An audit of a nonissuer's internal control over financial reporting in an integrated audit will generally
Be more extensive in scope than the assessment
... [Show More] of control risk made during the financial statement audit.
Which of the following conditions is necessary for an auditor to accept an engagement to audit and report on an entity's internal control over financial reporting in an integrated audit for a nonissuer?
Management presents its written assessment about the effectiveness of the entity's internal control over financial reporting.
Before an auditor can accept an engagement to audit internal control over financial reporting in an integrated audit of a nonissuer, all of the following conditions must be met, except for
Management must state in the engagement letter that any identified significant deficiencies will be corrected on a timely basis, not to exceed 60 days from the report release date.
An auditor's report expressing an unmodified opinion on an entity's internal control over financial reporting in an integrated audit of a nonissuer should state that the
Entity maintained effective internal control over financial reporting as of a specific date.
Brown, CPA, has been engaged to audit and report on Crow Company's written assessment about the effectiveness of Crow's internal control over financial reporting in an integrated audit under AICPA standards. In what form may Crow appropriately present its written assessment?
I. In a separate report that will accompany Brown's report.
II. In a representation letter to Brown.
I only.
When engaged to express an opinion on an entity's internal accounting control over financial reporting in an integrated audit of a nonissuer, an auditor should
Obtain management's written representations acknowledging responsibility for establishing and maintaining the system of internal control.
Snow, CPA, was engaged by Master Co., a nonpublic company, to audit and report on the effectiveness of Master's internal control over financial reporting in an integrated audit.
Snow's report should state that
Because of the inherent limitations of internal control over financial reporting, misstatements may occur and not be detected.
If an auditor performing an integrated audit identifies one or more material weaknesses in a nonissuer's internal control, the auditor should
Express an adverse opinion on the entity's internal control.
Which of the following statements correctly describes the "top-down approach" used during an audit of internal control over financial reporting?
Begin by understanding the overall risks to internal control over financial reporting at the financial statement level.
Which of the following best describes the earliest date for an auditor's report?
The date the auditor has obtained sufficient appropriate audit evidence to support the opinion.
In an integrated audit of a nonissuer, which of the following is the responsibility of an auditor with regard to testing controls at a company with multiple business units?
Testing controls over specific risks at business units that are material to the company's consolidated financial statements.
An auditing procedure that is applicable to "testing operating effectiveness" that is not associated with "testing design effectiveness" is
Reperformance of the control procedure.
Each of the following types of controls is considered to be an entity-level control, except those
Regarding the company's annual stockholder meeting.
PCAOB Auditing Standard No. 5 directs auditors to begin their study of internal control at the financial statement level and the overall risks to internal control over financial reporting, then consider "entity-level" controls, followed by focusing on the relevant assertions for significant accounts and disclosures. This approach is best described as a
Top-down approach.
According to PCAOB auditing standards, when the auditor issues separate reports on the financial statements and on internal control over financial reporting,
Each report should include a paragraph that references the other related report.
According to the PCAOB, each of the following statements is true with respect to the auditor's responsibility to communicate material weaknesses in internal control over financial reporting except
All such weaknesses must be communicated in writing to all stockholders.
PCAOB auditing standards apply when an issuer's auditor is engaged to report on whether a previously reported material weakness in internal control over financial reporting continues to exist as of a date specified by management. Which of the following statements is correct?
PCAOB auditing standards do not require an auditor to report whether a previously reported material weakness continues to exist, so such an engagement is voluntary.
According to PCAOB auditing standards, a "stated control objective" is best described as
The specific control objective identified by management that, if achieved, would result in the material weakness no longer existing.
According to PCAOB auditing standards, in evaluating whether a material weakness exists, an auditor should focus on materiality at the
Financial statement level.
Which legislation is most directly associated with pension and welfare plans?
Employee Retirement Income Security Act of 1974
Under applicable pension laws, the age that an employee is eligible to enter a pension plan cannot be set above the age of
21.
An employee benefit plan that provides healthcare benefits to participants is best characterized as a (an)
Welfare plan.
Which of the following pension plans is specifically associated with charitable organizations and public school entities?
403(b) plans
When filing a Form 5500 with the Department of Labor, an audit normally is required for an employee benefit plan that is identified as a
Large plan having at least 100 participants at the start of the plan year.
What terminology does the AICPA's Audit and Accounting Guide, Employee Benefit Plans, use in commenting on the types of audits relevant to employee benefit plans?
Full-scope and limited-scope audits
A limited-scope audit of an employee benefit plan requires the auditor to evaluate each of the following, except for
the plan investments and investment activities.
A "qualified, regulated financial institution" associated with a limited-scope audit engagement of an employee benefit plan may include each of the following types of financial institutions, except for
an investment company.
To justify a limited-scope audit, the qualified financial institution holding the plan assets must furnish a certification stating that the investments and related investment activity are
"Complete and accurate."
A limited-scope audit report includes each of the following, except for
An opinion that the employee benefit plan has complied with all applicable requirements of the Employee Retirement Income Security Act of 1974.
Which financial statement is specifically mentioned in the first paragraph of the auditor's report on an employee benefit plan's comparative financial statements?
Statements of net assets available for benefits.
Which of the following services provides the least assurance regarding the fairness of financial statements?
Compilation.
A practitioner is engaged to express an opinion on management's assertion that the square footage of a warehouse offered for sale is 150,000 square feet. The practitioner should refer to which of the following sources for professional guidance?
Statements on Standards for Attestation Engagements.
Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?
The attestation standards provide a framework for the attest function beyond historical financial statements.
A company engages a practitioner to assist the audit committee by performing specific procedures that were agreed to by the audit committee. Which of the following statements is correct regarding the procedures to be performed?
The specific procedures performed should be listed in the practitioner's report to the audit committee.
According to the AICPA Statements on Standards for Attestation Engagements, a public accounting firm should establish quality control policies to provide assurance about which of the following matters related to agreed-upon procedures engagements?
The practitioner is independent from the client and other specified parties.
An engagement letter for an examination should address all of the following matters, except for
The dollar amount associated with the practitioner's materiality threshold.
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
Statements on Standards for Attestation Engagements (SSAE).
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
Statements on Standards for Attestation Engagements (SSAE).
When the practitioner determines that the subject matter of an examination engagement has a misstatement that is both material and pervasive, the practitioner should express a (an)
Adverse opinion.
When the practitioner determines that the subject matter of an examination engagement is materially misstated, but that the misstatement is not pervasive, the practitioner should express a (an)
Qualified opinion directly on the subject matter.
What should the practitioner do when the responsible party (who is also the engaging party) declines to provide a written assertion for a review engagement?
Withdraw from the engagement when that is permitted by applicable law.
What should the practitioner do when the responsible party (who is also the engaging party) declines to provide the requested written representations for a review engagement?
Withdraw from the engagement when that is permitted by applicable law
Which of the following statements about a practitioner's review report for an attestation engagement is correct?
The practitioner's review report should include a disclaimer of opinion.
The practitioner's review report for an attestation engagement should include a restricted-use paragraph in all of the following circumstances, except for
When the practitioner refers to an external specialist because the practitioner's conclusion is modified and reference to the specialist may be helpful to readers in understanding the reason for the modification.
A practitioner's report on agreed-upon procedures should contain which of the following statements?
The procedures performed were those agreed to by the specified parties identified in the report.
Which of the following should a practitioner perform as part of an engagement for agreed-upon procedures in accordance with Statements on Standards for Attestation Engagements?
Issue a report on findings based on specified procedures performed.
Which of the following statements should be included in a practitioner's report on the application of agreed-upon procedures?
A statement referring to standards established by the AICPA.
In which of the following situations will a practitioner disclaim an opinion on an examination of prospective financial statements?
The practitioner was not able to perform certain procedures deemed necessary.
A CPA is engaged to examine an entity's financial forecast. The CPA believes that several significant assumptions do not provide a reasonable basis for the forecast. Under these circumstances, the CPA should issue a(an)
Adverse opinion.
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
All stockholders of record as of the report date.
An accountant's compilation report on a financial projection that does not contain a range should include a statement that
There will usually be differences between the projected and actual results because events and circumstances frequently do not occur as expected.
A company hired a practitioner to perform an examination of prospective financial statements. The practitioner concluded that the assumptions did not provide a reasonable basis for the prospective financial statements. Which of the following types of opinion should the practitioner issue?
Adverse.
Which of the following standards should a CPA firm apply in a review of pro forma financial information?
Statements on Standards for Attestation Engagements
A practitioner reporting on pro forma financial information does not possess an understanding of the client's business and the industry in which the client operates. The practitioner should take which of the following actions?
Review industry trade journals.
Each of the following items should be included in a presentation of pro forma financial statements except
All direct and indirect effects attributed to the related transaction.
An accountant's report on a review of pro forma financial information should include a
Reference to the financial statements from which the historical financial information is derived.
An independent auditor is issuing an audit report for a governmental entity and plans to issue separate reports on internal control over financial reporting and compliance with laws and regulations. The auditor should do which of the following?
State in the audit report that separate reports will be issued.
A practitioner has examined a client's compliance with debt covenants associated with a bank loan and is ready to issue a report. Which of the following standards apply to the report?
Compliance attestation standards.
Mill, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by Modern Co. regarding Modern's written assertion about its compliance with contractual requirements to pay royalties.
Mill's report on these agreed-upon procedures should contain a (an)
List of the procedures performed (or reference thereto) and Mill's findings.
Which of the following professional services would be subject to the Statements on Standards for Attestation Engagements (SSAEs)?
An engagement to report on an entity's compliance with statutory requirements.
A CPA's report on agreed-upon procedures related to management's assertion about an entity's compliance with specified requirements should contain
A statement of limitations on the use of the report.
Which of the following statements best serves as management's assertion of consistency in an MD&A presentation?
Nonfinancial data have been accurately derived from related records.
A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements (SSAE) when engaged to
Review management's discussion and analysis (MD&A) prepared pursuant to rules and regulations adopted by the SEC.
Which of the following forms of auditor association are possible relating to management's discussion and analysis (MD&A)?
Review: Yes
Examination: Yes
Which of the following is not an assertion embodied in management's discussion and analysis (MD&A)?
Rights and obligations.
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?
WebTrust. [Show Less]