27 terms


The term "special purpose reporting framework" may include all of the following except reports on financial statements
Of an organization that has limited the scope of the auditor's examination
If the auditor believes that financial statement prepared on the entity's income tax basis not suitably titled, the auditor should
Modify the auditor's report to disclose any reservations
Whenever regulatory basis financial reporting framework, filed on a printed form designed by authorities, call upon the independent auditors to make an assertion that the auditors believe is not justified, the auditors should
Reword the form or attach a separate report.
A modification of the CPA's report on a non public company review would be necessitated by which of the following?
Inadequate disclosure.
Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include
Inquiries concerning actions taken at meetings of the stockholders and the board of directors.
During a review of the financial statements of a nonpublic entity, the CPA finds that the financial statements contain a material departure from generally accepted accounting principles. If management refuses to correct the financial statement presentations, the CPA should
Disclose the departure in a separate paragraph of the report.
Which of the following would not be included in a CPA's report based upon a review of the financial statements of a nonpublic entity?
A statement that the review was in accordance with generally accepted auditing standards.
The objective of a review of interim financial information is to provide the accountant with a basis for reporting whether
Material modifications should be made to conform with generally accepted accounting principles.
Which of the following circumstances requires modification of the accountant's report on a review of interim financial information of publicly held entity? An Uncertainty or Inadequate Disclosure
No, Yes
Comfort letters are ordinarily signed by the
If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting do not disclose the basis of accounting used, the accountant should
Disclose the basis of accounting in the accountant's report.
The accountants' compilation report should be dated as of the date of
Completion of the compilation
Which of the following should not be included in an accountant's standard report based upon the compilation of an entity's financial statements?
A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements.
Each page of the financial statements compiled by an accountant should include a reference such as
See accountant's compilation report.
When a U.S.-based organization prepares financial statements which are for use in another country a U.S. report, modified to reflect the accounting principles of the other country may be issued
In which of the following types of reports do accountants provide no explicit assurance?
Financial statement auditors will request a cutoff bank statement primarily to
B. Verify reconciling items on the client's bank reconciliation
Which of the following is true about the auditors' observation of the client's physical inventory?
The auditors should evaluate the adequacy of the client's counting procedures.
Which of the following is the best audit procedure for the detection of lapping?
Comparison of postings of cash receipts with the details of cash deposits.
What type of error is the CPA most likely to discover when he/she examines all shipping reports dated in January of 20X1, shipped FOB shipping point, which were recorded in December of 20X0 as credit sales?
Accounts receivable are overstated at December 31, 20X0
By preparing a four column bank reconciliation ("proof of cash") at year end, an auditor will generally be able to detect:
an embezzlement of cash receipts recorded in the cash receipts journal before they had been deposited into the bank
Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal control over the revenue cycle?
Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash.
Kiting would least likely be detected by
tracing each day's total deposits from the cash receipts journal to the cash account
A client erroneously recorded a large purchase twice. Which of the following controls would be most likely to detect this error in a timely and efficient man¬ner?
Reconciling vendors' monthly statements with sub¬sidiary payable ledger accounts.
Alpha Company uses its sales invoices for posting per¬petual inventory records. Inadequate controls over the in¬voicing function allow goods to be shipped that are not in¬voiced. The inadequate controls could cause an
Understatement of revenues and receivables, and an overstatement of inventory.
A client's physical count of inventories was higher than the inventory quantities per the perpetual records. This situation could be the result of the failure to record:
Your client performed the physical count of inventory as of November 30, one month prior to year-end. Subsequently, your client closed the sales journal on 12/29/XX, two days before year end, and reported those two days of credit sales in January of the next year. Assuming the client uses a perpetual inventory system which of the following is most likely to be overstated relating to the year XX financial statements?