Which of the following is correct relating to an engagement to apply agreed-upon procedures to prospective financial statements.. Learning Objective: 20-01 Describe the differences among
Trang 1Chapter 20 Additional Assurance Services: Other Information
True / False Questions
1 Assurance services improve the quality of information or its context for decision makers True False
2 Attestation services are similar, but go beyond assurance services in scope of procedures and reporting
Trang 28 Trust Services assure consumers that they will be satisfied with their purchases
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:
Trang 313 Suitable criteria in an attestation engagement may be available:
14 When performing an attestation examination engagement, the standards do not require
which of the following?
Trang 416 Which of the following are Trust Services principles?
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
Trang 519 Assurance services performed for decision makers may address the:
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?
Trang 622 Which of the following is not currently an acceptable form of association with prospective
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?
Trang 726 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 2 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:
Trang 831 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:
Trang 934 A practitioner's unqualified (unmodified) opinion based upon an examination may
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
Trang 1038 To accept an engagement to examine a client's MD&A for annual financial statements, thepractitioners 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 includesecurity, availability, processing integrity, privacy, and:
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
Trang 1143 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
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
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
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
Trang 12Essay 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
Trang 1348 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
Trang 14Chapter 20 Additional Assurance Services: Other Information Answer Key
True / False Questions
1 Assurance services improve the quality of information or its context for decision makers
Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits.
Topic: Assurance Services
2 Attestation services are similar, but go beyond assurance services in scope of procedures and reporting
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
Trang 153 Independence is required for the performance of all assurance services
Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits.
Topic: Assurance Services
4 Practitioners may report on either an assertion about the subject matter, or on the subject matter for most attestation engagements
Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits.
Topic: Assurance Services
Trang 165 Attestation risk, like audit risk consists of three components inherent risk, control risk, andsubstantiation risk
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
6 The attestation standards prohibit the examination of prospective financial statements
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
7 A practitioner may be engaged to perform a review of management's discussion and
analysis for an annual or an interim period
Learning Objective: 20-05 Describe the fundamental attributes of attestation services for management discussion and analysis.
Topic: Attestation Standards—Examples
Trang 178 Trust Services assure consumers that they will be satisfied with their purchases
AICPA BB: Leveraging Technology
AICPA FN: Leveraging Technology
Learning Objective: 20-06 Describe the nature of Trust Services.
Topic: Attestation Standards—Examples
9 Trust Services are a part of the AICPA's vision that increased trust in annual historical financial statements is necessary
AICPA BB: Leveraging Technology
AICPA FN: Leveraging Technology
Learning Objective: 20-06 Describe the nature of Trust Services.
Topic: Attestation Standards—Examples
Trang 1810 SysTrust engagements relate only to database systems
AICPA BB: Leveraging Technology
AICPA FN: Leveraging Technology
Learning Objective: 20-06 Describe the nature of Trust Services.
Topic: Attestation Standards—Examples
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
Trang 1912 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:
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
13 Suitable criteria in an attestation engagement may be available:
Trang 2014 When performing an attestation examination engagement, the standards do not require
which of the following?
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
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
AICPA BB: Leveraging Technology
AICPA FN: Leveraging Technology
Learning Objective: 20-06 Describe the nature of Trust Services.
Topic: Attestation Standards—Examples
Trang 2116 Which of the following are Trust Services principles?
AICPA BB: Leveraging Technology
AICPA FN: Leveraging Technology
Learning Objective: 20-06 Describe the nature of Trust Services.
Topic: Attestation Standards—Examples
17 Which of the following is the least likely to be considered subject matter of an attestation
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
Trang 2218 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
Topic: Attestation Standards
19 Assurance services performed for decision makers may address the:
Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits.
Topic: Assurance Services
Trang 2320 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
Learning Objective: 20-01 Describe the differences among assurance services; attestation services; and audits.
Topic: Assurance Services
21 Which of the following are required on all attestation engagements?
Learning Objective: 20-02 Explain the applicability of the attestation standards.
Topic: Attestation Standards
Trang 2422 Which of the following is not currently an acceptable form of association with prospective
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
Learning Objective: 20-04 Describe the fundamental attributes of attestation services for prospective financial statements.
Topic: Attestation Standards—Examples