Kaplan University Unit 9 Auditing Questions In addition to auditing public companies, accountants can provide services for nonpublic companies and services

Kaplan University Unit 9 Auditing Questions In addition to auditing public companies, accountants can provide
services for nonpublic companies and services that do not require an
annual external audit. You will demonstrate your understanding of these
additional services that can be provided. Unit 9 Auditing assignment
1. Occasionally, public accounting firms are engaged to report on specified elements,
accounts and items of financial statements.
• Discuss three types of report that may be provided for specified elements,
accounts, and items of financial statements.
• Why should reports on the application of agreed-upon procedures to
information be restricted to specified users?
2. In connection with a public offering of first- mortgage bonds by Guizzettii
corporation, the bond underwriter has asked Guizzetti’s CPA’s to furnish it with a
comfort letter giving as much assurance as possible on Guizzetti’s unaudited
financial statements for the three months ended March 31. The CPA’s had expressed
an unqualified opinion on Guizzetti’s financial statements for the year ended
December 31, the preceding year; they also perfoemed a review of Guizzetti’s
financial statements for the three months ended March 31. Nothing has come to
their attention that would indicate that the March 31` statements are not properly
presented.
•
•
Explain what can be stated about the unaudited financial statements in the
letter.
Discuss other matters that are typically included in comfort letters.
Multiple Choices Qustions
Select the best answer for each of the following and explain fully the reason
fro your selection.
3. Which of the following is not typically performed when the auditors are
performing a review of client financial statements?
•
•
•
•
Analytical procedures applied to financial data.
Inquires about significant subsequent events.
Confirmation of accounts receivable.
Obtaining an understanding of accounting principles followed in the clients
industry.
4. Which of the following must be obtained in a review of a non public company?
Engagement letter
A. Yes
B . Yes
C. NO
D. NO
Representation letter
Yes
NO
YES
NO
5. A CPA Who is not independent may perform which of the following
services for non public company?
Compilation
Review
A. YES
B. YES
C.NO
D. NO
YES
NO
YES
NO
6. When performing a review of a non public company, which is least likely
to be included in auditor inquires of management member’s with resposibilty
for financial and accounting matters?
•
•
•
•
Subsequent events
Significant journal entries and other adjustments.
Communications with related parties.
Unusual or complex situations affecting the financial statements.
7. The proper report by an auditor relating to summarize financial statements
includes.
• A statement about the type of opinion expressed in the prior year.
• An adverse opinion.
• An opinion on wether the summarized information is fairly atated in all
material respect in relation to the basic financial statements.
• No Assurance of the information.
8. Corcerning interim quarterly financial statements, managements of public
companies;
• Must engage CPA’s to audit the statements.
• Must engage CPA’s to review the statements.
• May choose to engage CPA’s to review the statements.
• May not engage CPA’s to become associated with the statements.
9. A proper completion report on financial statements that omit note disclosures;
• Includes an adverse opinion.
• Includes a disclaimer of opinion on the accuracy of such note disclosures:
• Indicates that management has omitted such information.
• Indicates that note disclosures are not necessary for those not informed
about such matters.
10. Which of the following forms of accountant association is least likely to result in
issuance of an accountant’s report on financial statements or financial information?
• Compilation
•
•
•
Review
Preparation
Agreed- upon procedures
11.Which assertion is generally most difficult to attest to with respect to personal
financial statements?
• Existence and occurrence
• Rights and obligations
• Completeness
• Valuation
12. Financial statements prepared following which of the following are most likely
to be considered special- purpose financial reporting framework?
• Generally accepted accounting principles.
• International Financial reporting Standards
• Financial reporting standards of a foreign nation
• The cash basis of accounting
13. In which of the following reports should a CPA not express negative (limited)
assurance?
• A standard compilation report on financial statements of an nonpublic entity.
• A standard review report on interim financial statements of a public entity.
• A standard review report on financial statements of a nonpublic entity
• A comfort letter on financial information included in a registration
statement filed with the Securities and Exchange Commision.
14. Comfort letter to underwritters are normally signed by the:
•
•
•
•
Independent auditor
Underwitter
Clients lawyer
Chief executive officer
Simulation
Indicate wether a CPA may provide each of the following services, and
wether independence, by placing a check in the appropriate box.
Service
May provide;
Independence
Is required
May provide
Independence
Is Not Required
May not
Provide
A. Provide an opinion
on wether financial statements
are prepared following
the cash basis of accounting.
B. Compile the financial statements for
the past year and issue a publicity
available report.
C. Apply certain agreed-upon procedures
to accounts receivable for purposes
of obtaining a loan, and express
a summary of findings
relating to those procedures.
D. Review quarterly information
And issue a report that includes
Limited assurance.
E. Perform an audit of the financial
Statements on whether they are
Prepared following generally
Accepted accounting
Priniciples.
F. Prepare the financial statements
for the past year.

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