An accountant's standard report on a compilation of a projection should not include a statement that:
Answer(s): B
Choice "b" is correct. An accountant's standard report on a compilation of a projection does not include a statement that the hypothetical assumptions used in the projection are reasonable in the circumstances.Choice "a" is incorrect. An accountant's standard report on a compilation of a projection does state that there will usually be differences between the forecasted and actual results. Choice "c" is incorrect. An accountant's standard report on a compilation of a projection does state that the accountant has no responsibility to update the report for future events and circumstances. Choice "d" is incorrect. An accountant's standard report on a compilation of a projection does state that the compilation of a projection is limited in scope ("A compilation is limited to presenting in the form of a projection information that is the representation of management and does not include evaluation of the support for the assumptions underlying the projection.")
A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain:
Answer(s): C
Choice "c" is correct. A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain a statement of restrictions on the use of the report. Choice "a" is incorrect. Agreed-upon procedures engagements do not provide assurance of any sort. Choice "b" is incorrect. The responsible party (not the practitioner) is responsible for the sufficiency of the procedures.Choice "d" is incorrect. The subject matter of an agreed-upon procedures engagement varies, and may be unrelated to the financial statements.
When an accountant compiles projected financial statements, the accountant's report should include a separate paragraph that:
Answer(s): D
Choice "d" is correct. The accountant's report on compiled projected financial statements should include a separate paragraph that describes the limitations on the projection's usefulness. For example, the paragraph states that there will usually be differences between projected and actual results, and indicates that the accountant has no responsibility to update the report for events occurring after the date of the report.Choice "a" is incorrect. The accountant's report on compiled projected financial statements does not include an of the difference between a compilation and a review. Choice "b" is incorrect. The accountant's report on compiled projected financial statements does not document the assessment of the risk of material misstatement due to fraud. Choice "c" is incorrect. The accountant's report on compiled projected financial statements does not express limited assurance that the actual results may be within the projected range. In fact, it specifically states that no opinion or any other form of assurance is expressed, and that there usually will be differences between projected and actual results.
A CPA is engaged to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria. In performing this engagement, the CPA should comply with the provisions of:
Choice "d" is correct. Statements on Standards for Attestation Engagements apply to engagements in which a practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or on an assertion about the subject matter, which is the responsibility of another party. An engagement to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria would fall within this scope.Choice "a" is incorrect. Statements on Standards for Accounting and Review Services apply to engagements involving the unaudited financial statements of a nonissuer. An engagement to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria does not fall within this scope. Choice "b" is incorrect. Statements on Auditing Standards apply to audits of financial statements. An engagement to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria does not fall within this scope. Choice "c" is incorrect. Statements on Standards for Consulting Services apply to a broad range of consulting services. An engagement to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria is not a consulting service.
An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided the:
Choice "c" is correct. In an agreed-upon procedures engagement, use of the report is restricted to the specified users.Choice "a" is incorrect. Statements on Standards for Accounting and Review Services apply to the unaudited financial statements of a nonissuer, not to engagements to apply agreed-upon procedures to prospective financial statements.Choice "b" is incorrect. There is no requirement that the accountant also examine prospective financial statements in an agreed-upon procedures engagement. Choice "d" is incorrect. In an agreed-upon procedures engagement, the specified parties (and not the accountant) take responsibility for the sufficiency of the procedures for their purposes.Supplemental Questions
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