An accountant's report on a review of pro forma financial information should include a:
Answer(s): D
Choice "d" is correct. The accountant's report on a review of pro forma financial information should include a reference to the financial statements from which the historical information is derived and a statement as to whether such financial statements were audited or reviewed. Choice "a" is incorrect. No statement on the entity's internal control is necessary. Choice "b" is incorrect. If the auditor has audited the financial statements from which the pro forma financial information is derived, an opinion on those statements may be expressed. Choice "c" is incorrect. The report on a review of pro forma financial information would include an of the objective and limitations of the information, but would not discuss the uncertainty surrounding occurrence of the transaction or event.
In performing an attest engagement, a CPA typically:
Answer(s): C
Choice "c" is correct. In performing an attest engagement, a CPA typically issues a report on subject matter (or on an assertion about subject matter) that is the responsibility of another party. Choice "a" is incorrect. Supplying litigation support services is not an attest engagement because the CPA is not reporting on subject matter (or an assertion about subject matter) that is the responsibility of another party.Choice "b" is incorrect. An attest engagement may include a report on internal control; however, the assessed level of control risk may or may not be at a low level. Choice "d" is incorrect. Management consulting advice is not considered to be an attest engagement because the CPA is not reporting on subject matter (or on an assertion about subject matter) that is the responsibility of another party.
An accountant's standard report on a compilation of a projection should not include a:
Choice "c" is correct. A compilation of prospective financial statements is not intended to provide assurance on the prospective financial statements or the assumptions underlying such statements. Choice "a" is incorrect. The report on a compilation should include a statement that a compilation is limited in scope.Choice "b" is incorrect. The report on a compilation should include a statement that the accountant assumes no responsibility to update the report for events subsequent to the report date. Choice "d" is incorrect. The report on a compilation should include a separate paragraph that describes the limitations on the presentation's usefulness.
Which of the following is not an attestation standard?
Choice "d" is correct. A sufficient understanding of internal control is not required to be obtained in an attestation engagement.Choice "a" is incorrect. In an attestation engagement, sufficient evidence shall be obtained to provide a reasonable basis for the conclusion that is expressed in the report. Choice "b" is incorrect. An attestation report should identify the assertion being reported on and state the character of the engagement.Choice "c" is incorrect. In an attestation engagement, the work should be adequately planned and assistants, if any, should be properly supervised.
An accountant's compilation report on a financial forecast should include a statement that the:
Answer(s): A
Choice "a" is correct. An accountant's compilation report on a financial forecast should include a statement that the compilation does not include evaluation of the support of the assumptions underlying the forecast. (An examination of the financial forecast would include evaluation of the support).Choice "b" is incorrect. An accountant does not give any form of assurance related to hypothetical assumptions, which are not used in financial forecasts anyway. (Hypothetical assumptions are used in financial projections).Choice "c" is incorrect. No mention of the range of assumptions selected is made in the compilation report.Choice "d" is incorrect. A compilation is limited to presenting, in the form of a forecast, information that is management's representation.
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