AUDIT REPORTING PART 2

1.  In a review of an entity’s financial statements, a significant limitation on the practitioner’s review of the financial statements would lead the practitioner to:

• a.  Express a qualification of the negative assurance.

• a.  Provide no assurance.

• a.  Both A and B

• a.  Neither A nor B

1.  When performing a review of financial statements, if the practitioner has become aware that there are information coming to his/her attention that may be materially misstated, the practitioner should:

• a.  Not express a conclusion.

• b.  Withdraw from the engagement.

• c.  Request the client that an audit be performed.

• d.  Carry out additional procedures necessary to achieve limited assurance.

1.  Which of the following procedures is least likely performed by a practitioner in an engagement to review interim financial information?

• a.  Read minutes of the board of directors’ meetings that may affect the interim financial information.

• b.  Confirm customer receivable balances that are deemed to be of high risk of material misstatement.

• c.  Obtain an understanding of the entity and its environment, including its internal control.

• d.  Communicate with other auditors who are performing a review of the interim financial information of the reporting entity’s significant components.

• e.  All of the above procedures may be performed by the practitioner

1.  Statement 1: For agreed-upon procedures, the report on factual findings should be restricted to those parties that have agreed to the procedures to be performed.

Statement 2: For agreed-upon procedures, a CPA that is employed by the entity and unrelated to the business units that will be subjected to the procedures may perform the engagement and issue a report on factual findings.

• a.  True, True

• b.  True, False

• c.  False, True

• d.  False, False

1.  Which of the following items is least likely to be included in an agreed-upon procedures engagement report?

• a.  Purpose for which the agreed-upon procedures were performed.

• a.  A summary of procedures performed.

• a.  A statement that the practitioner is independent if that is the case.

• a.  A statement that the procedures performed do not constitute an audit or review, and therefore no assurance is provided.

1.  PSRS 4410 addresses engagements where the practitioner assists management in the preparation and presentation of

• Historical financial information.

• a.  Prospective financial information.

• a.  All of the above.

• a.  None of the above

1.  Which of the following engagements require compliance with all of the requirements of the IESBA Code of Ethics for Professional Accountants?

[1] Audit

[2] Review

[3] Compilation

[4] Agreed-upon

Procedures

• a.   Yes

  Yes

  No

  No

• b.   Yes

  Yes

  Yes

  Yes

• c.   No

  No

  Yes

  Yes

• d.   Yes

  No

  No

  No

1.  When compiling the financial statements of an entity, a practitioner should

• Perform ratio analyses of financial data of comparable periods.

• a.  Review agreements with financial institutions for restrictions on cash balances.

• a.  Inquire of key personnel concerning related parties and subsequent events.

• a.  Be aware of accounting principles and disclosure requirements for the client’s industry.

• a.  None of the above

1.  In the examination of prospective financial information, prospective financial information that presents estimates given one or more hypothetical assumptions is called a

• a.  Forecast

• a.  Projection

• a.  Both A and B

• a.  Neither A nor B

1.  Because of the inherent limitation due to assumptions made by the responsible party that is considered in the examination of prospective financial information, a practitioner can only provide   assurance in the engagement.

• a.  Positive

• a.  Negative

• a.  Either A or B

• a.  Neither A nor B