statements is(are) appropriate for general use?

A financial forecast is appropriate for general use, but a financial projection is not.

Which of the following should a practitioner include in an agreed-upon procedures report?

All findings from application of the agreed-upon procedures.

In which of the following engagements would a practitioner provide limited assurance about the possible significant effects on the historical financial statements if a change in capitalization had occurred at an earlier date?

A review of pro forma financial information.(A review of pro forma financial information provides limited assurance about the effect of a future or hypothetical event (in this case, a change in capitalization) by showing how it might have affected the historical financial statements if it had occurred at an earlier date. Tip: This question can be quickly answered by knowing that reviews provide limited assurance.)

In which case might an auditor of an issuer render a qualified opinion on internal control?

A scope limitation requires the auditor to disclaim an opinion or withdraw from the engagement, and a material weakness in internal control requires the auditor to issue an adverse opinion. Neither situation would result in a qualified opinion.

Which of the following statements should be included in a practitioner's report on the application of agreed-upon procedures?

A statement referring to standards established by the AICPA. (A statement referring to standards established by the AICPA Should be included in a practitioners report on the application of agreed-upon procedures.)

A practitioner's report on agreed-upon procedures that iS in the form of procedures and findings Should contain:

A statement that the subject matter is the responsibility of the responsible party. (A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain a statement that the subject matter is the responsibility of the responsible party.)

A CPA is engaged to examine an entity's financial forecast The CPA believes that several significant assumptions do not provide a reasonable basis for the forecast. Under these circumstances, the CPA should issue a(an):

Adverse opinion.(If one or more of the significant assumptions do not provide a reasonable basis for the financial statements, an adverse opinion would be issued.)

When an accountant examines a financial forecast that fails to disclose several significant assumptions used to prepare the forecast, the accountant should describe the assumptions in the accountant's report and issue a (an):

Adverse opinion.(When an accountant examines a financial forecast that fails to disclose significant assumptions used to prepare the forecast, the accountant should issue an adverse opinion.)

A company hired a practitioner to perform an examination of prospective financial statements. The practitioner concluded that the assumptions did not provide a reasonable basis for the prospective financial statements. Which of the following types of opinion should the practitioner issue?

Adverse.(In an examination of prospective financial statements, if the assumptions do not provide a reasonable basis for the prospective financial statements, then the practitioner should express an adverse opinion.)

The auditor is required to communicate each of the following items to those charged with government, except:

All control deficiencies detected during the course of the audit. (The auditor is not required to communicate all control deficiencies to those charged in governance. However, control deficiencies that are determined to be significant deficiencies and material weaknesses are required to be communicated to those charged with governance.)

Each of the following items should be included in a presentation of pro forma financial statements, except:

All direct and indirect effects attributed to the related transaction. (A presentation of pro forma financial statements should include all significant direct effects related to the transaction. The presentation does not need to include indirect effects related to the transaction.)

Which of the following statements is true regarding prospective financial statements?

All reports on prospective financial statements require a statement indicating that the prospective results may not be achieved. (All reports on prospective financial statements require a statement indicating that the prospective results may not be achieved.)

Which of the following items Should be included in prospective financial statements issued in an attestation engagement performed in accordance with Statements on Standards for Attestation Engagements?

All significant assumptions used to prepare the financial statements.(When performing an attestation engagement related to a client's prospective financial statements, the accountant should ensure that the client discloses all significant assumptions that are used for the prospective financial statements.)

Accepting an engagement to compile a financial projection for a nonissuer most likely would be inappropriate if the projection were to be distributed to:

All stockholders of record as of the report date. (Accepting an engagement to compile a financial projection for a nonissuer most likely would be inappropriate if the projection were to be distributed to all stockholders of record as of the report date (general use). Only a financial forecast is suitable for general use.)

Which of the following professional services would be considered an attest engagement covered by the Statements on Standards for Attestation Engagements (SSAEs)?

An engagement to report on management's discussion and analysis (MD&A). (An engagement to report on managements discussion and analysis (MD&A) would be considered an attest because the accountant is issuing an examination or review report on another party's assertion.

which of the following would not considered an attest engagement subject to attestation standards?

An engagement to review the financial statements of a nonpublic company. (Attest engagements covered under Statements on Standards for Attestation Engagements (SSAE) specifically exclude services performed in accordance with Statements on Standards for Accounting and Review Services (SSARS). Since a review of a nonpublic company's financial statements is conducted under SSARS, it is not subject to attestation standards.)

Each of the following statements is correct regarding how an auditor can obtain an understanding of the likely sources of potential misstatements in an integrated audit of a nonissuer, except

An evaluation of the entity's information technology risk and controls should be performed utilizing an approach other than the top-down approach. (An evaluation of an entity's information technology risk and controls should utilize the top-down approach. The top-down approach is used in selecting controls to test in an integrated audit.)

Which of the following is least likely to be included in an examination report related to a financial projection?

An indication that had the accountants performed additional procedures, other matters might have come to their attention that would have been reported. (This statement would be included in an agreed-upon procedures report, not an examination report.)

Which of the following statements concerning prospective financial statements is correct?

Any type of prospective financial statements would normally be appropriate for limited use. (Any type of prospective financial statements (financial forecasts and financial projections) would normally be appropriate for limited use.)

Which of the following professional services would be considered an attestation engagement?

Examining the income statement and balance sheet for one year in the future based on client expectations and predictions.(Examining future financial statements constitutes an examination of prospective financial statements, which is considered to be an attestation service.

An engagement to audit the internal control of a nonissuer will generally

Be more extensive in scope than the assessment of control risk made during a financial statement audit. (An engagement to audit internal control will generally be more extensive in scope than the assessment of control risk made during a financial statement audit of a nonissuer. This occurs because assessing control risk is the primary purpose of an engagement to express an opinion on internal control, whereas it is an incidental result of an audit of a nonissuer)

Which of the following statements correctly describes the "top-down approach" used during an audit of internal control over financial reporting?

Begin by understanding the overall risks to internal control over financial reporting at the financial statement level. (The "top-down approach" used during an audit of internal control over financial reporting begins by understanding the overall risks to internal control over financial reporting at the financial statement level.)

When an accountant compiles a financial forecast, the accountant's report should include a(an):

Caveat that the prospective results of the financial forecast may not be achieved. (Whenever an accountant reports on prospective financial statements, the report should include a caveat that prospective results may not be achieved.)

An accountant's compilation report on a financial forecast Should include a statement that

There will usually be differences between the forecasted and actual results.(The accountant's compilation report on a client's financial forecast should include a caveat that the prospective results may not be achieved.)

which of the following is not a role of the risk assessment in an integrated audit of nonissuer?

Concluding on the effectiveness of a given control. (The auditor's conclusion on the operating effectiveness of a given control is not a role of the risk assessment process. The auditor's conclusion on the operating effectiveness of internal control occurs after the risk assessment process.)

When a service organization provides services that affect the initiation, execution, processing, or reporting of a user company's transactions, those services are:

Considered to be part of the user company's information system. (When a service organization provides services that affect the initiation, execution, processing, or reporting of a user company's transactions, those services are considered to be part of the user company's information system.)

In the integrated audit of an issuer, an auditor has identified entity-level controls that are important to the conclusion as to whether the company has effective internal control over financial reporting. Each of the following is an example of an entity-level control, except:

Controls over the completeness of deposited cash. (Controls over the completeness of deposited cash relates to controls at the account level.)

When an accountant compiles projected financial statements, the accountant's report should include a statement that:

Describes the limitations on the projection's usefulness. (The accountant's report on compiled projected financial statements should include a statement that describes the limitations on the projection's usefulness. The report indicates these limitations by stating: (1) that there will usually be differences between projected and actual results, and (2) that the accountant has no responsibility to update the report for events occurring after the date of the report.)

When an accountant examines projected financial statements, the accountant's report should include a separate paragraph that:

Describes the limitations on the usefulness of the presentation. (The accountants standard report on an examination of projected financial statements should include a caveat that the projected results may not be achieved. This is included in a separate paragraph that describes the limitations on the usefulness of the presentation -there will usually be differences between the forecasted and actual results... [that] may be material.")

When an accountant compiles projected financial statements, the accountant's report should include a statement that:

Describes the limitations on the usefulness of the projection.(A compilation of a financial projection report describes the limitations on the usefulness of the projection by including a caveat that the prospective results may not achieved.)

An accountant who accepts an engagement to compile a financial projection most likely would make the client aware that the:

Engagement does not include an evaluation of the support for the assumptions underlying the projection.(When an accountant accepts a compilation engagement, he or she should indicate that it is limited in scope and would not include an opinion or assurance on the projected financial statements or the related assumptions.)

Management of Eva Industries, an issuer as defined under the Sarbanes-Oxley Act, believes it has eliminated a material weakness previously noted in its assessment of internal control, and has hired Henna and Company, CPAs, to attest to the improvements in internal control. Which of the following is true of this engagement?

Eva's management must provide a written report to accompany Henna and Company's report. (Eva's management must provide a written report to accompany Henna and Company's report.)

An examination of a financial forecast is a professional service that involves:

Evaluating the preparation of a financial forecast and the support underlying management's assumptions. (An examination of a financial forecast is a professional service that involves: 1. Evaluating the preparation of the prospective financial statements, 2. Evaluating the support underlying the assumptions, 3. Evaluating the presentation of the prospective financial statements in conformity with AICPA guidelines, and 4. Issuing an examination report.)

If an auditor performing an integrated audit identifies one or more material weaknesses in a nonissuer's internal control, the auditor should:

Express an adverse opinion on the entity's internal control. (If an auditor performing an integrated audit identifies one or more material weaknesses in a nonissuer's internal control, the auditor should express an adverse opinion on the entity's internal control.

How do the scope, procedures, and purpose of tests of controls in an audit of the internal control of a nonissuer compare to those for obtaining an understanding of internal control and assessing control risk as part of a financial statement audit of a nonissuer?

In an audit of an entity's internal control, the scope and procedures are more extensive, and the purpose is directed primarily toward the internal control report. In an audit, the scope is less extensive, and the purpose is to determine the nature, timing, and extent of auditing procedures. Audit procedures (testing) is more extensive when rendering an opinion on internal controls because the auditor should obtain evidence on selected controls over all relevant assertions, whereas in a financial statement audit the auditor is not required to test controls over all relevant assertions.

Which of the following best describes the responsibility of the auditor with respect to significant deficiencies and material weaknesses in an audit of an issuer? Must be Communicated to Management Results in an Adverse Opinion of the

In an audit of an issuer, the auditor is required to communicate both significant deficiencies and material weaknesses to management and the audit committee, but only material weaknesses result in an adverse opinion on the effectiveness of internal control.

In reporting on a nonissuer's internal control over financial reporting, an auditor should include a paragraph that describes the:

Inherent limitations of any internal control. (In reporting on a nonissuer's internal control over financial reporting, the auditor's report should include a paragraph stating that, because of inherent limitations of any internal control, errors or fraud may occur and not be detected.)

Which of the following should a practitioner perform as part of an engagement for agreed-upon procedures in accordance with Statements on Standards for Attestation Engagements?

Issue a report on findings based on specified procedures performed. (An agreed-upon procedures engagement is one in which the practitioner is engaged to issue a report of findings based on specific procedures performed.)

In an integrated audit of a nonissuer, if an auditor concludes that a material weakness exists as of the date specified in management's assessment, the auditor should take which of the following actions?

Issue an adverse opinion. (The presence of a material weakness in internal control results in an adverse opinion.)

which of the following activities would most likely be considered an attestation engagement?

Issuing a report about a firm's compliance with laws and regulations. (Attest engagements may result in reports related to compliance with laws and regulations.)

Jackson is auditing the financial statements of Safer Company, an issuer Which of the following is true?

Jackson is required to audit and report on Saffer's internal control.(PCAOB Standards require Jackson to perform an integrated audit, which includes audits of both the financial statements and the effectiveness of internal control.)

Mill, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by Modern Co. regarding Modern's written assertion about its compliance with contractual requirements to pay royalties. Mill's report on these agreed-upon procedure should contain a (an):

List of the procedures performed (or reference thereto) and Mill's findings.(A report on agreed-upon procedures should include a list of the procedures performed (or reference thereto) and the related findings.)

Which of the following procedures should an accountant perform during an engagement to compile prospective financial statements?

Make inquiries about the accounting principles used in the preparation of the prospective financial statements.(An accountant performing an engagement to compile prospective financial statements should make inquiries about the accounting principles used in the preparation of the prospective financial statements.)

Quick Service Center processes the payroll for a variety of clients, including James Industries. Adams, CPA, is Quick's auditor, while Robinson, CPA, is the auditor for James Industries. Which of the following is not required of Adams?

Making inquiries regarding the professional reputation of Robinson, CPA. (The user auditor (Robinson) would make inquiries regarding the professional reputation of the service auditor (Adams), not vice versa.)

Which of the following conditions is necessary for an auditor to accept an engagement to audit and report on a nonissuer's internal control over financial reporting?

Management presents its written assessment about the effectiveness of internal control.(In order for an auditor to audit and report on a nonissuer's internal control, management must present its written assessment about the effectiveness of internal control.)

which of the following statements best serves as management's assertion of consistency in an MD&A presentation?

Nonfinancial data have been accurately derived from related records. (The consistency assertion in an MD&A presentation addresses whether nonfinancial data has been accurately derived from related records.)

If an auditor of a nonissuer concludes that reasonable justification exists to change an audit engagement to an agreed-upon procedures engagement, then the report should:

Not include a reference to the original audit engagement but may include a reference to procedures that have been performed. (If an auditor of a nonissuer concludes that reasonable justification exists to change an audit engagement to an agreed-upon procedures engagement, then the report should not include a reference to the original audit engagement but may include a reference to procedures that have been performed. Note: Typically, when there is a change in engagement, the report should not reference procedures that have been performed in the original audit engagement. However, there is an exception when the change is from an audit engagement to an agreed-upon procedures engagement: because reference to the procedures performed is a normal part of the agreed- upon procedures report.)

Accepting an engagement to compile an entity's financial projections most likely would be inappropriate if the projections are to be included in a(an):

Offering statement of the entity's initial public offering of common stock.(Financial projections are not appropriate for general use, and therefore should not be included in an offering statement of the entity's initial public offering of common stock.)

Prospective financial information presented in the format of historical financial statements that omit either gross profit or net income is deemed to be a:

Partial presentation.("Partial presentations" are presentations of prospective financial information which would not ordinarily be appropriate for general use because they omit one or more of these essential elements: (a) sales or gross revenue, (b) gross profit or cost of sales, (c) unusual or infrequently occurring items, (d) provision for income taxes, (e) discontinued operations or extraordinary items, (f) income from continuing operations, (g) net income, (h) earnings per snare, and (i) significant changes in financial position.)

Accepting an engagement to compile a financial projection most likely would be inappropriate if the projection is to be distributed to:

Potential stockholders in an offering statement.(Financial projections are appropriate only for limited use. Limited use means that the financial statements will only be used by the responsible party alone or by parties negotiating directly With the responsible party (the issuing company).

A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements when engaged to:

Provide assurance on investment performance statistics prepared by an investment company on established criteria.(A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements (SSAE) when engaged to provide assurance on investment performance statistics prepared by an investment company on established criteria. SSAE provide guidance on engagements other than reporting on historical financial statements.)

An accountant's report on a review of pro forma financial information should include a:

Reference to the financial statements from which the historical financial information js derived. (The accountant's report on a review of pro forma financial information should include a reference to the financial statements from which the historical information is derived and a statement as to whether such financial statements were audited or reviewed.)

Each of the following types of controls is considered to be an entity-level control, except those:

Regarding the company's annual stockholder meeting. (Entity level controls include controls related to the control environment, the risk assessment process, and the policies over risk management practices. Controls regarding the company's annual stockholder meeting are controls related to a specific event, rather than the entity as a whole.)

Negative assurance may be expressed when an accountant is requested to report on the:

Results of performing a review of managements assertion. (Negative assurance may be expressed when an accountant is requested to report on the results of performing a review of managements assertion.)

A practitioner may perform an agreed-upon procedures engagement on projected financial statements provided that which of the following is met?

The projected financial statements include a summary of significant assumptions. (A practitioner may perform an agreed-upon procedures engagement on projected financial statements provided that the projected financial statements include a summary of significant assumptions.)

A practitioner reporting on pro forma financial information does not possess an understanding of the client's business and the industry in which the client operates. The practitioner should take which of the following actions?

Review industry trade journals. (A practitioner that does not have knowledge of the clients business and industry should obtain the appropriate knowledge before commencing the engagement For example, this knowledge may be obtained by reviewing industry trade journals.)

A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements (SSAE) when engaged to:

Review management's discussion and analysis (MD&A) prepared pursuant to rules and regulations adopted by the SEC.(A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements (SSAE) when engaged to review management's discussion and analysis (MD&A) prepared pursuant to rules and regulations adopted by the SEC.)

In the integrated audit of a nonissuer, in order to obtain evidence to form an opinion on the effectiveness of internal control over financial reporting, an auditor will perform each of the following procedures, except

Reviewing matters related to the entity's capital structure. (Matters related to an entity's capital structure would not be relevant to the auditor's opinion on the effectiveness of internal control over financial reporting. This would be relevant in forming an opinion on the financial statements of the entity.)

When a CPA examines a client's projected financial statements, the CPA's report should:

State that the CPA performed procedures to evaluate management's assumptions.(When a CPA examines projected financial statements, the standard report should include a statement that the examination included such procedures as we considered necessary to evaluate both the assumptions used by management end the preparation and presentation of the projection.")

An accountant's standard report on a compilation of a projection should not include a:

Statement that the accountant expresses only limited assurance that the results may be achieved.(A compilation of prospective financial statements is not intended to provide assurance on the prospective financial statements or the assumptions underlying such statements.)

A CPA in public practice is required to comply with the provisions of the Statements on Standards for Attestation Engagements (SSAE) when.

Statements on Standards for Attestation Engagements do not address services involving advocating for a client, such as testifying as an expert witness. In addition, compilations of prospective financial statements are governed by Statements on Standards for Accounting and Review Services (SSARS).

Which of the following standards should a CPA firm apply in a review of pro forma financial information?

Statements on Standards for Attestation Engagements. (A CPA should refer to Statements on Standards for Attestation Engagements (SSAE) for a review of pro forma financial information.)

An accountant's compilation report on a financial forecast should include a statement that:

There will usually be differences between the forecasted and actual results.(An accountant's compilation report on a financial forecast should include a statement that there will usually differences between the forecasted and actual results.)

A practitioner is engaged to express an opinion on management's assertion that the square footage of a warehouse for sale is 150,000 square feet. The practitioner should refer to which of the following sources for professional guidance?

Statements on Standards for Attestation Engagements. (The practitioner should refer to Statements on Standards for Attestation Engagements for an attestation engagement In an attest service. the practitioner is engaged to issue a report on subject matter or on an assertion about the subject matter (in this case, the square footage of the warehouse), that is the responsibility of a party other than the practitioner (in this case, management).

In an integrated audit of a nonissuer, which of the following is the responsibility of an auditor with regard to testing controls at a company with multiple business units?

Testing controls over specific risks at business units that are material to the company's consolidated financial statements. (An auditor that is testing controls at a company with multiple business units should test controls over specific risks at business units that are material to the company's consolidated financial statements.)

An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided the:

The accountant and engaging party agree, or will be able to agree, on the criteria to be used in the determination of the findings.(In an agreed-upon procedures engagement, both the practitioner and the engaging party must agree, or be able to agree, on the criteria that will be used in the determination of findings. In addition, agreement should be reached on the procedures to be performed and any materiality limits to be applied.)

An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that:

The accountant is independent from the responsible party. ( An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that certain conditions are met, including independence from the responsible party.)

An accountant has been engaged to examine pro forma adjustments that show the effects on previously audited historical financial statements due to a proposed disposition of a significant portion of an entity's business. Other than the procedures previously applied to the historical financial statements, the accountant is required to:

The accountant should evaluate the pro forma adjustments, but need not reevaluate the entity's internal control over financial reporting.

Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards (GAAS)?

The attestation standards provide a framework for the attest function beyond historical financial statements. (Attestation standards provide a framework for the attest function beyond historical financial statements.)

A report on an issue's integrated audit must include each of the following statements, except:

The audit was conducted in accordance with AICPA standards. (A report on an issuer's integrated audit must include the statement that the audit was conducted in accordance of the standards of the Public Company Accounting Oversight Board (not AICPA standards).

which of the following best describes an auditor's responsibility with respect to communicating internal control deficiencies of issuers?

The auditor is required to communicate all deficiencies in internal control to management, and deficiencies that constitute a significant deficiency or a material weakness to management and the audit committee. (The auditor is required to communicate all deficiencies in internal control to management, and deficiencies that constitute a significant deficiency or a material weakness to management and the audit committee.)

which of the following best describes the responsibility of the auditor to report significant deficiencies and material weaknesses in an engagement to audit the effectiveness of a nonissuer's internal control?

The auditor must communicate both significant deficiencies and material weaknesses. (In an engagement to audit the effectiveness of an entity's internal control, the auditor must communicate both significant deficiencies and material weaknesses to management and those charged with governance.)

In an audit of an issuer, the auditor must provide an opinion on which of the following? The financial statements:

The auditor provides an opinion on the entity's financial statements and on the effectiveness of internal control. The auditor is not required to provide an opinion on the audit committee's oversight (but is required to report to the board when such oversight is ineffective).

A nonissuer engaged a practitioner to perform agreed-upon procedures on specified matters. The date of the practitioner's report would ordinarily be determined by the occurrence of which of the following events?

The completion of the agreed-upon procedures. (The date of the agreed-upon procedures report is ordinarily determined by the completion of the agreed-upon procedures.)

If a statement from the Statements on Standards for Attestation Engagements (SSAE) provides that a procedure or action is one that the practitioner •should consider," then which of the following interpretations is correct?

The consideration of the procedure is presumptively required, whereas carrying out the procedure is not required. (If a statement from the SSAE provides that a procedure or action is one that the practitioner "should consider," this means that the procedure is presumptively required, whereas carrying out the procedure is not required. In other words, the auditor must comply with the requirement in all cases, except in rare circumstances. In rare circumstances, the practitioner may judge it necessary to depart from a relevant presumptively mandatory requirement and not perform the "should consider' procedure. In such circumstance, the practitioner should perform alternative procedures to achieve the intent of that requirement.)

A practitioner has been engaged to apply procedures in accordance with Statements on Standards for Attestation Engagements (SSAE) to prospective financial statements. Which of the following conditions must be met for the practitioner to finalize the engagement?

The engaging party acknowledges that the procedures performed were appropriate to meet the intended purpose of the engagement. (Prior to the issuance of the practitioner's report, the engaging party (normally the client) must acknowledge and agree that the procedures performed were appropriate to meet the intended purpose of the engagement.)

when planning an audit of the effectiveness of the entity's internal control in an integrated audit of a nonissuer, an auditor would be least likely to consider which of the following factors?

The evaluation of the operating effectiveness of the controls. (When planning an audit of the effectiveness of the entity's internal control in an integrated audit of a nonissuer, a practitioner would be least likely to consider the evaluation of the operating effectiveness of the controls. The evaluation of the operating effectiveness of controls occurs after the planning stage.)

An accountant's standard report on a compilation of a projection should not include a statement that:

The hypothetical assumptions used in the projection are reasonable in the circumstances.(An accountant's standard report on a compilation of a projection does not include a statement that the hypothetical assumptions used in the projection are reasonable in the circumstances.)

In the integrated audit of an issuer, which of the following would not be considered an entity-level control?

The outside auditors assessment process of internal auditor competence and objectivity. (An entity-level control exists independently of the audit. Therefore, the external auditors assessment process of internal auditor competence and objectivity would not be considered an entity-level control.)

According to the AICPA Statements on Standards for Attestation Engagements, a public accounting firm should establish quality control policies to provide assurance about Which of the following matters related to agreed-upon procedures engagements?

The practitioner is independent from the client and other specified parties. (One of the conditions/policies that must exist in an agreed-upon procedures attestation engagement is that the practitioner be independent from the client and other specified parties pertaining to the engagement.)

Which of the following statements is least likely to be included in a practitioner's report on agreed-upon procedures?

The practitioner is required to be independent. The report has provided limited assurance.(Agreed-upon procedure engagements provide no assurance. Reviews provide limited (negative) assurance.)

In which of the following situations will a practitioner disclaim an opinion on an examination of prospective financial statements?

The practitioner was not able to perform certain procedures deemed necessary. (A practitioner would disclaim an opinion when facing a scope limitation, such as the inability to perform certain procedures deemed necessary.)

What information should a practitioner include in the standard report on an examination of prospective financial statements?

The prospective results might not be achieved. (An examination report on prospective financial statements states that the prospective results might not be achieved.)

When a user auditor plans to use a SOC I Type 2 report as audit evidence to reduce the assessed level of control risk for areas of the user entity's accounting affected by the service organization, the user auditor should be satisfied regarding all of the following except:

The reperformance of the tests of controls by the user auditor over the service organization's controls to verify the same conclusions as the service auditor. (The SOC 1 Type 2 report can be relied upon, without reperformance by the user auditor, if the evaluation of the report determines that the report is satisfactory for use by the user auditor.)

which of the following is a conceptual similarity between general auditing standards and attestation standards?

The requirement that the CPA be independent is included in both sets of standards.(The requirement that the CPA be independent is included in both sets of standards.)

Which of the following is a requirement for accepting an attestation engagement to report on the controls at a service organization?

The service auditor has the competence and capability to perform the engagement. (A requirement for accepting an attestation engagement to report on the controls at a service organization is that the service auditor has the competence and capability to perform the engagement.)

A company engages a practitioner to assist the audit committee by performing specific procedures that were agreed to by the audit committee. Which of the following statements is correct regarding the procedures to be performed?

The specific procedures performed should be listed in the practitioner's report to the audit committee. (This question is describing an agreed-upon procedure engagement performing specific procedures that were agreed to... An agreed-upon procedures report should include a list of the specific procedures performed.)

An accountant's compilation report on a financial forecast Should include a statement that

There will usually be differences between forecasted and actual results.(An accountant's compilation report on a financial forecast should include a statement that there will usually be differences between forecasted and actual results.)

An accountant's compilation report on a financial projection that does not contain a range Should include a statement that

There will usually be differences between the projected and actual results because events and circumstances frequently do not occur as expected.(An accountant's compilation report on a financial projection should include a statement that there will usually differences between the projected and actual results because events and circumstances frequently do not occur as expected.)

Which of the following characteristics of prospective financial statements would require the practitioner to include in a report on the prospective financial statements a paragraph that restricts the use and distribution of the report?

They are considered a financial projection. (Prospective financial statements considered a financial projection would require a paragraph restricting the use and distribution of the report.)

What is a service auditor's responsibility, if any, With regard to other information presented in a document containing management's description of its system and the service auditor report?

To read the other information in order to identify material inconsistencies or misstatements. (The service auditor should read the other information included in a document containing managements description of its system and the service auditors report to identity material inconsistencies or misstatements.)

An auditor has been hired to report on a nonissue(s internal control over financial reporting. Which of the following best describes a reporting option in this scenario?

When a material weakness exists, the auditor should issue an adverse opinion. (When a material weakness exists, the auditor should issue an adverse opinion.)

In an attest engagement, use of the accountant's report should be restricted to specified parties in all of the following situations, except

When reporting on an assertion about the subject matter instead of reporting directly on the subject matter. (There is no requirement that the accountants report be restricted to specified parties when reporting on an assertion about the subject matter instead of reporting directly on the subject matter.)