The quarterly data required by SEC Regulation S-K have been omitted. Which of the following statements must be included in the auditor's report?
Answer(s): C
Choice "c" is correct. If the quarterly data required by SEC Regulation S-K have been omitted, the auditor's report must include a statement indicating that the company has not presented such data. Choice "a" is incorrect. The auditor's report should only state that the auditor was unable to review quarterly data required by SEC Regulation S-K when the data have been included, but the auditor has not reviewed such data.Choice "b" is incorrect. Generally, the auditor's report does not make reference to a review of interim financial information, since such information is not a required part of GAAP financial statements. (Note, however, that the auditor's report might be modified to indicate that the company's internal control was not sufficient to provide an adequate basis for a review of such information, in situations where quarterly data is included but not reviewed).Choice "d" is incorrect. If an entity is required to file quarterly reports, a review of this quarterly data is also required. Such review should be completed before the quarterly report is filed, not postponed to a subsequent quarter.Letters for Underwriters
Which of the following matters is covered in a typical comfort letter?
Answer(s): D
Choice "d" is correct. In a typical comfort letter, the accountants express an opinion (i.e., positive assurance) concerning the financial statements' compliance (as to form) with the pertinent accounting requirements of the SEC.Choice "a" is incorrect. No assurance is generally provided in a comfort letter regarding the operation of an entity's internal control.Choice "b" is incorrect. A typical comfort letter is addressed to the underwriters of the securities. Government Auditing Standards and the Single Audit Act are not applicable to a comfort letter related to the issuance of securities.Choice "c" is incorrect. Negative assurance (not positive) is typically provided regarding unaudited condensed financial information.
Comfort letters ordinarily are signed by the client's:
Answer(s): A
Choice "a" is correct. A comfort letter is a letter containing a negative assurance from the CPA to the underwriter or certain other requesting parties just before the registration of the client's securities. Choice "b" is incorrect. The comfort letter is sent to the underwriter. Choice "c" is incorrect. The audit committee does not sign a comfort letter. Choice "d" is incorrect. Senior management may sign a client representation letter, not a comfort letter.
When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receive:
Choice "a" is correct. When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receive negative assurance on capsule information.Choice "b" is incorrect. Positive assurance cannot be given if the information was not audited. Choices "c" and "d" are incorrect. A comfort letter generally covers the period from the date of the last auditor's report to the effective date of the registration. It does not cover "pro forma" or prospective financial statements.
Comfort letters ordinarily are:
Choice "d" is correct. A comfort letter is a letter from the independent auditor to the named underwriter just before the registration of the client's securities. Choices "a", "b", and "c" are incorrect, based on the above Explanation.Attest Engagements
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