CPA Auditing and Attestation (AUD) : Preparation vs Compilation vs Review Engagements
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #1 : Preparation Vs Compilation Vs Review Engagements
The Compilation audit report will:
Discuss auditing procedures
State that the Financial Statements are the responsibility of management
Express an opinion based on GAAP
Discuss internal control findings
State that the Financial Statements are the responsibility of management
Although the firm may assist management in the preparation of statements, the compilation audit report will state that the report is the responsibility of management.
Example Question #2 : Preparation Vs Compilation Vs Review Engagements
A review engagement provides what level of assurance regarding the applicable financial framework
limited assurance
absolute assurance
sufficient assurance
minimal assurance
limited assurance
A review engagement provides limited assurance. Limited assurance is given that the financial statements comply with the applicable reporting framework.
Example Question #1 : Preparation Vs Compilation Vs Review Engagements
A review engagement should express which of the following terms:
Auditors Responsibilities
Managements responsibilities
Managements objectives
All of the answer choices are correct
All of the answer choices are correct
AR Section 90; review of financial statements. Section .04 states that the engagement determines: management responsibility, the auditor’s responsibility, and management objectives.
Example Question #4 : Preparation Vs Compilation Vs Review Engagements
Regarding the review of financial statements of a non-issuer performed in accordance with SSARS, the CPA is required to obtain:
A letter of consent from the prior auditor
Sufficient evidence supporting management's assertions
An understanding of internal control
A client representation letter
A client representation letter
The CPA is required to obtain a representation letter from management for all financial statements and periods covered by the review report.
Example Question #2 : Preparation Vs Compilation Vs Review Engagements
Of the following statements, which is correct regarding a review of a nonpublic entity financial statements in accordance with SSARS?
An opinion is expressed in the review report
The CPA is required to assess the risk of fraud
It is not necessary for the CPA to obtain a management representation letter
The CPA must be independent to issue the review report
The CPA must be independent to issue the review report
In order to issue a review report on the financial statements of a nonpublic entity, the accountant must be independent.
Example Question #6 : Preparation Vs Compilation Vs Review Engagements
When a preparer conducts a preparation engagement, the accountant should:
Both
Neither
Perform a compilation engagement if he or she is unable to include a statement on each page of the financial statements
Issue a disclaimer of opinion if he or she is unable to include a statement on each page of the financial statements
Both
With a preparation requirement, the preparer must include a statement on each page of the financials. If he or she cannot, these two options are the only options.
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