Title chapter 25.doc ✅

1 Copyright © 2017 Pearson Education, Inc. Auditing and Assurance Services, 16e (Arens/Elder/Beasley) Chapter 25 Other Assurance Services 25.1 Learning Objective 25-1 1) The standards for preparation, compilation, and review engagements of financial statements are the A) AICPA's Code of Professional Conduct. B) Statements on Auditing Standards (SASs). C) Statements of Standards on Attestation Engagements (SSAEs). D) Statements on Standards for Accounting and Review Services (SSARS). Answer: D Terms: Review, compilation, and preparation services Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking 2) Two of the types of services provided in connection with the Statements on Standards for Accounting and Review Services are A) audit and examination services. B) compilation and review services. C) examination and review services. D) management advisory services and compilations. Answer: B Terms: Statements on Standards for Accounting and Review Services (SSARS) Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking 3) Practitioners who perform preparation, compilation, or review engagements are referred to in the Statements on Standards for Accounting and Review Services (SSARS) standards as A) bookkeepers. B) accountants. C) auditors. D) CPAs. Answer: B Terms: Preparation, compilation, and review engagements; SSARS standards Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking
2 Copyright © 2017 Pearson Education, Inc. 4) Compilation reports may be of all except which of the following types? A) compilation with limited independence B) compilation with full disclosure C) compilation without independence D) compilation that omits substantially all disclosures Answer: A Terms: Compilation reports Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking 5) A CPA firm can issue a compilation report A) only if the partners are independent. B) only if all the partners and the staff in the office performing the engagement are independent. C) if the partners have no material or direct immaterial interest in client. D) even if it is not independent. Answer: D Terms: Compilation reports Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking 6) 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 is the representation of management C) a statement that the review primarily consists of analytical procedures and inquiries D) a statement that the accountant has conducted a review Answer: A Terms: CPA's report; Review of financial statements; Nonpublic entity Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking 7) The statement that "We are not aware of any material modifications that should be made to the accompanying financial statements" expresses which of the following? A) disclaimer of an opinion B) negative assurance C) negative confirmation D) shared opinion Answer: B Terms: Negative assurance Diff: Easy Objective: LO 25-1 AACSB: Reflective thinking
3 Copyright © 2017 Pearson Education, Inc. 8) For compilations, an accountant does which of the following? A) Obtain an understanding of internal control. Perform tests of controls. Perform tests of transactions. Yes Yes No B) Obtain an understanding of internal control. Perform tests of controls. Perform tests of transactions. Yes No Yes C) Obtain an understanding of internal control. Perform tests of controls. Perform tests of transactions. No Yes Yes D) Obtain an understanding of internal control. Perform tests of controls. Perform tests of transactions. No No No Answer: D Terms: Compilation Diff: Moderate Objective: LO 25-1 AACSB: Reflective thinking 9) The concept of limited assurance is provided for in which of the following engagements? A) audit B) review C) compilation D) agreed-upon procedures Answer: B Terms: Limited assurance; Engagements Diff: Moderate Objective: LO 25-1 AACSB: Reflective thinking
4 Copyright © 2017 Pearson Education, Inc. 10) Evidence for a review engagement consists primarily of A) Inquiries Analytical procedures Tests of details No Yes No B) Inquiries Analytical procedures Tests of details Yes Yes No C) Inquiries Analytical procedures Tests of details No No Yes D) Inquiries Analytical procedures Tests of details Yes No Yes Answer: B Terms: Evidence for review engagement Diff: Moderate Objective: LO 25-1 AACSB: Reflective thinking 11) When the accountant has performed a review and has determined that no material changes to the financial statements are needed, the first paragraph of the review report A) expresses positive assurance about the financial statements. B) notes the accountant's responsibility to conduct the review. C) identifies the entity and the period of financial statements subject to the review. D) specifies that management is responsible for the financial statements. Answer: C Terms: Review of financial statement; Report Diff: Moderate Objective: LO 25-1 AACSB: Reflective thinking 12) The highest level of assurance is provided for in which one of the following engagements? A) review B) compilation C) audit D) preparation service Answer: C Terms: Concept of reasonable assurance Diff: Moderate Objective: LO 25-1 AACSB: Analytic thinking