chapter 20 test bank additional assurance services

Chapter 20 - Additional Assurance Services: Other Information Chapter 20 Additional Assurance Services: Other Information True / False Questions Assurance services improve the quality of information or its context for decision makers True False Attestation services are similar, but go beyond assurance services in scope of procedures and reporting True False Independence is required for the performance of all assurance services True False Practitioners may report on either an assertion about the subject matter, or on the subject matter for most attestation engagements True False Attestation risk, like audit risk consists of three components inherent risk, control risk, and substantiation risk True False The attestation standards prohibit the examination of prospective financial statements True False A practitioner may be engaged to perform a review of management's discussion and analysis for an annual or an interim period True False 20-1 Chapter 20 - Additional Assurance Services: Other Information Trust Services assure consumers that they will be satisfied with their purchases True False Trust Services are a part of the AICPA's vision that increased trust in annual historical financial statements is necessary True False 10 SysTrust engagements relate only to database systems True False Multiple Choice Questions 11 Which of the following is least likely to be included in an agreed-upon procedures attestation engagement report? A The specified party takes responsibility for the sufficiency of procedures B Use of the report is restricted C Limited assurance on the information presented D A summary of procedures performed 12 In an engagement relating to a nonpublic company, conditions exist that result in a material deviation from the criteria against which the subject matter was evaluated during an examination performed following the attestation standards The CPA's conclusion may be on: A Option A B Option B C Option C D Option D 20-2 Chapter 20 - Additional Assurance Services: Other Information 13 Suitable criteria in an attestation engagement may be available: A Option A B Option B C Option C D Option D 14 When performing an attestation examination engagement, the standards not require which of the following? A Assertion B Practitioner independence C Subject matter D Suitable criteria 15 Which of the following engagements is most likely to consider security, availability, processing integrity, confidentiality, and privacy relating to a system? A Internal control over financial reporting B Trust Services C Website Associate D Financial statement audit 20-3 Chapter 20 - Additional Assurance Services: Other Information 16 Which of the following are Trust Services principles? A Option A B Option B C Option C D Option D 17 Which of the following is the least likely to be considered subject matter of an attestation engagement? A Assertion B Behavior C Historical event D Systems and processes 18 Arel, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by Modit Co regarding Modit's written assertion about its compliance with contractual requirements to pay royalties Arel's report on these agreed-upon procedures should contain a(n): A Disclaimer of opinion about the fair presentation of Modit's financial statements B List of the procedures performed (or reference thereto) and Arel's findings C Opinion about the effectiveness of Modit's internal control activities concerning royalty payments D Acknowledgment that the sufficiency of the procedures is solely Arel's responsibility 20-4 Chapter 20 - Additional Assurance Services: Other Information 19 Assurance services performed for decision makers may address the: A Option A B Option B C Option C D Option D 20 Which of the following is least likely to be structured as an attest engagement? A An elder care engagement B A SysTrust engagement C An examination of internal control over financial reporting for a nonpublic company D A review of management's discussion and analysis 21 Which of the following are required on all attestation engagements? A Option A B Option B C Option C D Option D 20-5 Chapter 20 - Additional Assurance Services: Other Information 22 Which of the following is not currently an acceptable form of association with prospective financial statements? A Compilation B Review C Agreed-upon procedures D Examination 23 When a practitioner examines projected financial statements, the practitioner's report should include a separate paragraph that: A Describes the limitations on the usefulness of the presentation B Provides an explanation of the differences between an examination and a review C States that the accountant is responsible for events and circumstances for a period not exceeding one year after the report's date D Disclaims an opinion on whether the assumptions provide a reasonable basis for the projection 24 Which of the following is correct relating to an engagement to apply agreed-upon procedures to prospective financial statements? A Use of the report is restricted to the specified users B Such engagements are permissible for forecasts but not for projections C Responsibility for the adequacy of the procedures performed is taken by the practitioner D Such engagements are not permissible under the professional standards 25 When a financial forecast fails to disclose a significant assumption used to prepare that forecast, which of the following reports become appropriate? A Option A B Option B C Option C D Option D 20-6 Chapter 20 - Additional Assurance Services: Other Information 26 When reporting upon a review engagements on an entity's management discussion and analysis, the report is ordinarily: A A general use report B A restricted use report C Required to include a disclaimer of opinion D Included with the entity's report on internal control over financial reporting 27 A Type service auditor's report addresses: A Only management's description and design of its controls B Management's description and design of its controls and control operating effectiveness C Only control operating effectiveness D Control operating effectiveness and primary assertion reliability 28 A CPA service relating elderly clients is referred to as: A ElderAssure B PrimePlus/ElderCare Services C Elder Care Plus D Prime of Life Care 29 An international information format designed specifically for business information: A ERP B XML C Integrated Systems Format D XBRL 30 Providing assurance using a series of reports provided simultaneously or shortly after the related information is released is referred to as: A Continuous auditing B Serial auditing C Systems reliability auditing D Simultaneity auditing 20-7 Chapter 20 - Additional Assurance Services: Other Information 31 The organization that was established to identify, develop and communicate new assurance service opportunities is the: A Assurance Services Executive Committee B Attestation Standards Board C Auditing Standards Board D Counsel of Executives 32 Many new assurance services are performed in accordance with Statements on: A Standards for Attestation Services B Generally Accepted Assurance Standards C Auditing Standards D Accounting for other Assurance Services 33 Independence is required when performing: A Option A B Option B C Option C D Option D 20-8 Chapter 20 - Additional Assurance Services: Other Information 34 A practitioner's unqualified (unmodified) opinion based upon an examination may ordinarily be on: A Option A B Option B C Option C D Option D 35 Which attest engagement aligns most directly with a financial statement audit in terms of assurance provided? A Agreed-upon procedures B Evaluation C Examination D Review 36 The WebTrust engagement relates most directly to: A Financial statements maintained on the Internet B Health care facilities C Risk assurance procedures D Electronic commerce systems 37 Under the attestation standards, in which of the following circumstances is a review report least likely to be issued? A Criteria are agreed-upon or only available to specified users B Established criteria exist, but other criteria are used C The subject matter departs from the criteria D A significant limitation on the scope of the engagement has occurred 20-9 Chapter 20 - Additional Assurance Services: Other Information 38 To accept an engagement to examine a client's MD&A for annual financial statements, the practitioners ordinarily must have: A Audited the most recent financial statement period to which the MD&A applies B Determined that the client reports to the Securities and Exchange Commission C Performed a detailed analysis of the client's controls over decision making D Reviewed the quarterly MD&A information 39 Which of the following is correct concerning service auditor and SysTrust reports? A They both result in restricted use reports B A client must engage the CPA to perform both services as neither may be selected independently of the other C They both address system reliability D They represent different names for the same service 40 The five principles of a reliable system considered in a Trust Services engagement include security, availability, processing integrity, privacy, and: A Control B Confidentiality C Relevance D Reliability 41 When a CPA is associated with a forecast, all of the following should be disclosed except the: A Sources of information B Character of the work performed by the CPA C Major assumptions in the preparation of the forecast D Probability of achieving estimates 42 Which of the following is a prospective financial statement for general use upon which a practitioner may appropriately report? A Financial projection B Partial presentation C Pro forma financial statement D Financial forecast 20-10 Chapter 20 - Additional Assurance Services: Other Information 22 Which of the following is not currently an acceptable form of association with prospective financial statements? A Compilation B Review C Agreed-upon procedures D Examination AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Topic: Attestation Standards—Examples 23 When a practitioner examines projected financial statements, the practitioner's report should include a separate paragraph that: A Describes the limitations on the usefulness of the presentation B Provides an explanation of the differences between an examination and a review C States that the accountant is responsible for events and circumstances for a period not exceeding one year after the report's date D Disclaims an opinion on whether the assumptions provide a reasonable basis for the projection AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Topic: Attestation Standards—Examples 20-24 Chapter 20 - Additional Assurance Services: Other Information 24 Which of the following is correct relating to an engagement to apply agreed-upon procedures to prospective financial statements? A Use of the report is restricted to the specified users B Such engagements are permissible for forecasts but not for projections C Responsibility for the adequacy of the procedures performed is taken by the practitioner D Such engagements are not permissible under the professional standards AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Topic: Attestation Standards—Examples 25 When a financial forecast fails to disclose a significant assumption used to prepare that forecast, which of the following reports become appropriate? 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: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Topic: Attestation Standards—Examples 20-25 Chapter 20 - Additional Assurance Services: Other Information 26 When reporting upon a review engagements on an entity's management discussion and analysis, the report is ordinarily: A A general use report B A restricted use report C Required to include a disclaimer of opinion D Included with the entity's report on internal control over financial reporting AACSB: Analytic AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement Bloom's: Understand Difficulty: Medium Learning Objective: 20-05 Describe the fundamental attributes of attestation services for management discussion and analysis Topic: Attestation Standards—Examples 27 A Type service auditor's report addresses: A Only management's description and design of its controls B Management's description and design of its controls and control operating effectiveness C Only control operating effectiveness D Control operating effectiveness and primary assertion reliability AACSB: Analytic AACSB: Communication AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Bloom's: Understand Difficulty: Medium Learning Objective: 20-06 Describe the nature of Trust Services Topic: Attestation Standards—Examples 20-26 Chapter 20 - Additional Assurance Services: Other Information 28 A CPA service relating elderly clients is referred to as: A ElderAssure B PrimePlus/ElderCare Services C Elder Care Plus D Prime of Life Care AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Bloom's: Remember Difficulty: Easy Learning Objective: 20-07 Describe the nature of PrimePlus/ElderCare services Topic: Attestation Standards—Examples 29 An international information format designed specifically for business information: A ERP B XML C Integrated Systems Format D XBRL AACSB: Analytic AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology AICPA FN: Measurement Bloom's: Remember Difficulty: Easy Learning Objective: 20-08 List several developing assurance services Topic: Attestation Standards—Examples 20-27 Chapter 20 - Additional Assurance Services: Other Information 30 Providing assurance using a series of reports provided simultaneously or shortly after the related information is released is referred to as: A Continuous auditing B Serial auditing C Systems reliability auditing D Simultaneity auditing AACSB: Analytic AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology AICPA FN: Measurement Bloom's: Remember Difficulty: Easy Learning Objective: 20-08 List several developing assurance services Topic: Attestation Standards—Examples 31 The organization that was established to identify, develop and communicate new assurance service opportunities is the: A Assurance Services Executive Committee B Attestation Standards Board C Auditing Standards Board D Counsel of Executives AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Bloom's: Understand Difficulty: Medium Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits Topic: Assurance Services 20-28 Chapter 20 - Additional Assurance Services: Other Information 32 Many new assurance services are performed in accordance with Statements on: A Standards for Attestation Services B Generally Accepted Assurance Standards C Auditing Standards D Accounting for other Assurance Services AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement AICPA FN: Risk Analysis Bloom's: Understand Difficulty: Medium Learning Objective: 20-02 Explain the applicability of the attestation standards Topic: Attestation Standards 33 Independence is required when performing: A Option A B Option B C Option C D Option D AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Bloom's: Understand Difficulty: Medium Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits Topic: Assurance Services 20-29 Chapter 20 - Additional Assurance Services: Other Information 34 A practitioner's unqualified (unmodified) opinion based upon an examination may ordinarily be on: A Option A B Option B C Option C D Option D AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement AICPA FN: Risk Analysis Bloom's: Understand Difficulty: Medium Learning Objective: 20-02 Explain the applicability of the attestation standards Topic: Attestation Standards 35 Which attest engagement aligns most directly with a financial statement audit in terms of assurance provided? A Agreed-upon procedures B Evaluation C Examination D Review AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement AICPA FN: Risk Analysis Bloom's: Remember Difficulty: Easy Learning Objective: 20-02 Explain the applicability of the attestation standards Topic: Attestation Standards 20-30 Chapter 20 - Additional Assurance Services: Other Information 36 The WebTrust engagement relates most directly to: A Financial statements maintained on the Internet B Health care facilities C Risk assurance procedures D Electronic commerce systems AACSB: Analytic AACSB: Communication AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Bloom's: Remember Difficulty: Easy Learning Objective: 20-06 Describe the nature of Trust Services Source: AICPA Topic: Attestation Standards—Examples 37 Under the attestation standards, in which of the following circumstances is a review report least likely to be issued? A Criteria are agreed-upon or only available to specified users B Established criteria exist, but other criteria are used C The subject matter departs from the criteria D A significant limitation on the scope of the engagement has occurred AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Bloom's: Apply Difficulty: Hard Learning Objective: 20-03 Describe the nature of attestation engagements; including examinations; reviews; and agreed-upon procedures engagements Topic: Attestation Standards 20-31 Chapter 20 - Additional Assurance Services: Other Information 38 To accept an engagement to examine a client's MD&A for annual financial statements, the practitioners ordinarily must have: A Audited the most recent financial statement period to which the MD&A applies B Determined that the client reports to the Securities and Exchange Commission C Performed a detailed analysis of the client's controls over decision making D Reviewed the quarterly MD&A information AACSB: Analytic AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement Bloom's: Apply Difficulty: Hard Learning Objective: 20-05 Describe the fundamental attributes of attestation services for management discussion and analysis Topic: Attestation Standards—Examples 39 Which of the following is correct concerning service auditor and SysTrust reports? A They both result in restricted use reports B A client must engage the CPA to perform both services as neither may be selected independently of the other C They both address system reliability D They represent different names for the same service AACSB: Analytic AACSB: Communication AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Bloom's: Understand Difficulty: Medium Learning Objective: 20-06 Describe the nature of Trust Services Topic: Attestation Standards—Examples 20-32 Chapter 20 - Additional Assurance Services: Other Information 40 The five principles of a reliable system considered in a Trust Services engagement include security, availability, processing integrity, privacy, and: A Control B Confidentiality C Relevance D Reliability AACSB: Analytic AACSB: Communication AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Bloom's: Understand Difficulty: Medium Learning Objective: 20-06 Describe the nature of Trust Services Topic: Attestation Standards—Examples 41 When a CPA is associated with a forecast, all of the following should be disclosed except the: A Sources of information B Character of the work performed by the CPA C Major assumptions in the preparation of the forecast D Probability of achieving estimates AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Source: AICPA Topic: Attestation Standards—Examples 20-33 Chapter 20 - Additional Assurance Services: Other Information 42 Which of the following is a prospective financial statement for general use upon which a practitioner may appropriately report? A Financial projection B Partial presentation C Pro forma financial statement D Financial forecast AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Source: AICPA Topic: Attestation Standards—Examples 43 The party responsible for assumptions identified in the preparation of prospective financial statements is usually: A A third-party lending institution B The client's management C The reporting accountant D The client's independent auditor AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Remember Difficulty: Easy Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Source: AICPA Topic: Attestation Standards—Examples 20-34 Chapter 20 - Additional Assurance Services: Other Information 44 Given one or more hypothetical assumptions, a responsible party may prepare an entity's expected financial position, results of operations, and changes in financial position Such prospective financial statements are known as: A Pro forma financial statements B Financial projections C Partial Presentation D Financial forecasts AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Source: AICPA Topic: Attestation Standards—Examples 45 Accepting an engagement to examine an entity's financial projection most likely would be appropriate if the projection were to be distributed to: A All employees who work for the entity B Potential stockholders who request a prospectus or a registration statement C A bank with which the entity is negotiating for a loan D All stockholders of record as of the report date AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Apply Difficulty: Hard Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Source: AICPA Topic: Attestation Standards—Examples 20-35 Chapter 20 - Additional Assurance Services: Other Information 46 When an accountant compiles a financial forecast, the accountant's report should include a(n): A Explanation of the differences between a financial forecast and a financial projection B Caveat that the prospective results of the financial forecast may not be achieved C Statement that the accountant's responsibility to update the report is limited to one year D Disclaimer of opinion on the reliability of the entity's internal controls AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Source: AICPA Topic: Attestation Standards—Examples 20-36 Chapter 20 - Additional Assurance Services: Other Information Essay Questions 47 Following are a set of statements For each statement indicate with an "X" whether it is correct with respect to an examination, a review, and an agreed-upon procedures engagement Each statement may relate to none, one or more services 20-37 Chapter 20 - Additional Assurance Services: Other Information AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Bloom's: Understand Difficulty: Medium Learning Objective: 20-03 Describe the nature of attestation engagements; including examinations; reviews; and agreed-upon procedures engagements Topic: Attestation Standards 48 The Warren Corporation wants to enhance the market value of its stock by including in its annual report a financial forecast for the next year They also would like to have their auditors examine the forecast a Define a financial forecast b Is an examination of a financial forecast similar in scope to a review of financial statements? Explain a A financial forecast is "an estimate of the most probable financial position, results of operations, and changes in financial position for one or more future periods." b No An examination of a financial forecast involves an extensive examination of the assumptions underlying the forecast, to satisfy the CPAs that management has identified all key assumptions and that the assumptions are suitably supported AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA BB: Legal AICPA FN: Measurement AICPA FN: Reporting Bloom's: Understand Difficulty: Medium Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements Topic: Attestation Standards—Examples 20-38 ... differences among assurance services; attestation services; and audits Topic: Assurance Services 20-28 Chapter 20 - Additional Assurance Services: Other Information 32 Many new assurance services are... Describe the differences among assurance services; attestation services; and audits Topic: Assurance Services Attestation services are similar, but go beyond assurance services in scope of procedures... 20-01 Describe the differences among assurance services; attestation services; and audits Topic: Assurance Services 20-15 Chapter 20 - Additional Assurance Services: Other Information Attestation