Section C: Attestation and Assurance Engagements

For each term listed below, select the correct description (a-f). If none of the answers are correct, then select the answer choice "None of these are correct". TERM: Attestation Answers: a. None of these are correct. b. Professional services aimed at improving the quality of information both financial and non-financial for decision makers. c. A service whereby the practitioner assists in assembling financial information and issues a report providing no assurance. d. Professional services resulting in a report on subject matter or a claim about subject matter that is the responsibility of another party. e. An entity that provides a service to another company regarding the processing of transactions or information. f. A service whereby the practitioner assists in assembling financial information, but issues no report.

Professional services resulting in a report on subject matter or a claim about subject matter that is the responsibility of another party.

Which of the following is not a condition that must be met before an accountant can conduct an engagement concerning a nonpublic entity's internal control over financial reporting? Answers: a. Management presents a written assertion about the effectiveness of its internal control. b. Management's evaluation of control can be supported by sufficient evidence. c. Management has appropriately documented the internal controls. d. Management accepts responsibility for the effectiveness of its internal control.

Management has appropriately documented the internal controls.

A responsible party for information to subject to an attestation engagement would not include: Answers: a. the independent accountant. b. the client's vice president of marketing. c. a client employee named in a contract or regulation as being responsible for the information. d. the client's controller.

the independent accountant

Which of the following best describes an engagement to report on an entity's internal control over financial reporting for a nonpublic company? Answers: a. A prospective engagement to project, for a period of time not to exceed one year, and report on the expected benefits of the entity's internal control structure. b. A consulting engagement to provide constructive advice to the entity on its internal control structure. c. An audit engagement to render an opinion on the entity's internal control structure. d. An attestation engagement to examine and report on management's written assertions about the effectiveness of its internal control structure.

An attestation engagement to examine and report on management's written assertions about the effectiveness of its internal control structure.

For each term listed below, select the correct description (a-f). If none of the answers are correct, then select the answer choice "None of these are correct". TERM: Review Service Answers: a. An engagement whereby a practitioner provides limited assurance about financial information. b. Professional services resulting in a report on subject matter or a claim about subject matter that is the responsibility of another party. c. Professional services aimed at improving the quality of information both financial and non-financial for decision makers. d. A service whereby the practitioner assists in assembling financial information, but issues no report. e. An entity that provides a service to another company regarding the processing of transactions or information. f. None of these are correct.

An engagement whereby a practitioner provides limited assurance about financial information

In an agreed-upon procedures engagement, an accountant: Answers: a. follows all of the fundamental principles of GAAS. b. gives a qualified audit report. c. includes negative assurance in the report. d. restricts the report to specified users.

restricts the report to specified users.

Which of the following steps is not required in performing a compliance attestation engagement? Answers: a. Confirm restrictions with applicable third-parties. b. Assess inherent risk. c. Assess planning materiality. d. Consider subsequent events.

Confirm restrictions with applicable third-parties

In an agreed-upon procedures engagement, an accountant must: Answers: a. all of these are true. b. follow the attestation standard related to internal control. c. follow the attestation standard related to evidential matter. d. include negative assurance explicitly in the report.

Follow the attestation standard related to evidential matter.

When a company uses a service organization to prepare its payroll, the company's auditors: Answers: a. should include the audit report of the service company's auditors with their auditors' report. b. have no obligation concerning the internal controls at the service organization. c. need to understand the internal controls over the transaction regardless of the location of the control. d. must audit the internal controls at the service organization.

Need to understand the internal controls over the transaction regardless of the location of the control.

For each term listed below, select the correct description (a-f). If none of the answers are correct, then select the answer choice "None of these are correct". TERM: Assurance Service Answers: a. Professional services resulting in a report on subject matter or a claim about subject matter that is the responsibility of another party. b. An entity that provides a service to another company regarding the processing of transactions or information. c. An engagement whereby a practitioner provides limited assurance about financial information. d. A service whereby the practitioner assists in assembling financial information and issues a report providing no assurance. e. None of these are correct. f. A service whereby the practitioner assists in assembling financial information, but issues no report.

None of these are correct

For each term listed below, select the correct description (a-f). If none of the answers are correct, then select the answer choice "None of these are correct". TERM: Attestation Answers: a. A service whereby the practitioner assists in assembling financial information and issues a report providing no assurance. b. Professional services aimed at improving the quality of information both financial and non-financial for decision makers. c. An entity that provides a service to another company regarding the processing of transactions or information. d. An engagement whereby a practitioner provides limited assurance about financial information. e. A service whereby the practitioner assists in assembling financial information, but issues no report. f. None of these are correct.

None of these are correct.

For the statement, description, or phrase below, indicate the related type of engagement or report (a-e). If none of the answer choices are correct, then select the answer choice "None of these are correct". It is substantially less in scope than an audit in accordance with generally accepted auditing standards. Answers: a. Compilations of financial statements. b. None of these are correct. c. Reports on compliance with contractual agreements or regulatory requirements. d. Preparation of financial statements. e. Reports on internal control.

None of these are correct.

For the statement, description, or phrase below, indicate the related type of engagement or report (a-e). If none of the answer choices are correct, then select the answer choice "None of these are correct". Management issues a separate report containing assertions. Answers: a. Reviews of unaudited financial statements of a nonissuer. b. Compilations of financial statements. c. Preparation of financial statements. d. Reports on elements, accounts, or items of a financial statement. e. None of these are correct.

None of these are correct.

Which of the following procedures should an accountant perform during an engagement to review the financial statements of a nonpublic entity? Answers: a. Communicate reportable conditions discovered during the assessment of control risk. b. Examine cash disbursements in the subsequent period for unrecorded liabilities. c. Send bank confirmation letters to the entity's financial institutions. d. Obtain a client representation letter from members of management.

Obtain a client representation letter from members of management

Which of the following procedures ordinarily should be applied when an independent accountant conducts a review of interim financial information of a publicly held entity? Answers: a. Verify changes in key account balances. b. Read the minutes of the board of directors' meetings. c. Perform cut-off tests for cash receipts and disbursements. d. Inspect the open purchase order file.

Read the minutes of the board of directors' meetings.

For the statement, description, or phrase below, indicate the related type of engagement or report (a-e). If none of the answer choices are correct, then select the answer choice "None of these are correct". Management issues a separate report containing assertions. Answers: a. Reports on internal control. b. None of these are correct. c. Compilations of financial statements. d. Reports on the agreed-upon procedures. e. Reports on elements, accounts, or items of a financial statement.

Reports on internal control

For the statement, description, or phrase below, indicate the related type of engagement or report (a-e). If none of the answer choices are correct, then select the answer choice "None of these are correct". It is substantially less in scope than an audit in accordance with generally accepted auditing standards. Answers: a. Preparation of financial statements. b. Reviews of unaudited financial statements of a nonissuer. c. Reports on elements, accounts, or items of a financial statement. d. Reports on the agreed-upon procedures. e. None of these are correct.

Reviews of unaudited financial statements of a nonissuer

Attestation engagements may be more difficult than financial statement audits when: Answers: a. management may not understand the underlying assumptions of the attestation. b. internal controls are difficult to assess. c. the establishment of suitable measurement criteria is difficult. d. the report may be submitted to individuals with insufficient knowledge of the nature of an attestation engagement.

The establishment of suitable measurement criteria is difficult

When interim financial information is presented as supplementary information accompanying audited financial statements, the auditor should make reference to the information: Answers: a. when it is material to the financial statement users. b. when the information has been reviewed rather than audited. c. in all cases. d. when it has not been labeled as "unaudited".

When it has not been labeled as "unaudited"

An auditor that is requested to provide a report on application of requirements of an appropriate financial reporting framework may not: Answers: a. discuss the requirements with the client's current auditors. b. limit the report to the sole use of specified parties. c. issue an opinion on the accounting treatment of a hypothetical transaction. d. state that differences in facts, circumstances, or assumptions might change the conclusion.

issue an opinion on the accounting treatment of a hypothetical transaction.