Auditing & Attestation AUD CPA Exam Questions

1. Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle.

Which of the following should the auditor consider the most authoritative?

2. For an entity's financial statements to be presented fairly in conformity with generally accepted accounting principles, the principles selected should:

3. Which of the following statements is correct concerning an auditor's responsibilities regarding financial statements?

4. Which of the following provides the most authoritative guidance for an auditor?

5. Which of the following accurately depicts the auditor's responsibility with respect to Statements on Auditing Standards?

6. In the first audit of a new client, an auditor was able to extend auditing procedures to gather sufficient evidence about consistency. Under these circumstances, the auditor should:

7. The third general standard states that due care is to be exercised in the performance of an audit.

This standard is ordinarily interpreted to require:

8. The concept of materiality would be least important to an auditor when considering the:

9. An auditor of a nonpublic company must conduct the audit in accordance with:

I. ASB standards.

II. PCAOB standards.

10. Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of:

11. Which of the following categories is included in generally accepted auditing standards?

12. When qualifying an opinion because of an insufficiency of audit evidence, an auditor should refer to the situation in the:

13. When an auditor believes there is substantial doubt about the ability of an entity to continue as a going concern, all of the following should be included in the audit documentation, except:

14. After considering an entity's negative trends and financial difficulties, an auditor has substantial doubt about the entity's ability to continue as a going concern.

The auditor's considerations relating to management's plans for dealing with the adverse effects of these conditions most likely would include management's plans to:

15. In which of the following situations would an auditor ordinarily choose between expressing a qualified opinion or an adverse opinion?

16. Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern?

17. In the first audit of a client, an auditor was not able to gather sufficient evidence about the consistent application of accounting principles between the current and prior year, as well as the amounts of assets or liabilities at the beginning of the current year. This was due to the client's record retention policies.

If the amounts in question could materially affect current operating results, the auditor would:

18. Pell, CPA, decides to serve as principal auditor in the audit of the financial statements of Tech Consolidated, Inc. Smith, CPA, audits one of Tech's subsidiaries.

In which situation(s) should Pell make reference to Smith's audit?

I. Pell reviews Smith's audit documentation and assumes responsibility for Smith's work, but expresses a qualified opinion on Tech's financial statements.

II. Pell is unable to review Smith's audit documentation; however, Pell's inquiries indicate that Smith has an excellent reputation for professional competence and integrity.

19. Cooper, CPA, believes there is substantial doubt about the ability of Zero Corp. to continue as a going concern for a reasonable period of time.

In evaluating Zero's plans for dealing with the adverse effects of future conditions and events, Cooper most likely would consider, as a mitigating factor, Zero's plans to:

20. Which of the following statements is a basic element of the auditor's standard report?

21. An auditor may not issue a qualified opinion when:

22. An auditor most likely would express an unqualified opinion and would not add explanatory language to the report if the auditor:

23. An auditor would express an unqualified opinion with an explanatory paragraph added to the auditor's report for:

24. Digit Co. uses the FIFO method of costing for its international subsidiary's inventory and LIFO for its domestic inventory.

Under these circumstances, the auditor's report on Digit's financial statements should express an:

25. In which of the following circumstances would an auditor not express an unqualified opinion?

26. Management of Edington Industries plans to disclose an uncertainty as follows: The Company is a defendant in a lawsuit alleging infringement of certain patent rights and claiming damages. Discovery proceedings are in progress. The ultimate outcome of the litigation cannot presently be determined. Accordingly, no provision for any liability that may result upon adjudication has been made in the accompanying financial statements. The auditor is satisfied that sufficient audit evidence supports management's assertions about the nature and disclosure of the uncertainty.

What type of opinion should the auditor express under these circumstances?

27. Kane, CPA, concludes that there is substantial doubt about Lima Co.'s ability to continue as a going concern for a reasonable period of time.

If Lima's financial statements adequately disclose its financial difficulties, Kane's auditor's report is required to include an explanatory paragraph that specifically uses the phrase(s):

28. Mead, CPA, had substantial doubt about Tech Co.'s ability to continue as a going concern when reporting on Tech's audited financial statements for the year ended June 30, 19X4. That doubt has been removed in 19X5.

What is Mead's reporting responsibility if Tech is presenting its financial statements for the year ended June 30, 19X5, on a comparative basis with those of 19X4?

29. March, CPA, is engaged by Monday Corp., a client, to audit the financial statements of Wall Corp., a company that is not March's client. Monday expects to present Wall's audited financial statements with March's auditor's report to 1st Federal Bank to obtain financing in Monday's attempt to purchase Wall.

In these circumstances, March's auditor's report would usually be addressed to:

30. An auditor issued an audit report that was dual dated for a subsequent event occurring after the original date of the auditor's report but before issuance of the related financial statements.

The auditor's responsibility for events occurring subsequent to the original report date was:

31. When an independent CPA is associated with the financial statements of a publicly held entity but has not audited or reviewed such statements, the appropriate form of report to be issued must include a(an):

32. Which of the following auditing procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

33. When an independent CPA assists in preparing the financial statements of a publicly held entity, but has not audited or reviewed them, the CPA should issue a disclaimer of opinion.

In such situations, the CPA has no responsibility to apply any procedures beyond:

34. When an auditor concludes there is substantial doubt about a continuing audit client's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to:

35. Reference in a principal auditor's report to the fact that part of the audit was performed by another auditor most likely would be an indication of the:

36. An auditor includes a separate paragraph in an otherwise unmodified report to emphasize that the entity being reported on had significant transactions with related parties.

The inclusion of this separate paragraph:

37. When there has been a change in accounting principles, but the effect of the change on the comparability of the financial statements is not material, the auditor should:

38. When single-year financial statements are presented, an auditor ordinarily would express an unqualified opinion in an unmodified report if the:

39. Park, CPA, was engaged to audit the financial statements of Tech Co., a new client, for the year ended December 31, 20X3. Park obtained sufficient audit evidence for all of Tech's financial statement items except Tech's opening inventory. Due to inadequate financial records, Park could not verify Tech's January 1, 20X3, inventory balances.

Park's opinion on Tech's 20X3 financial statements most likely will be:

40. When disclaiming an opinion due to a client-imposed scope limitation, an auditor should indicate in a separate paragraph why the audit did not comply with generally accepted auditing standards.

The auditor should also omit the:

41. An auditor decides to issue a qualified opinion on an entity's financial statements because a major inadequacy in its computerized accounting records prevents the auditor from applying necessary procedures.

The opinion paragraph of the auditor's report should state that the qualification pertains to:

42. When an auditor qualifies an opinion because of inadequate disclosure, the auditor should describe the nature of the omission in a separate explanatory paragraph and modify the:

43. An entity changed from the straight-line method to the declining balance method of depreciation for all newly acquired assets. This change has no material effect on the current year's financial statements, but is reasonably certain to have a substantial effect in later years.

If the change is disclosed in the notes to the financial statements, the auditor should issue a report with a(an):

44. If a publicly held company issues financial statements that purport to present its financial position and results of operations but omits the statement of cash flows, the auditor ordinarily will express a(an):

45. In which of the following circumstances would an auditor most likely add an explanatory paragraph to the standard report while not affecting the auditor's unqualified opinion?

46. When an entity changes its method of accounting for income taxes, which has a material effect on comparability, the auditor should refer to the change in an explanatory paragraph added to the auditor's report.

This paragraph should identify the nature of the change and:

47. Green, CPA, was engaged to audit the financial statements of Essex Co. after its fiscal year had ended. The timing of Green's appointment as auditor and the start of fieldwork made confirmation of accounts receivable by direct communication with the debtors ineffective.

However, Green applied other procedures and was satisfied as to the reasonableness of the account balances. Green's auditor's report most likely contained a(an):

48. Davis, CPA, believes there is substantial doubt about the ability of Hill Co. to continue as a going concern for a reasonable period of time.

In evaluating Hill's plans for dealing with the adverse effects of future conditions and events, Davis most likely would consider, as a mitigating factor, Hill's plans to:

49. In the auditor's report, the principal auditor decides not to make reference to another CPA who audited a client's subsidiary.

The principal auditor could justify this decision if, among other requirements, the principal auditor:

50. A limitation on the scope of an audit sufficient to preclude an unqualified opinion will usually result when management:

51. In which of the following situations would an auditor ordinarily choose between expressing an "except for" qualified opinion or an adverse opinion?

52. When an auditor expresses an adverse opinion, the opinion paragraph should include:

53. Under which of the following circumstances would a disclaimer of opinion not be appropriate?

54. Green, CPA, concludes that there is substantial doubt about JKL Co.'s ability to continue as a going concern.

If JKL's financial statements adequately disclose its financial difficulties, Green's auditor's report should:

55. An auditor may reasonably issue an "except for" qualified opinion for a(an):

56. The following explanatory paragraph was included in an auditor's report to indicate a lack of consistency: "As discussed in note T to the financial statements, the company changed its method of computing depreciation in X0."

How should the auditor report on this matter if the auditor concurred with the change? Type of Location of opinion explanatory paragraph.

57. How does an auditor make the following representations when issuing the standard auditor's report on

58. An auditor was unable to obtain sufficient appropriate audit evidence concerning certain transactions due to an inadequacy in the entity's accounting records.

The auditor would choose between issuing a(an):

59. In which of the following situations would a principal auditor least likely make reference to another auditor who audited a subsidiary of the entity?

60. In which of the following situations would an auditor ordinarily issue an unqualified audit opinion without an explanatory paragraph?

61. When there has been a change in accounting principle that materially affects the comparability of the comparative financial statements presented and the auditor concurs with the change, the auditor should:

62. When a qualified opinion results from a limitation on the scope of the audit, the situation should be described in an explanatory paragraph:

63. An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time.

If the entity's disclosures concerning this matter are adequate, the audit report may include a(an):

64. An auditor should disclose the substantive reasons for expressing an adverse opinion in an explanatory paragraph:

65. When management does not provide reasonable justification that a change in accounting principle is preferable and it presents comparative financial statements, the auditor should express a qualified opinion:

66. When an independent CPA is associated with the financial statements of a publicly held entity but has not audited or reviewed such statements, the appropriate form of report to be issued must include a(an):

67. Restrictions imposed by a retail entity that is a new client prevent an auditor from observing any physical inventories. These inventories account for 40% of the entity's assets. Alternative auditing procedures cannot be applied due to the nature of the entity's records.

Under these circumstances, the auditor should express a(an):

68. Which of the following audit procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

69. Which of the following procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

70. A CPA's standard report on audited financial statements would be inappropriate if it referred to:

71. When an auditor has substantial doubt about an entity's ability to continue as a going concern because of the probable discontinuance of operations, the auditor most likely would express a qualified opinion if:

72. An auditor believes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time.

In evaluating the entity's plans for dealing with the adverse effects of future conditions and events, the auditor most likely would consider, as a mitigating factor, the entity's plans to:

73. Which of the following is true regarding the standard audit report for an issuer?

74. Under which of the following circumstances would an auditor's expression of an unqualified opinion be inappropriate?

75. Jewel, CPA, audited Infinite Co.'s prior-year financial statements. These statements are presented with those of the current year for comparative purposes without Jewel's auditor's report, which expressed a qualified opinion.

In drafting the current year's auditor's report, Crain, CPA, the successor auditor, should:

I. Not name Jewel as the predecessor auditor.

II. Indicate the type of report issued by Jewel.

III. Indicate the substantive reasons for Jewel's qualification.

76. A registration statement filed with the SEC contains the reports of two independent auditors on their audits of financial statements for different periods.

The predecessor auditor who audited the prior-period financial statements generally should obtain a letter of representation from the:

77. Before reissuing the prior year's auditor's report on the financial statements of a former client, the predecessor auditor should obtain letters of representation from the:

78. In May X4, an auditor reissues the auditor's report on the X2 financial statements at a continuing client's request. The X2 financial statements are not restated and the auditor does not revise the wording of the report.

The auditor should:

79. An auditor expressed a qualified opinion on the prior year's financial statements because of a lack of adequate disclosure. These financial statements are properly restated in the current year and presented in comparative form with the current year's financial statements.

The auditor's updated report on the prior year's financial statements should:

80. Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose report is not presented.

If the predecessor's report was qualified, the successor should:

81. An auditor has previously expressed a qualified opinion on the financial statements of a prior period because of a departure from generally accepted accounting principles. The prior-period financial statements are restated in the current period to conform with generally accepted accounting principles.

The auditor's updated report on the prior-period financial statements should:

82. Which of the following statements is not true regarding the auditor's responsibility for subsequent events?

83. Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?

84. Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

85. Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events?

86. An auditor is considering whether the omission of a substantive procedure considered necessary at the time of an audit may impair the auditor's present ability to support the previously expressed opinion.

The auditor need not apply the omitted procedure if the:

87. Subsequent to the issuance of an auditor's report, the auditor became aware of facts existing at the report date that would have affected the report had the auditor then been aware of such facts.

After determining that the information is reliable, the auditor should next:

88. On March 15, X4, Kent, CPA, issued an unqualified opinion on a client's audited financial statements for the year ended December 31, X3. On May 4, X4, Kent's internal inspection program disclosed that engagement personnel failed to observe the client's physical inventory. Omission of this procedure impairs Kent's present ability to support the unqualified opinion.

If the stockholders are currently relying on the opinion, Kent should first:

89. Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

90. Wilson, CPA, obtained sufficient appropriate audit evidence to render an opinion on Abco's December 31, X1, financial statements on March 6, X2. A subsequent event requiring adjustment to the X1 financial statements occurred on April 10, X2, and came to Wilson's attention on April 24, X2.

If the adjustment is made without disclosure of the event, Wilson's report ordinarily should be dated:

91. An auditor concludes that a substantive auditing procedure considered necessary during the prior period's audit was omitted.

Which of the following factors would most likely cause the auditor promptly to apply the omitted procedure?

92. After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unless:

93. Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events?

94. Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

95. On February 9, Brown, CPA, expressed an unqualified opinion on the financial statements of Web Co.

On October 9, during a peer review of Brown's practice, the reviewer informed Brown that engagement personnel failed to perform a search for subsequent events for the Web engagement. Brown should first:

96. Which of the following is not true regarding an engagement to provide a written report on the application of accounting principles?

97. Before reporting on the financial statements of a U.S. entity that have been prepared in conformity with another country's accounting principles, an auditor practicing in the U.S. should:

98. In connection with a proposal to obtain a new client, an accountant in public practice is asked to prepare a written report on the application of accounting principles to a specific transaction.

The accountant's report should include a statement that:

99. Blue, CPA, has been asked to render an opinion on the application of accounting principles to a specific transaction by an entity that is audited by another CPA.

Blue may accept this engagement, but should:

100. The financial statements of KCP America, a U.S. entity, are prepared for inclusion in the consolidated financial statements of its non-U.S. parent. These financial statements are prepared in conformity with the accounting principles generally accepted in the parent's country and are for use only in that country.

How may KCP America's auditor report on these financial statements?

I. A U.S.-style report (unmodified).

II. A U.S.-style report modified to report on the accounting principles of the parent's country.

III. The report form of the parent's country.

101. Which of the following is true regarding the auditor's responsibility to report on information accompanying the basic financial statements in a client-prepared document?

102. Which of the following reporting options is least likely with regard to supplementary information that is required by GAAP?

103. When an auditor submits a document containing audited financial statements to a client, and those financial statements include supplementary information required by GAAP, the auditor may choose any of the following options, except:

104. An auditor may report on condensed financial statements that are derived from complete financial statements if the:

105. An auditor is engaged to report on selected financial data that are included in a client-prepared document containing audited financial statements.

Under these circumstances, the report on the selected data should:

106. If information accompanying the basic financial statements in an auditor-submitted document has been subjected to auditing procedures, the auditor may include in the auditor's report on the financial statements an opinion that the accompanying information is fairly stated in:

107. An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. The auditor believes that the financial statements do not require revision, but the client is unwilling to revise or eliminate the material inconsistency in the other information.

Under these circumstances, what action would the auditor most likely take?

108. In the standard report on condensed financial statements that are derived from a public entity's audited financial statements, a CPA should indicate that the:

109. Investment and property schedules are presented for purposes of additional analysis in an auditor submitted document. The schedules are not required parts of the basic financial statements, but accompany the basic financial statements.

When reporting on such additional information, the measurement of materiality is the:

110. What is an auditor's responsibility for supplementary information which is outside the basic financial statements, but required by the FASB?

111. Which of the following best describes the auditor's reporting responsibility concerning information accompanying the basic financial statements in an auditor-submitted document?

112. When audited financial statements are presented in a client's document containing other information, the auditor should:

113. An auditor may report on condensed financial statements that are derived from complete audited financial statements if the:

114. If management (of a governmental body) declines to present supplementary information required by the Governmental Accounting Standards Board (GASB), the auditor should issue a(an):

115. The objective of auditing procedures applied to segment information is to provide the auditor with a reasonable basis for concluding whether:

116. Green, CPA, is requested to render an opinion on the application of accounting principles by an entity that is audited by another CPA. Green may:

117. In its annual report to shareholders, Lake Co. included a separate management report that contained additional information. Lake's auditor is expressing an unqualified opinion on Lake's financial statements but has not been engaged to examine and report on this additional information.

What is the auditor's responsibility concerning such a report?

118. An auditor is reporting on condensed financial statements for an annual period that are derived from the audited financial statements of a publicly-held entity.

The auditor's opinion should indicate whether the information in the condensed financial statements is fairly stated in all material respects:

119. An auditor determines that the entity is presenting certain supplementary financial disclosures of pension information that are required by the GASB.

Under these circumstances, the auditor should:

120. An auditor reads the letter of transmittal accompanying a county's comprehensive annual financial report and identifies a material inconsistency with the financial statements. The auditor determines that the financial statements do not require revision.

Which of the following actions should the auditor take?

121. Pell, CPA, decides to serve as principal auditor in the audit of the financial statements of Tech Consolidated, Inc. Smith, CPA, audits one of Tech's subsidiaries.

In which situation(s) should Pell make reference to Smith's audit?

I. Pell reviews Smith's audit documentation and assumes responsibility for Smith's work, but expresses a qualified opinion on Tech's financial statements.

II. Pell is unable to review Smith's audit documentation; however, Pell's inquiries indicate that Smith has an excellent reputation for professional competence and integrity.

122. Which of the following best describes what is meant by the term generally accepted auditing standards?

123. According to the profession's ethical standards, which of the following events may justify a departure from a Statement of Financial Accounting Standards?

124. Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern?

125. For an entity that does not receive governmental financial assistance, an auditor's standard report on financial statements generally would not refer to:

126. Which of the following procedures should an auditor generally perform regarding subsequent events?

127. An auditor's report contains the following sentences: We did not audit the financial statements of JK Co., a wholly owned subsidiary, which statements reflect total assets and revenues constituting 17 percent and 19 percent, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for JK Co., is based solely on the report of the other auditors.

These sentences:

128. Which of the following phrases should be included in the opinion paragraph when an auditor expresses a qualified opinion?

129. Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?

130. What is an auditor's responsibility for supplementary information required by the GASB that is placed outside the basic financial statements?

131. An auditor's responsibility to express an opinion on the financial statements is:

132. When an independent CPA assists in preparing the financial statements of a publicly held entity, but has not audited or reviewed them, the CPA should issue a disclaimer of opinion. In such situations, the CPA has no responsibility to apply any procedures beyond:

133. An auditor issued an audit report that was dual dated for a subsequent event occurring after the original date of the auditor's report.

The auditor's responsibility for events occurring subsequent to the original date was:

134. An auditor most likely would issue a disclaimer of opinion because of:

135. When an auditor qualifies an opinion because of the inability to confirm accounts receivable by direct communication with debtors, the wording of the opinion paragraph of the auditor's report should indicate that the qualification pertains to the:

136. The adverse effects of events causing an auditor to believe there is substantial doubt about an entity's ability to continue as a going concern would most likely be mitigated by evidence relating to the:

137. An auditor was unable to obtain audited financial statements or other evidence supporting an entity's investment in a foreign subsidiary.

Between which of the following opinions should the entity's auditor choose?

138. Which of the following standards requires a critical review of the work done and the judgment exercised by those assisting in an audit at every level of supervision?

139. Six months after issuing an unqualified opinion on audited financial statements, an auditor discovered that the engagement personnel failed to confirm several of the client's material accounts receivable balances.

The auditor should first:

140. Which of the following procedures would an auditor ordinarily perform during the review of subsequent events?

141. An annual shareholders' report includes audited financial statements and contains supplementary information required by GAAP.

Is it permissible for the auditor to report on such information?

142. Tech Company has disclosed an uncertainty due to pending litigation.

The auditor's decision to issue a qualified opinion rather than an unqualified opinion most likely would be determined by the:

143. It is not appropriate to refer a reader of an auditor's report to a financial statement footnote for details concerning:

144. Morris, CPA, suspects that a pervasive scheme of illegal bribes exists throughout the operations of Worldwide Import-Export, Inc., a new audit client. Morris notified the audit committee and Worldwide's legal counsel, but neither could assist Morris in determining whether the amounts involved were material to the financial statements or whether senior management was involved in the scheme.

Under these circumstances, Morris should:

145. The first general standard requires that an audit of financial statements is to be performed by a person or persons having:

146. An auditor's report that refers to the use of an accounting principle at variance with generally accepted accounting principles contains the words, "In our opinion, with the foregoing Explanation, the financial statements referred to above present fairly...."

This is considered an:

147. Management of Hill Company has decided not to account for a material transaction in accordance with the provisions of an FASB Standard. In setting forth its reasons in a note to the financial statements, management has clearly demonstrated that due to unusual circumstances the financial statements presented in accordance with the FASB Standard would be misleading.

The auditor's report should include a separate explanatory paragraph and contain a(an):

148. A former client requests a predecessor auditor to reissue an audit report on a prior period's financial statements. The financial statements are not restated and the report is not revised.

What date(s) should the predecessor auditor use in the reissued report?

149. Does an auditor make the following representations explicitly or implicitly when issuing the standard auditor's report on comparative financial statements?

150. An auditor may issue a qualified opinion under which of the following circumstances?

151. Grant Company's financial statements adequately disclose uncertainties that concern future events, the outcome of which are not susceptible of reasonable estimation.

The auditor's report should include a (an):

152. How are management's responsibility and the auditor's responsibility represented in the standard auditor's report?

153. When there is a significant change in accounting principle, an auditor's report should refer to the lack of consistency in:

154. When a principal auditor decides to make reference to another auditor's examination, the principal auditor's report should always indicate clearly, in the introductory, scope, and opinion paragraphs, the:

155. Information accompanying the basic financial statements in an auditor-submitted document should not include:

156. For a particular entity's financial statements to be presented fairly in conformity with generally accepted accounting principles, it is not required that the principles selected:

157. An auditor has been asked to report on the balance sheet of Kane Company but not on the other basic financial statements. The auditor will have access to all information underlying the basic financial statements.

Under these circumstances, the auditor:

158. If an accounting change has no material effect on the financial statements in the current year, but the change is reasonably certain to have a material effect in later years, the change should be:

159. To exercise due professional care an auditor should:

160. This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations. The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

In auditing the long-term investments account, an auditor is unable to obtain audited financial statements for an investee located in a foreign country. The auditor concludes that sufficient appropriate audit evidence regarding this investment cannot be obtained.

List A Types of Options

161. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

In auditing the long-term investments account, an auditor is unable to obtain audited financial statements for an investee located in a foreign country. The auditor concludes that sufficient appropriate audit evidence regarding this investment cannot be obtained.

List B Report Modifications

162. This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time.

However, the financial statement disclosures concerning these matters are adequate.

List A Types of Options

163. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time.

However, the financial statement disclosures concerning these matters are adequate. List B Report Modifications

164. This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

A principal auditor decides to take responsibility for the work of another CPA who audited a wholly-owned subsidiary of the entity and issued an unqualified opinion. The total assets and revenues of the subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audited. List A Types of Options

165. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

A principal auditor decides to take responsibility for the work of another CPA who audited a wholly-owned subsidiary of the entity and issued an unqualified opinion. The total assets and revenues of the subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audited.

List B Report Modifications

166. This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity issues financial statements that present financial position and results of operations but omits the related statement of cash flows. Management discloses in the notes to the financial statements that it does not believe the statement of cash flows to be a useful financial statement. List A Types of Options

167. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity issues financial statements that present financial position and results of operations but omits the related statement of cash flows. Management discloses in the notes to the financial statements that it does not believe the statement of cash flows to be a useful financial statement. List B Report Modifications

168. This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity changes its depreciation method for production equipment from the straight-line to a units-of production method based on hours of utilization. The auditor concurs with the change although it has a material effect on the comparability of the entity's financial statements. List A Types of Options

169. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity changes its depreciation method for production equipment from the straight-line to a units-of production method based on hours of utilization. The auditor concurs with the change although it has a material effect on the comparability of the entity's financial statements. List B Report Modifications

170. This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity is a defendant in a lawsuit alleging infringement of certain patent rights.

However, the ultimate outcome of the litigation cannot be reasonably estimated by management. The auditor believes there is a reasonable possibility of a significantly material loss, but the lawsuit is adequately disclosed in the notes to the financial statements. List A Types of Options

171. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity is a defendant in a lawsuit alleging infringement of certain patent rights.

However, the ultimate outcome of the litigation cannot be reasonably estimated by management. The auditor believes there is a reasonable possibility of a significantly material loss, but the lawsuit is adequately disclosed in the notes to the financial statements. List B Report Modifications

172. This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

- The auditor is independent.

- The auditor previously expressed an unqualified opinion on the prior year's financial statements.

- Only single-year (not comparative) statements are presented for the current year.

- The conditions for an unqualified opinion exist unless contradicted in the factual situations.

- The conditions stated in the factual situations are material.

- No report modifications are to be made except in response to the factual situation.

Item to Be Answered

An entity discloses in the notes to the financial statements certain lease obligations. The auditor believes that the failure to capitalize these leases is a departure from generally accepted accounting principles. List B Report Modifications

173. The nature and extent of a CPA firm's quality control policies and procedures depend on:

174. Would the following factors ordinarily be considered in planning an audit engagement's personnel requirements?

175. After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up review of the audit documentation.

This second review usually focuses on:

176. The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to:

177. A CPA firm evaluates its personnel advancement experience to ascertain whether individuals meeting stated criteria are assigned increased degrees of responsibility.

This is evidence of the firm's adherence to which of the following prescribed standards:

178. The primary purpose of establishing quality control policies and procedures for deciding whether to accept new clients is to:

179. Jackson & Company, CPAs, plan to audit the financial statements of Perigee Technologies, an issuer as defined under the Sarbanes-Oxley Act of 2002.

Which of the following situations would impair Jackson's independence?

180. Which of the following are true regarding communication requirements an auditor must follow when providing tax services to an audit client who is an issuer under the Sarbanes-Oxley Act of 2002?

I. The auditor must communicate to the audit committee, in writing, regarding the proposed tax services and related fees.

II. The auditor must communicate to the audit committee, in writing, when the proposed tax services involve contingent fee arrangements.

III. The auditor must discuss with the audit committee the potential effects of the proposed tax services on the firm's independence.

181. Financial information is presented in a printed form that prescribes the wording of the independent auditor's report. The form is not acceptable to the auditor because the form calls for statements that are inconsistent with the auditor's responsibility.

Under these circumstances, the auditor most likely would:

182. Field is an employee of Gold Enterprises. Hardy, CPA, is asked to express an opinion on Field's profit participation in Gold's net income.

Hardy may accept this engagement only if:

183. Due to a scope limitation, an auditor disclaimed an opinion on the financial statements taken as a whole, but the auditor's report included a statement that the current asset portion of the entity's balance sheet was fairly stated.

The inclusion of this statement is:

184. A CPA is permitted to accept a separate engagement (not in conjunction with an audit of financial statements) to audit an entity's:

185. Delta Life Insurance Co. prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.

If Wall, CPA, Delta's auditor, discovers that the statements are not suitably titled, Wall should:

186. Helpful Co., a nonprofit entity, prepared its financial statements on an accounting basis prescribed by a regulatory agency solely for filing with that agency. Green audited the financial statements in accordance with generally accepted auditing standards and concluded that the financial statements were fairly presented on the prescribed basis.

Green should issue a:

187. An auditor's report would be designated a special report when it is issued in connection with:

188. When a CPA reports on audited financial statements prepared on the cash receipts and disbursements basis of accounting, the report should:

189. Which option best describes the level of assurance provided in the following special reports?

190. Which of the following situations would not result in restricted use language being included in an auditor's special report?

191. Which of the following is true about management representations obtained during an engagement to review the financial statements of a nonissuer?

192. In reviewing the financial statements of a nonissuer, an accountant is required to modify the standard review report for which of the following matters?

193. An accountant has compiled the financial statements of a nonissuer but declines to issue a compilation report.

This is an example of:

194. An accountant compiles unaudited financial statements that are not expected to be used by a third party.

The accountant may decline to issue a compilation report provided:

I. Each page of the financial statements is clearly marked to restrict its use.

II. A written engagement letter is used to document the understanding with the client.

III. A written representation letter is obtained from the client's management.

195. An accountant has compiled the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services (SSARS). The financial statements are expected to be used by a third party.

Does SSARS require that the compilation report be printed on the accountant's letterhead and that the report be manually signed by the accountant?

196. An accountant is required to comply with the provisions of Statements on Standards for Accounting and Review Services when:

I. Reproducing client-prepared financial statements without modification, as an accommodation to a client.

II. Preparing standard monthly journal entries for depreciation and expiration of prepaid expenses.

197. If requested to perform a review engagement for a nonissuer in which an accountant has an immaterial direct financial interest, the accountant is:

198. Kell engaged March, CPA, to submit to Kell a written personal financial plan containing unaudited personal financial statements. March anticipates omitting certain disclosures required by GAAP because the engagement's sole purpose is to assist Kell in developing a personal financial plan.

For March to be exempt from complying with the requirements of SSARS 1, Compilation and Review of Financial Statements, Kell is required to agree that the:

199. When providing limited assurance that the financial statements of a nonissuer require no material modifications to be in accordance with generally accepted accounting principles, the accountant should:

200. What type of analytical procedure would an auditor most likely use in developing relationships among balance sheet accounts when reviewing the financial statements of a nonissuer?

201. Compiled financial statements should be accompanied by an accountant's report stating that:

202. Moore, CPA, has been asked to issue a review report on the balance sheet of Dover Co., a nonissuer. Moore will not be reporting on Dover's statements of income, retained earnings, and cash flows.

Moore may issue the review report provided the:

203. Baker, CPA, was engaged to review the financial statements of Hall Co., a nonissuer. During the engagement Baker uncovered a complex scheme involving client illegal acts and fraud that materially affect Hall's financial statements.

If Baker believes that modification of the standard review report is not adequate to indicate the deficiencies in the financial statements, Baker should:

204. Each page of a nonissuer's financial statements reviewed by an accountant should include the following reference:

205. An accountant has been engaged to review a nonissuer's financial statements that contain several departures from GAAP.

If the financial statements are not revised and modification of the standard review report is not adequate to indicate the deficiencies, the accountant should:

206. Statements on Standards for Accounting and Review Services (SSARS) require an accountant to report when the accountant has:

207. Which of the following procedures should an accountant perform during an engagement to review the financial statements of a nonissuer?

208. An accountant who had begun an audit of the financial statements of a nonissuer was asked to change the engagement to a review because of a restriction on the scope of the audit.

If there is reasonable justification for the change, the accountant's review report should include reference to the:

209. Which of the following statements should be included in an accountant's standard report based on the compilation of a nonissuer's financial statements?

210. Miller, CPA, is engaged to compile the financial statements of Web Co., a nonissuer, in conformity with the income tax basis of accounting.

If Web's financial statements do not disclose the basis of accounting used, Miller should:

211. When an accountant is engaged to compile a nonissuer's financial statements that omit substantially all disclosures required by GAAP, the accountant should indicate in the compilation report that the financial statements are:

212. North Co., a privately-held entity, asked its tax accountant, King, a CPA in public practice, to prepare North's interim financial statements on King's microcomputer when King prepared North's quarterly tax return.

King should not submit these financial statements to North unless, as a minimum, King complies with the provisions of:

213. Davis, CPA, accepted an engagement to audit the financial statements of Tech Resources, a nonissuer. Before the completion of the audit, Tech requested Davis to change the engagement to a compilation of financial statements.

Before Davis agrees to change the engagement, Davis is required to consider the:

214. Smith, CPA, has been asked to issue a review report on the balance sheet of Cone Company, a nonissuer, and not on the other related financial statements.

Smith may do so only if:

215. May an accountant accept an engagement to compile or review the financial statements of a not-for-profit entity if the accountant is unfamiliar with the specialized industry accounting principles, but plans to obtain the required level of knowledge before compiling or reviewing the financial statements?

216. An accountant should perform analytical procedures during an engagement to:

217. Which of the following procedures most likely would not be included in a review engagement of a nonissuer?

218. Compiled financial statements should be accompanied by a report stating that:

219. An accountant may compile a nonissuer's financial statements that omit all of the disclosures required by GAAP only if the omission is:

I. Clearly indicated in the accountant's report.

II. Not undertaken with the intention of misleading the financial statement users.

220. An accountant's standard report on a review of the financial statements of a nonissuer should state that the accountant:

221. An accountant has been asked to issue a review report on the balance sheet of a nonissuer but not to report on the other basic financial statements.

The accountant may not do so:

222. When performing an engagement to review a nonissuer's financial statements, an accountant most likely would:

223. During an engagement to review the financial statements of a nonissuer an accountant becomes aware of a material departure from GAAP.

If the accountant decides to modify the standard review report because management will not revise the financial statements, the accountant should:

224. Which of the following representations does an accountant make implicitly when issuing the standard report for the compilation of a nonissuer's financial statements?

225. Which of the following accounting services may an accountant perform without being required to issue a compilation or review report under the Statements on Standards for Accounting and Review Services?

I. Preparing a working trial balance.

II. Preparing standard monthly journal entries.

226. Which of the following inquiry or analytical procedures ordinarily is performed in an engagement to review a nonissuer's financial statements?

227. When compiling the financial statements of a nonissuer, an accountant should:

228. Jones Retailing, a nonissuer, has asked Winters, CPA, to compile financial statements that omit substantially all disclosures required by generally accepted accounting principles.

Winters may compile such financial statements provided the:

229. Which of the following procedures is usually performed by the accountant in a review engagement of a nonissuer?

230. Which of the following procedures is more likely to be performed in a review engagement of a nonissuer than in a compilation engagement?

231. Statements on Standards for Accounting and Review Services establish standards and procedures for which of the following engagements?

232. When compiling a nonissuer's financial statements, an accountant would be least likely to:

233. Which of the following procedures would most likely be included in a review engagement of a nonissuer?

234. Baker, CPA, was engaged to review the financial statements of Hall Company, a nonissuer. Evidence came to Baker's attention that indicated substantial doubt as to Hall's ability to continue as a going concern. The principal conditions and events that caused the substantial doubt have been fully disclosed in the notes to Hall's financial statements.

Which of the following statements best describes Baker's reporting responsibility concerning this matter?

235. The authoritative body designated to promulgate standards concerning an accountant's association with unaudited financial statements of an entity that is not required to file financial statements with an agency regulating the issuance of the entity's securities is the:

236. When an accountant performs more than one level of service (for example, a compilation and a review, or a compilation and an audit) concerning the financial statements of a nonissuer, the accountant generally should issue the report that is appropriate for:

237. An accountant who reviews the financial statements of a nonissuer should issue a report stating that a review:

238. Before performing a review of a nonissuer's financial statements, an accountant should:

239. Which of the following is not true about documentation requirements related to a review of a nonissuer's financial statements?

240. An accountant performing a compilation or review of the financial statements of a nonissuer should:

241. When performing an engagement to review a nonissuer's financial statements, an accountant most likely would:

242. Which of the following should be the first step in reviewing the financial statements of a nonissuer?

243. An accountant has been asked to issue a review report on the balance sheet of a nonissuer without reporting on the related statements of income, retained earnings, and cash flows.

The accountant may issue the requested review report only if:

244. An accountant is asked to issue a review report on the balance sheet, but not on other related statements. The scope of the inquiry and analytical procedures has not been restricted, but the client failed to provide a representation letter.

Which of the following should the accountant issue under these circumstances?

245. Which of the following procedures is usually the first step in reviewing the financial statements of a nonissuer?

246. An accountant's standard report issued after compiling the financial statements of a nonissuer should state that:

247. Which of the following would be used on a review engagement?

248. Which of the following statements is true regarding an accountant's consideration of fraud/illegal acts in compilation and review engagements?

249. An accountant had begun to audit the financial statements of a nonissuer.

Which of the following circumstances most likely would be considered a reasonable basis for agreeing to the entity's request to change the engagement to a compilation?

250. Which of the following statements is correct regarding a review engagement of a nonissuer's financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)?

251. Which of the following procedures does a CPA normally perform first in a review engagement in accordance with Statements on Standards for Accounting and Review Services (SSARS)?

252. Which of the following describes how the objective of a review of financial statements differs from the objective of a compilation engagement?

253. The standard report issued by an accountant after reviewing the financial statements of a nonissuer should state that:

254. While auditing the financial statements of a nonissuer, a CPA was requested to change the engagement to a review in accordance with Statements on Standards for Accounting and Review Services (SSARS) because of a scope limitation.

If the CPA believes the client's request is reasonable, the CPA's review report should:

I. Refer to the scope limitation that caused the change.

II. Describe the auditing procedures that have already been applied.

255. When unaudited financial statements of a nonissuer are presented in comparative form with audited financial statements in the subsequent year, the unaudited financial statements should be clearly marked to indicate their status and:

I. The report on the unaudited financial statements should be reissued.

II. The report on the audited financial statements should include a separate paragraph describing the responsibility assumed for the unaudited financial statements.

256. When unaudited financial statements are presented in comparative form with audited financial statements in a document filed with the Securities and Exchange Commission, such statements should be:

257. Clark, CPA, compiled and properly reported on the financial statements of Green Co., a nonissuer, for the year ended March 31, 20X1. These financial statements omitted substantially all disclosures required by generally accepted accounting principles (GAAP). Green asked Clark to compile the statements for the year ended March 31, 20X2, and to include all GAAP disclosures for the 20X2 statements only, but otherwise present both years' financial statements in comparative form.

What is Clark's responsibility concerning the proposed engagement?

258. Silver, CPA, has been hired by Andrews Co., a publicly held company, to conduct a review of its interim financial information. While performing review procedures, Silver becomes aware of a significant change in the control activities at one of Andrew's branch locations.

Which of the following might Silver consider performing in response to this situation?

259. Davidson, CPA, is performing a review under auditing standards of Gold's interim financial information. As part of planning, Davidson reads the audit documentation from the preceding year's annual audit.

Which of the following is least likely to affect Davidson's review?

260. The annual financial statements of a publicly held company have been audited, and its interim financial statements have been reviewed.

Which of the following is true about the application of professional standards to this review?

261. Which of the following is not a required procedure in an engagement to review the interim financial information of a publicly held entity?

262. In which case would the accountant be least likely to perform a review of interim financial information under PCAOB (auditing) standards?

263. An independent accountant's report is based on a review of interim financial information.

If this report is presented in a registration statement, a prospectus should include a statement clarifying that the:

264. The objective of a review of interim financial information of a public entity is to provide an accountant with a basis for reporting whether:

265. The quarterly data required by SEC Regulation S-K have been omitted.

Which of the following statements must be included in the auditor's report?

266. Which of the following matters is covered in a typical comfort letter?

267. Comfort letters ordinarily are signed by the client's:

268. When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receive:

269. Comfort letters ordinarily are:

270. A CPA in public practice is required to comply with the provisions of the Statements on Standards for Attestation Engagements (SSAE) when:

271. In an attest engagement, use of the accountant's report should be restricted to specified parties in all of the following situations, except:

272. Which of the following is a term for an attest engagement in which a CPA assesses a client's commercial Internet site for predefined criteria that are designed to measure transaction integrity, information protection, and disclosure of business practices?

273. An entity engaged a CPA to determine whether the client's web sites meet defined criteria for standard business practices and controls over transaction integrity and information protection.

In performing this engagement, the CPA should comply with the provisions of:

274. A CPA's report on agreed-upon procedures related to management's assertion about an entity's compliance with specified requirements should contain:

275. An examination of a financial forecast is a professional service that involves:

276. An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that:

277. An accountant's compilation report on a financial forecast should include a statement that:

278. Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?

279. An accountant's report on a review of pro forma financial information should include a:

280. In performing an attest engagement, a CPA typically:

281. An accountant's standard report on a compilation of a projection should not include a:

282. Which of the following is not an attestation standard?

283. An accountant's compilation report on a financial forecast should include a statement that the:

284. An attest engagement is one in which a CPA is engaged to:

285. Which of the following professional services would be considered an attest engagement?

286. Which of the following statements concerning prospective financial statements is correct?

287. Negative assurance may be expressed when an accountant is requested to report on the:

288. When an accountant examines a financial forecast that fails to disclose several significant assumptions used to prepare the forecast, the accountant should describe the assumptions in the accountant's report and issue a (an):

289. Prospective financial information presented in the format of historical financial statements that omit either gross profit or net income is deemed to be a:

290. Which of the following activities would most likely be considered an attestation engagement?

291. Which of the following professional services would be considered an attestation engagement?

292. Which of the following is a professional engagement that a CPA may perform to provide assurance on a system's reliability?

293. An accountant's standard report on a compilation of a projection should not include a statement that:

294. A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain:

295. When an accountant compiles projected financial statements, the accountant's report should include a separate paragraph that:

296. A CPA is engaged to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria.

In performing this engagement, the CPA should comply with the provisions of:

297. An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided the:

298. Accepting an engagement to compile a financial projection for a publicly held company most likely would be inappropriate if the projection were to be distributed to: