Loose-leaf For Auditing & Assurance Services: A Systematic Approach
11th Edition
ISBN: 9781260687637
Author: William F Messier Jr, Steven M Glover Associate Professor, Douglas F Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 21, Problem 21.20MCQ
To determine
Introduction:
Engagement to compile financial information is a special engagement involving utilization of accounting and financial expertise of the auditor rather than audit expertise, it involves procedures which ensure adequate collection, classification and disclosure of such financial information.
Engagement to review financial statements is a limited audit engagement that involves the auditor to reach negative assurance regarding the review performed. The auditor does not express an opinion on the financial statement rather expresses that no material misstatement was observed which was apparently visible on performance of review.
To select: The correct option.
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Students have asked these similar questions
Which of the following is not a way by which the Sarbanes-Oxley Act attempts to ensure auditor independence from an
audit client?
Multiple Choice
The auditing firm must be appointed by the client's audít committee.
The audit committee must be composed of members of the client's board of directors who are
independent of the management.
Audit fees must be approved by the Public Company Accounting Oversight Board.
The external auditor cannot also perform financial information system design and implementation work.
The auditor prepares the financial statements for DecoPaints SAOG while also serving as the auditor for DecoPaints SAOG Company. By having the auditor review his or her own work, the auditor cannot be expected to form an unbiased opinion on the financial statements. Which threat may occur when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment?
Intimidation threats
Advocacy threats
Self-review threats
Self-interest threats
Before issuing a report on the compilation of
financial statements of a non-public entity,
the accountant should:
a. Apply analytical procedures to selected
financial data to discover any material
misstatements.
b. Corroborate at least a sample of the
assertions management has embodied in the
financial
statements.
c. Inquire of the client's personnel whether
the financial statements omit substantially all
disclosures.
d. Read the financial statements to consider
whether the financial statements are free
from obvious material errors.
Chapter 21 Solutions
Loose-leaf For Auditing & Assurance Services: A Systematic Approach
Ch. 21 - Prob. 21.1RQCh. 21 - Prob. 21.2RQCh. 21 - Prob. 21.3RQCh. 21 - Prob. 21.4RQCh. 21 - Prob. 21.5RQCh. 21 - Prob. 21.6RQCh. 21 - Prob. 21.7RQCh. 21 - Prob. 21.8RQCh. 21 - Prob. 21.9RQCh. 21 - Prob. 21.10RQ
Ch. 21 - Prob. 21.11RQCh. 21 - Prob. 21.12RQCh. 21 - Prob. 21.13RQCh. 21 - Prob. 21.14RQCh. 21 - Prob. 21.15MCQCh. 21 - Prob. 21.16MCQCh. 21 - Prob. 21.17MCQCh. 21 - Prob. 21.18MCQCh. 21 - Prob. 21.19MCQCh. 21 - Prob. 21.20MCQCh. 21 - Prob. 21.21MCQCh. 21 - Prob. 21.22MCQCh. 21 - Prob. 21.23MCQCh. 21 - Prob. 21.24MCQCh. 21 - Prob. 21.25MCQCh. 21 - Prob. 21.26MCQCh. 21 - Prob. 21.27MCQCh. 21 - Prob. 21.28MCQCh. 21 - Prob. 21.29MCQCh. 21 - Prob. 21.30PCh. 21 - Prob. 21.31PCh. 21 - Prob. 21.32PCh. 21 - Prob. 21.33PCh. 21 - Prob. 21.34PCh. 21 - Prob. 21.35P
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Similar questions
- The Accountant Should?arrow_forwardWhich of the following best describes the responsibility of the CPA in performingcompilation services for a company?(1) The CPA has to satisfy only himself or herself that the financial statements wereprepared in conformity with accounting standards.(2) The CPA must understand the client’s business and accounting methods andread the financial statements for reasonableness.(3) The CPA should obtain an understanding of internal control and perform testsof controls.(4) The CPA is relieved of any responsibility to third partiesarrow_forwardThe audit committee’s responsibility for auditor independence concernsa. Ensuring that partners of the public accounting firm are not stockholders in the company.b. Ensuring that nonaudit services provided by the auditor do not impair independence.c. Reporting on auditor independence to the PCAOB.d. Ensuring that all nonaudit services are provided by auditors who do not perform the financial statement auditarrow_forward
- During a review of a nonissuer’s financial statements, accountants are required to make certaininquiries of management. Which of the following inquiries is not required by the SSARS?a. The basis for the preparation of financial statements.b. Internal control deficiencies.c. Significant transactions occurring near the end of the reporting period.d. Material subsequent eventsarrow_forwardWhen a client’s financial statements contain a material departure from an FASB Statementon Accounting Standards and the public accounting firm believes the departure is necessaryto ensure that the statements are not misleading,a. The public accounting firm must qualify the auditors’ report for a departure from GAAP.b. The public accounting firm can explain why the departure is necessary and then give anunmodified opinion paragraph in the auditors’ report.c. The public accounting firm must give an adverse auditors’ report.d. The public accounting firm can give the standard unmodified auditors’ report with anunmodified opinion paragrapharrow_forwardWhich one of the following statements is not included in the management representation letter provided to the auditor at the end of the audit? O It is the management’s responsibility to prepare financial statement and design and maintain effective internal control over financial reporting. O The management has provided all necessary information and documents to the auditor to enable the auditor to complete the audit. O Any remaining misstatements in the financial statements are immaterial. O There is no material weakness in internal control over financial reporting.arrow_forward
- Under which of the following circumstances would a disclaimer of opinion not beappropriate?(1) The auditor is unable to determine the amounts associated with an employeefraud scheme.(2) Management does not provide reasonable justification for a change in accountingprinciples.(3) The client refuses the auditor permission to confirm certain accounts receivableor apply alternative procedures to verify their balances.(4) The chief executive officer is unwilling to sign the management representationletter.arrow_forwardIf the company is subject to PCAOB rules involving disclosure of control shortcomings (AS 1305), what written assurances concerning internal control over financial reporting should auditors seek from the client?arrow_forwardIf a nonissuer wants an accountant to perform an examination of its internal controls, the accountant should follow:a. PCAOB AS 2201, “An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements.”b. AICPA AT 501, “An Examination of an Entity’s Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements.”c. AICPA AU-C 315, “Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement.”d. FASB Concepts Statement No. 1, “Objectives of Financial Reporting by Business Enterprises.”arrow_forward
- Which of the following best describes why an independent auditor is asked to expressan opinion on the fair presentation of financial statements?(1) It is difficult to prepare financial statements that fairly present a company’s financialposition, operations, and cash flows without the expertise of an independent auditor.(2) It is management’s responsibility to seek available independent aid in theappraisal of the financial information shown in its financial statementsarrow_forwardNoncompliance includes transactions entered by the entity’s employees and management in their personal capacity. The preliminary judgment or estimate about materiality represents the maximum amount by which a set of financial statements could be misstated and still not cause the auditor to believe that the decisions of reasonable users would be affected. Group of answer choices False, True True, False True, True False, Falsearrow_forwardWhich of the following statement is not related to role of audit committee? Approve remuneration and terms of engagement of the external auditor Monitor and review the effectiveness of the company’s internal control Monitor the integrity of the company’s financial statements To prepare the financial statement of the company in timearrow_forward
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