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Chapter 19 - Additional Assurance Services: Historical Financial Information Chapter 19 Additional Assurance Services: Historical Financial Information True / False Questions An audit opinion on cash basis financial statements is an example of an opinion on financial statements that follow a special purpose financial reporting framework True False The balance sheet for an individual may be titled a Statement of Financial Condition True False The auditors should take exception to assets presented at their estimated current values in personal financial statements True False Personal financial statements may be compiled or reviewed, but they should not be audited True False A compilation of financial statement provides limited assurance regarding the financial statements True False Compiled financial statements may omit note disclosures True False The auditors must issue a compilation report if they prepare a client's financial statements and submit them to a client who intends to use them for external purposes True False 19-1 Chapter 19 - Additional Assurance Services: Historical Financial Information The auditors should not accept an engagement to issue a compilation report on financial information presented in a prescribed form True False Letters to underwriters should not contain negative assurances True False 10 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 True False Multiple Choice Questions 11 Which of the following is correct relating to compiled financial statements when third party reliance upon those statements is anticipated? A A compilation report must be issued B Omission of note disclosures is unacceptable C A written engagement letter is required D Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only" 19-2 Chapter 19 - Additional Assurance Services: Historical Financial Information 12 Which communication option(s) may be used when an accountant submits compiled financial statements to be used only by management? A Option A B Option B C Option C D Option D 13 A compilation report is not required when compiled financial statements are expected to be used by: A Management only B Management and third parties C Third parties only D A compilation report is required whenever financial statements are compiled 14 It is the end of the client's first quarter and Bill Smith, CPA has been engaged to perform a compilation and to issue a compilation report on the financial statements The client does not wish to present notes to the financial statements The appropriate report includes: A Qualified opinion ("subject to" the omission of the notes) B Compilation report with an adverse opinion due to inadequate disclosure C Standard compilation report D Compilation report with an indication that all required disclosures under GAAP may not be presented with the statements 19-3 Chapter 19 - Additional Assurance Services: Historical Financial Information 15 An accountant's standard report issued after compiling the financial statements of a nonpublic entity should state that: A I am not aware of any material modifications that should be made to the accompanying financial statements B A compilation consists principally of inquiries of company personnel and analytical procedures C A compilation is limited to presenting in the form of financial statements information that is the representation of management D A compilation is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion 16 Which of the following procedures is usually the first step in reviewing the financial statements of a nonpublic entity? A Make preliminary judgments about risk and materiality to determine the scope and nature of the procedures to be performed B Obtain a general understanding of the entity's organization, its operating characteristics, and its products or services C Assess the risk of material misstatement arising from fraudulent financial reporting and the misappropriation of assets D Perform a preliminary assessment of the operating efficiency of the entity's internal control activities 17 Which of the following would be used on a review engagement? A Examination of board minutes B Confirmation of cash and accounts receivable C Comparison of current-year to prior-year account balances D Recalculation of depreciation expense 18 Which of the following is correct concerning financial statements prepared in the United States for use in another country? A The auditor must follow GAAP of both the United States and of the other country B The type of audit report issued depends upon whether it is for use primarily outside the United States C The audit must only follow US GAAP D Auditors from the other country must be involved with the audit to assure adequate performance of that country's standards 19-4 Chapter 19 - Additional Assurance Services: Historical Financial Information 19 For a CPA, a client imposed scope limitation during a review of financial statements is most likely to result in: A Resignation from the engagement B Issuance of a disclaimer of opinion C Issuance of an adverse opinion D Only an explanatory paragraph added to report, with no change in the assurance provided 20 Interim information of public companies: A Must be as comprehensive as that filed annually with the Securities and Exchange Commission B Must be reviewed by CPAs before it is filed with the Securities and Exchange Commission C Must be reviewed continuously by CPAs using continuous auditing techniques D Requires no accountant association until it becomes a part of the companies' annual financial information 21 In which of the following types of reports the auditors express negative assurance? A Letters for underwriters B Reports on audits of financial statements on a basis other than generally accepted accounting principles C Reports on audits of specified accounts D Reports on summary financial statements 22 An assertion that is particularly difficult to audit with respect to personal financial statements is: A Existence B Rights C Completeness D Legality 19-5 Chapter 19 - Additional Assurance Services: Historical Financial Information 23 In which of the following types of reports accountants provide no explicit assurance? A Compilations B Reviews C Examinations D Audits 24 Which of the following types of services is most likely to result in a report whose use is restricted to specified parties? A Compilations B Reviews C Agreed-upon procedures D Audits 25 Which of the following does not result in a modification of a compilation report? A A lack of independence on the part of the auditors B A departure from generally accepted accounting principles C A lack of adequate disclosure in the financial statements D A lack of consistent application of generally accepted accounting principles 26 A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain: A Negative assurance that the procedures did not necessarily disclose all reportable conditions B An acknowledgment of the practitioner's responsibility for the sufficiency of the procedures C A statement of restrictions on the use of the report D A disclaimer of opinion on the entity's financial statements 19-6 Chapter 19 - Additional Assurance Services: Historical Financial Information 27 Which of the following statements is correct with respect to an audit report issued for financial statements to be used primarily outside of the United States? A The report should follow the U.S format, modified as appropriate B The report should follow the format of the other country C The report may follow either the U.S format, modified as appropriate, or may follow the format of the other country D The report should follow the attestation examination report format 28 A "comfort letter" to an investment banking firm will normally not: A Express negative assurance B Be included with the registration statement for the securities C Include the CPA's opinion as to whether the audited financial statements comply in all material respects with applicable requirements of the related securities acts D Include a statement as to the auditors' independence 29 When the auditors have performed an audit and are asked to report on the client's compliance with aspects of contractual agreements, which of the following is correct? A They may so and provide reasonable assurance as to compliance B They may so and provide negative assurance as to compliance C They only may so when details of the contracts have been audited D They may not so 30 Which of the following is accurate relating to audit reports on tax basis financial statements? A No emphasis of matter paragraph is included in the audit report B Use of the report need not be restricted C The purpose of the financial statements should be described in the audit report D Only reports with modified opinions are appropriate 31 Which of the following requires modification of a review report? A A change in accounting principles B A substantial doubt about a company's ability to continue as a going concern C A departure from generally accepted accounting principles D A change in an accounting estimate 19-7 Chapter 19 - Additional Assurance Services: Historical Financial Information 32 Which of the following is correct when a company is issuing summary financial statements developed from audited financial statements? A Such summary statements should always have a CPA's report associated with them when audited financial statements exist B The CPA may issue a report on whether the summary information is fairly stated in all material respects in relation to the basic financial statements C The CPA should perform a compilation and review of the summary financial statements D The CPA who has audited the financial statements who is asked to report on the summary statements should decline the engagement because the summary statements not include all disclosures necessary under generally accepted accounting principles 33 Financial statements that are developed from and summarize the overall information presented in audited financial statements are referred to as: A Agreed-upon procedure financial statements B Compiled financial statements C Summary financial statements D Reviewed financial statements 34 Which of the following is not an example of financial statements that use a special purpose financial reporting framework? A Of a partnership which follows accounting practices used to file its tax return B Prepared for limited purposes such as relating to a contract a company has entered into C Of an organization that has limited the scope of the auditor's examination D Of an organization that follows procedures of a regulatory agency that oversees the company and its operations 35 Whenever a report 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: A Submit a short-form report with explanations B Reword the form or attach a separate report C Submit the form with questionable items clearly omitted D Withdraw from the engagement 19-8 Chapter 19 - Additional Assurance Services: Historical Financial Information 36 During a review of the financial statements of a non-public 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: A Disclose the departure in a separate paragraph of the report B Issue an adverse opinion C Attach a note explaining the effects of the departure D Issue a compilation report 37 The accountants' compilation report should be dated as of the date of: A Completion of fieldwork B Completion of the compilation C Transmittal of the compilation report D The latest subsequent event referred to in the notes to the financial statements 38 A modification of the CPA's report on a review of the interim financial statements of a publicly-held company would be necessitated by which of the following? A An uncertainty B Lack of consistency C Reference to another accountant D Inadequate disclosure 39 A CPA should not normally refer to which one of the following subjects in a "comfort letter" to underwriters? A The independence of the CPA B Changes in financial-statement items during a period subsequent to the date and period of the latest financial statements in the registration statement C Unaudited financial statements and schedules in the registration statement D Management's determination of line of business classifications 19-9 Chapter 19 - Additional Assurance Services: Historical Financial Information 40 Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include: A Analytical procedures designed to identify reportable conditions related to internal control B Inquiries concerning actions taken at meetings of the stockholders and the board of directors C Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter D Inquiries of knowledgeable outside parties such as the client's attorneys and bankers 41 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 A statement that the review was in accordance with generally accepted auditing standards B A statement that all information included in the financial statements are the representations of management C A statement describing the nature of the procedures performed D A statement describing the auditor's conclusions based upon the results of the review 42 The objective of a review of interim financial information is to provide the accountant with a basis for reporting whether: A A reasonable basis exists for expressing an updated opinion regarding the financial statements that were previously audited B Material modifications should be made to conform with generally accepted accounting principles C The financial statements are presented fairly in accordance with standards of interim reporting D The financial statements are presented fairly in accordance with generally accepted accounting principles 43 If the auditor believes that financial statements prepared on the entity's income tax basis are not suitably titled, the auditor should: A Issue a disclaimer of opinion B Explain in the notes to the financial statements the terminology used C Issue a compilation report D Modify the auditor's report to disclose any reservations 19-10 Chapter 19 - Additional Assurance Services: Historical Financial Information 38 A modification of the CPA's report on a review of the interim financial statements of a publicly-held company would be necessitated by which of the following? A An uncertainty B Lack of consistency C Reference to another accountant D Inadequate disclosure AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-07 Discuss how reviews performed under Statements on Standards for Accounting and Review Services differ from those erformed under the Statements on Auditing Standards Source: AICPA Topic: Reviews of Historical Financial Statements 39 A CPA should not normally refer to which one of the following subjects in a "comfort letter" to underwriters? A The independence of the CPA B Changes in financial-statement items during a period subsequent to the date and period of the latest financial statements in the registration statement C Unaudited financial statements and schedules in the registration statement D Management's determination of line of business classifications AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-01 Discuss additional audit-based services; including reporting on compliance with contractual agreements; letters for underwriters; and summary financial statements Source: AICPA Topic: Audit-Based Services—Assurance on Additional Information 19-34 Chapter 19 - Additional Assurance Services: Historical Financial Information 40 Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include: A Analytical procedures designed to identify reportable conditions related to internal control B Inquiries concerning actions taken at meetings of the stockholders and the board of directors C Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter D Inquiries of knowledgeable outside parties such as the client's attorneys and bankers AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-06 Describe the nature of financial statement reviews conducted under Statements on Standards for Accounting and Review Services Source: AICPA Topic: Reviews of Historical Financial Statements 41 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 A statement that the review was in accordance with generally accepted auditing standards B A statement that all information included in the financial statements are the representations of management C A statement describing the nature of the procedures performed D A statement describing the auditor's conclusions based upon the results of the review AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-06 Describe the nature of financial statement reviews conducted under Statements on Standards for Accounting and Review Services Source: AICPA Topic: Reviews of Historical Financial Statements 19-35 Chapter 19 - Additional Assurance Services: Historical Financial Information 42 The objective of a review of interim financial information is to provide the accountant with a basis for reporting whether: A A reasonable basis exists for expressing an updated opinion regarding the financial statements that were previously audited B Material modifications should be made to conform with generally accepted accounting principles C The financial statements are presented fairly in accordance with standards of interim reporting D The financial statements are presented fairly in accordance with generally accepted accounting principles AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-07 Discuss how reviews performed under Statements on Standards for Accounting and Review Services differ from those erformed under the Statements on Auditing Standards Source: AICPA Topic: Reviews of Historical Financial Statements 43 If the auditor believes that financial statements prepared on the entity's income tax basis are not suitably titled, the auditor should: A Issue a disclaimer of opinion B Explain in the notes to the financial statements the terminology used C Issue a compilation report D Modify the auditor's report to disclose any reservations AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Remember Difficulty: Easy Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Source: AICPA Topic: Auditing Financial Statements—Other Than GAAP 19-36 Chapter 19 - Additional Assurance Services: Historical Financial Information 44 An auditor's report on financial statements prepared in accordance with a special purpose financial reporting framework of accounting other than generally accepted accounting principles should include all of the following except: A Reference to the note to the financial statements that describes the basis of preparation of the financial statements B Disclosure that the audit was performed in accordance with generally accepted auditing standards C An opinion as to whether the basis of accounting used is appropriate under the circumstances D An opinion as to whether the financial statements are presented fairly in conformity with the basis of accounting described AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Source: AICPA Topic: Auditing Financial Statements—Other Than GAAP 45 When an auditor reports on financial statements prepared on an entity's income tax basis, the auditor's report should: A Disclose that the income tax basis is a basis of accounting other than generally accepted accounting principles B Disclaim an opinion on whether the statements were examined in accordance with generally accepted auditing standards C Not express an opinion on whether the statements are presented in conformity with the basis of accounting used D Include an explanation of how the results of operations differ from the cash receipts and disbursements basis of accounting AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Source: AICPA Topic: Auditing Financial Statements—Other Than GAAP 19-37 Chapter 19 - Additional Assurance Services: Historical Financial Information 46 An auditor's report would be designated as a report on financial statements following a special purpose financial reporting framework for financial statements when they are: A For an interim period and are subjected to a review B Unaudited and are prepared from a client's accounting records C Prepared in accordance with a regulatory basis of accounting other than generally accepted accounting principles D Purported to be in accordance with generally accepted accounting principles but not include a presentation of the statement of cash flows AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Source: AICPA Topic: Auditing Financial Statements—Other Than GAAP 47 The underwriter of a securities offering may request that an auditor perform specified procedures and supply certain assurances concerning unaudited information contained in a registration statement The auditor's response to such a request is commonly called a: A Report under federal security statutes B Comfort letter C Review of interim financial information D Compilation report for underwriters AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting Bloom's: Remember Difficulty: Easy Learning Objective: 19-01 Discuss additional audit-based services; including reporting on compliance with contractual agreements; letters for underwriters; and summary financial statements Source: AICPA Topic: Audit-Based Services—Assurance on Additional Information 19-38 Chapter 19 - Additional Assurance Services: Historical Financial Information 48 Comfort letters are ordinarily signed by the: A Client B Client's lawyer C Independent auditor D Internal auditor AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting Bloom's: Remember Difficulty: Easy Learning Objective: 19-01 Discuss additional audit-based services; including reporting on compliance with contractual agreements; letters for underwriters; and summary financial statements Source: AICPA Topic: Audit-Based Services—Assurance on Additional Information 49 Which of the following circumstances requires modification of the accountant's report on a review of interim financial information of publicly held entity? A Option A B Option B C Option C D Option D AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-07 Discuss how reviews performed under Statements on Standards for Accounting and Review Services differ from those erformed under the Statements on Auditing Standards Source: AICPA Topic: Reviews of Historical Financial Statements 19-39 Chapter 19 - Additional Assurance Services: Historical Financial Information 50 If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting not disclose the basis of accounting used, the accountant should: A Disclose the basis in the notes to the financial statements B Clearly label each page "Unaudited." C Disclose the basis of accounting in the accountant's report D Recompile the financial statements using generally accepted accounting principles AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Source: AICPA Topic: Auditing Financial Statements—Other Than GAAP 51 An auditor is reporting on cash basis financial statements These statements are best referred to in his opinion by which of the following descriptions? A Financial position and results of operation arising from cash transactions B Assets and liabilities arising from cash transactions, and revenue collected and expenses paid C Balance sheet and income statement resulting from cash transactions D Cash balance sheet and the source and application of funds AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Source: AICPA Topic: Auditing Financial Statements—Other Than GAAP 19-40 Chapter 19 - Additional Assurance Services: Historical Financial Information 52 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 A statement that a compilation is limited to presenting in the form of financial statements information that is the representation of management B A statement that the compilation was performed in accordance with standards established by the American Institute of CPAs C A statement that the accountant has not audited or reviewed the financial statements D A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-06 Describe the nature of financial statement reviews conducted under Statements on Standards for Accounting and Review Services Source: AICPA Topic: Reviews of Historical Financial Statements 53 Each page of the financial statements compiled by an accountant should include a reference such as: A See accompanying accountant's notes B Unaudited, see accountant's disclaimer C See accountant's compilation report D Subject to compilation restrictions AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting Bloom's: Remember Difficulty: Easy Learning Objective: 19-08 Explain the accountant's responsibilities when performing a compilation of financial statements Source: AICPA Topic: Compilations of Historical Financial Statements 19-41 Chapter 19 - Additional Assurance Services: Historical Financial Information 54 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: A Disclose the departure in a separate paragraph of the report B Issue an adverse opinion C Attach a note explaining the effects of the departure D Issue a compilation report AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-08 Explain the accountant's responsibilities when performing a compilation of financial statements Source: AICPA Topic: Compilations of Historical Financial Statements 55 Which of the following is an auditor least likely to inquire about when performing a review of a nonpublic company? A Significant transactions near the end of the period B Communications with regulatory agencies C That financial statements are prepared in conformity with a special basis of accounting D Questions that have arisen in applying review procedures AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Topic: Auditing Financial Statements—Other Than GAAP 19-42 Chapter 19 - Additional Assurance Services: Historical Financial Information 56 When performing a review of a nonpublic company, the auditors must obtain in a representation letter acknowledgement of management for its responsibility for each of the following except: A Responsibility for identifying illegal acts committed by employees B Responsibility for the financial statements conforming with generally accepted accounting principles C Responsibility to prevent and detect fraud D Knowledge of any actual or suspected fraud that is material AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-06 Describe the nature of financial statement reviews conducted under Statements on Standards for Accounting and Review Services Topic: Reviews of Historical Financial Statements 19-43 Chapter 19 - Additional Assurance Services: Historical Financial Information Essay Questions 57 Items a through j present various phrases or characteristics that may apply to audits, reviews, and compilations Place an X in the cell if the phrase or characteristic applies to the listed service: 19-44 Chapter 19 - Additional Assurance Services: Historical Financial Information AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-06 Describe the nature of financial statement reviews conducted under Statements on Standards for Accounting and Review Services Learning Objective: 19-08 Explain the accountant's responsibilities when performing a compilation of financial statements Topic: Compilations of Historical Financial Statements Topic: Reviews of Historical Financial Statements 19-45 Chapter 19 - Additional Assurance Services: Historical Financial Information 58 The financial statements of nonpublic companies may be compiled or reviewed by the CPAs a Describe a compilation of financial statements b Describe a review of financial statements c Describe three procedures that are performed in the review of a nonpublic company's financial statements a A compilation is limited to taking the representations of management and putting them in the form of financial statements No explicit assurance is provided on the financial statements b A review of financial statements involves the performance of inquiry and analytical procedures to provide the accountants with a reasonable basis for expressing limited assurance that the financial statements are in accordance with generally accepted accounting principles c Procedures performed in the review of financial statements include (only three required):  Inquiries of officers and other executives  Analytical procedures applied to financial data by reference to prior financial data, budgets, and other operating data  Inquiries concerning actions taken in meetings of stockholders, board of directors, and committees of the board  Additional procedures if the accountants become aware that the information may be incorrect, incomplete, or otherwise unsatisfactory AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 19-08 Explain the accountant's responsibilities when performing a compilation of financial statements Topic: Compilations of Historical Financial Statements 19-46 Chapter 19 - Additional Assurance Services: Historical Financial Information 59 One may envision a continuum of assurance ranging from absolute assurance to no assurance In between may be reasonable assurance, limited assurance, and a summary of findings with no other assurance a What level of assurance is provided in the CPA's report by each of the following types of engagements?  Examinations  Audits  Review  Agreed-upon procedures  Compilations b What type of assurance is provided on financial statements prepared following a special purpose basis of accounting other than generally accepted accounting principles? 19-47 Chapter 19 - Additional Assurance Services: Historical Financial Information a Assurance provided:  Examinations reasonable assurance  Audits reasonable assurance  Review limited assurance  Agreed-upon procedures summary of findings  Compilations no assurance b The assurance provided is dependent upon the nature of the service provided With financial statements the options (and assurance) possible are audit (reasonable assurance), review (limited assurance), and compilations (no assurance) Additionally, agreed-upon procedures could be applied to various elements, accounts or items of the financial statements (a summary of findings would be provided) AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 19-01 Discuss additional audit-based services; including reporting on compliance with contractual agreements; letters for underwriters; and summary financial statements Learning Objective: 19-02 Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued Learning Objective: 19-06 Describe the nature of financial statement reviews conducted under Statements on Standards for Accounting and Review Services Learning Objective: 19-08 Explain the accountant's responsibilities when performing a compilation of financial statements Topic: Audit-Based Services—Assurance on Additional Information Topic: Auditing Financial Statements—Other Than GAAP Topic: Compilations of Historical Financial Statements Topic: Reviews of Historical Financial Statements 19-48 ... Services: Historical Financial Information Chapter 19 Additional Assurance Services: Historical Financial Information Answer Key True / False Questions An audit opinion on cash basis financial statements... involved in auditing personal financial statements Topic: Additional GAAS Audits 19-17 Chapter 19 - Additional Assurance Services: Historical Financial Information Personal financial statements may... Services Assurance on Additional Information 19-19 Chapter 19 - Additional Assurance Services: Historical Financial Information 10 When a U.S.-based organization prepares financial statements