Module A Acct 403 Multiple Choice

Which of the following statements should be included in a practitioners' report on the application of agreed-upon procedures? A statement that the practitioner performed an examination of prospective financial statements. A statement of scope limitation that will qualify the practitioners' opinion. A statement referring to standards established by the AICPA. A statement of limited assurance based on procedures performed.

A statement referring to standards established by the AICPA.

Which of the following would not ordinarily be included in an accountants' review report on a non-issuer's financial statements? An indication that a review engagement is substantially less in scope than an audit engagement. A statement that a review engagement was conducted in accordance with SSARS. A statement that a review engagement is greater in scope than a compilation. Limited assurance on the fairness of the financial statements.

A statement that a review engagement is greater in scope than a compilation.

Which of the following would not be included in an accountants' report on compliance with laws, regulations, or other matters conducted separately from an audit? Identification of the law, regulation, or other matter that serves as the basis for the engagement. A statement that the engagement was conducted in accordance with AICPA standards. A statement that the accountants' engagement provides a legal determination with respect to compliance. The accountants' conclusion with respect to compliance.

A statement that the accountants' engagement provides a legal determination with respect to compliance.

Which of the following would not be included in an auditors' report on financial statements prepared using a special purpose framework? A statement that the financial statements are the responsibility of management. An identification of the financial statements and years examined. An opinion on the appropriateness of the special purpose framework. A reference to a footnote or other disclosure discussing the special purpose framework used in preparing the financial statements.

An opinion on the appropriateness of the special purpose framework.

Which of the following statements would not be included in an accountants' report on an examination of a financial forecast? The examination was conducted in accordance with attestation standards established by the AICPA. An opinion on the likelihood of achieving the forecasted results. An acknowledgment that differences may occur between forecasted and actual results. A statement indicating the accountants have no responsibility to update the report for future events and circumstances.

An opinion on the likelihood of achieving the forecasted results.

Which of the following best describes the scope of audit and compilation engagements compared to a review engagement? (Greater then review/Lesser than review) audit compilation

Audit - Greater then review Compilation - Lesser than review

In which of the following engagements would an accountant be required to be independent of the client? (yes/no) compilation engagement preparation engagement

Compilation engagement - No Preparation engagement - No

When accountants are not independent, which of the following reports can they issue? Compilation report on historical financial statements. Standard unmodified audit report on historical financial statements. Examination report on a financial forecast. Examination of internal control over financial reporting for an issuer.

Compilation report on historical financial statements

Auditors may accept an engagement and express an unmodified opinion on an element, account, or item of the financial statements if they Perform analytical procedures related to all significant account balances and classes of transactions. Limit the use of their report to specified users. Conduct the engagement in accordance with generally accepted auditing standards. Have expressed an adverse opinion on the full financial statements.

Conduct the engagement in accordance with generally accepted auditing standards.

An SOC 1 Type 2 report supporting the auditors6 report on internal control over financial reporting for an issuer provides assurance with respect to (yes/no) Controls placed in operation Operating effectiveness of controls

Controls placed in operation - Yes Operating effectiveness of controls - Yes

Dale, CPA, was engaged to conduct an audit of the financial statements of AM Company (a non-issuer). After considering the scope and cost of an audit engagement, AM Company has asked Dale to modify the scope of the engagement to a review. Which of the following best describes the professional guidance for this situation? Dale would be required to issue a disclaimer of opinion on the financial statements because of the limited scope of a review engagement. Dale would be permitted to modify the scope of the engagement if AM Company's request is based on their lender's willingness to accept a review engagement rather than an audit. Dale would be permitted to modify the scope of the engagement, regardless of the reason for AM Company's request. Dale would be precluded from modifying the scope of the engagement under any circumstances.

Dale would be permitted to modify the scope of the engagement if AM Company's request is based on their lender's willingness to accept a review engagement rather than an audit.

In which of the following engagements would general use of the accountants' report be appropriate? Agreed-upon-procedures engagement on a financial forecast. Examination of financial projection. Examination of financial forecast. None of the above.

Examination of financial forecast.

During a review of a non-issuer's financial statements, accountants are required to make certain inquiries of management. Which of the following inquiries is not required by SSARS? The basis for the preparation of financial statements. Internal control deficiencies. Significant transactions occurring near the end of the reporting period. Material subsequent events.

Internal control deficiencies.

Which of the following is not a condition that must be met for an engagement to evaluate compliance with laws, regulations, or other matters? Management must accept responsibility for compliance. Management's evaluation of compliance is capable of evaluation and is measured against reasonable criteria. Sufficient evidence is available to support management's evaluation. Management provides a report attesting to satisfactory compliance.

Management provides a report attesting to satisfactory compliance.

In providing assurance services to clients, CPAs are building on their reputations for Knowledge and integrity. Objectivity and integrity. Expertise in accounting and financial matters. Professionalism and trust.

Objectivity and integrity.

Which of the following sections or paragraphs of the auditors' report would be modified if the report expresses an opinion on financial statements prepared using the cash basis of accounting rather than generally accepted accounting principles (yes /no) Opinion Section Auditor's Responsibility Section

Opinion Section - Yes Auditor's Responsibility Section - No

Accountants are permitted to express limited assurance in which of the following reports? Standard unmodified report on audited financial statements. Compilation report on unaudited financial statements. Review report on unaudited financial statements. Adverse opinion on audited financial statements.

Review report on unaudited financial statements.

Which of the following would be included in an accountants' report on an agreed-upon procedures engagement? Summary of findings summary of procedures preformed

Summary of findings - Yes Summary of procedures performed - Yes

The conclusions provided in an accountants' report on an agreed-upon procedures engagement are in the form of a(n) Limited assurance. Summary of findings. Opinion. No conclusions are provided in an agreed-upon procedures engagement.

Summary of findings.

Which of the following statements is not true regarding an auditors' report on compliance with contractual provisions conducted in conjunction with a GAAS audit? Auditors may issue either a separate report on compliance with contractual provisions or a combined report on compliance included with the report on the financial statements. The auditors' report expresses an opinion on the financial statements and compliance with contractual provisions. The use of the auditors' report is limited. The auditors' report acknowledges that the audit was not conducted with the purpose of obtaining knowledge regarding compliance with contractual provisions.

The auditors' report expresses an opinion on the financial statements and compliance with contractual provisions.

Which of the following is not correct with respect to a user auditors' request for a SOC 1 report? A SOC 1 report should be requested in the audit of an issuer. Type 1 reports would be most appropriate for auditors' reporting requirements for issuers. The user entity is the entity on whom the audit of the financial statements and internal control over financial reporting is being conducted. A SOC 1 report may express an opinion on the design and/or operating effectiveness of internal controls.

Type 1 reports would be most appropriate for auditors' reporting requirements for issuers.

To perform an attestation engagement on prospective financial information, accountants must do all of the following except Obtain knowledge about the entity's business and accounting principles. Understand the internal controls used in the processes that generated the prospective financial information. Obtain an understanding of the process through which the prospective financial information was developed. Evaluate the assumptions used to prepare the prospective financial information.

Understand the internal controls used in the processes that generated the prospective financial information.

Which of the following is not true with respect to a preparation engagement? The accountant should obtain an engagement letter from the client. While not required to be independent, the accountants' communication to third parties should disclose their lack of independence. The accountants' communication should include a statement on the financial statements such as "no assurance is provided." The accountant may issue a report disclaiming an opinion or assurance on the financial statements.

While not required to be independent, the accountants' communication to third parties should disclose their lack of independence.

If an accountant is not independent with respect to a non-issuer and has been requested to conduct a compilation engagement, the accountant should Decline to accept the engagement because of the lack of independence. Decline to accept the engagement and conduct a preparation engagement. Accept the engagement and disclose the lack of independence in the compilation report. Accept the engagement and express limited assurance on the financial statements because of the lack of independence.

accept the engagement and disclose the lack of independence in the compilation report.

Prospective financial information that reflects the results assuming the occurrence of one or more hypothetical events is referred to as a Financial estimate. Financial forecast. Financial projection. Pro forma financial information.

financial projection.

An assurance service is defined as a service that Expands auditing services to nonfinancial information. Reviews unaudited financial information. Improves the quality of information for decision makers Reduces the risk in management decision making.

improves the quality of information for decision makers.

If a non-issuer prepares financial statements that omit substantially all footnote disclosures required by GAAP, the accountants' compilation report Is not affected, since no assurance is provided in a compilation engagement. Should be modified to provide the omitted disclosures. Should indicate that the disclosures are omitted and that this omission might affect users' conclusions. Should disclaim an opinion on the financial statements because of a significant scope limitation.

should indicate that the disclosures are omitted and that this omission might affect users' conclusions.

B. Harper is shopping online and finds a great pair of running shoes at a really low price. However, he is not familiar with the company and is concerned with the accuracy of the website in presenting the quality of the shoes. Harper may be more willing to place an order with this company if The website displays the WebTrust seal. The company provides its annual report and the report of the independent auditors on its website. The company provides a money-back guarantee. Only a partial payment is required prior to receiving the product

the website displays the WebTrust seal.

Statements on Standards for Accounting and Review Services are applicable to engagements involving Audited financial statements of issuers. Unaudited financial statements of issuers. Unaudited financial statements of non-issuers. Audited financial statements of non-issuers

unaudited financial statements of non-issuers.