A5 Course 3 and 4

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which of the following statements is least likely to be included in a practitioner's report on agreed-upon procedures? a. the practitioner is required to be independent b. the report has limited assurance c. the subject matter is the responsibility of the responsible party d. the adequacy of the procedures performed was acknowledged by the engaging party

b. the report has limited assurance

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. disclaimer of opinion about the fair presentation of Modern's financial statements b. a description of the procedures performed and Mill's findings c. opinion about the effectiveness of Modern's internal control activities concerning royalty payments d. acknowledgment that the sufficiency of the procedures is solely Mill's responsibility

b. a description of the procedures performed and Mill's findings

Which of the following statements best serves as management's assertion of consistency in an MD&A presentation? a. information included in the presentation is properly classified and described b. nonfinancial data have been accurately derived from related records c. reported transactions took place during a given period d. description of transaction are included to understand financial condition

b. nonfinancial data have been accurately derived from related records

A practitioner is engaged to express an opinion on management's assertion that the square footage of a warehouse offered for sale is 150,000 square feet. The practitioner should refer to which of the following sources for professional guidance? a. statement on auditing standards b. statements on standards for attestation engagements c. statements on standards for accounting and review services d. statements on standards for consulting services

b. statements on standards for attestation engagements

Which of the following statements should be included in a practitioner's report on the application of agree-upon procedures? a. a statement that the practitioner performed an examination of prospective financial statements b. a statement of scope limitation that will qualify the practitioner's opinion c. a statement referring to standards established by the AICPA d. a statement of negative assurance based on a procedure performed

c. a statement referring to standards established by the AICPA

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 use? a. unmodified opinion b. qualified c. adverse d. disclaimer

c. adverse

Which of the following statements concerning prospective financial statements is correct? a. only a financial forecast would normally be appropriate form limited use b. only a financial projection would normally be appropriate for general use c. any type of perspective financial statements would normally be appropriate for limited use d. any type of prospective financial statements would normally be appropriate for general use

c. any type of perspective financial statements would normally be appropriate for limited use

A practitioner has been engaged to apply agreed-upon procedures in accordance with Statements on Standards for Attestation Engagements to prospective financial statements. Which of the following conditions must be met for the practitioner to finalize the engagement? a. the prospective financial statements include a summary of significant accounting policies b. the practitioner takes responsibility for the sufficiency of the agreed-upon procedures c. the engaging party acknowledges that the procedures performed were appropriate to meet the intended purpose of the engagement d. the practitioner reviews the findings and reaches an opinion based on the procedures performed

c. the engaging party acknowledges that the procedures performed were appropriate to meet the intended purpose of the engagement

An accountant's compilation report on financial forecast should include a statement that: a. the forecast should be read only in conjunction with the audited historical financial statements b. the accountant expresses only limited assurance on the forecasted statements and their assumptions c. there will usually be differences between forecasted and actual results d. the hypothetical assumptions used in the forecast are reasonable in the circumstances

c. there will usually be differences between forecasted and actual results

The accountant may report on agreed-upon procedures applied to specified elements, accounts, or items of financial statements a. without being independent of the client company since no opinion or any other form of assurance is given on the sufficiency of agreed-upon procedures performed. b. as long as the accountant assumes responsibility for the adequacy of the agreed-upon procedures the account has agreed to perform c. but must be independent of the client company and provide limited assurance on the sufficiency of the agreed-upon procedures performed d. but must be independent of the client company and give no opinion or any other form of assurance on the sufficiency of the agreed-upon procedures applied

d. but must be independent of the client company and give no opinion or any other form of assurance on the sufficiency of the agreed-upon procedures applied

An accountant who accepts an engagement to compile financial projection most likely would make the client aware that the a. projection may not include in a document with the audited historical financial statements b. accountant's responsibility to update the projection for future events and circumstances is limited to one year c. projection omits all hypothetical assumptions and presents the most likely future financial position d. engagement does not include an evaluation of the support for the assumptions underlying the projection

d. engagement does not include an evaluation of the support for the assumptions underlying the projection

All of the following should contain a restricted use paragraph in the report, except for an engagement to: a. report on compliance with aspects of regulatory requirements in connection with audited financial statements b. issue a letter to requesting parties in connection with a nonissuer entity's financial statements included in a registration statement filed with the SEC c. report on a financial projection d. report on pro forma financial statements

d. report on pro forma financial statements

Which of the following prospective financial statements is(are) appropriate for general use? 1. financial forecasts 2. financial projection

yes and no


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