CPA exam questions with complete solutions 2023Which of the following procedures is ordinarily performed by an accountant in a compilation engagement of a nonissuer?
Reading the financial statements to consider whether they are free of obvious mistakes in the application of accounting principle...
CPA exam questions with complete solutions 2023
Which of the following procedures is ordinarily performed by an accountant in a compilation engagement of a nonissuer?
Reading the financial statements to consider whether they are free of obvious mistakes in the application of accounting principles.
Obtaining written representations from management indicating that the compiled financial statements will not be used to obtain credit.
Making inquiries of management concerning actions taken at meetings of the stockholders and the board of directors.
Applying analytical procedures designed to corroborate management's assertions that are embodied in the financial statement components. - correct answer A
. When performing a review of interim financial information, an accountant would typically do each of the following, except:
Consider the results from the latest audit.
Test controls related to the preparation of annual financial information.
Perform analytical procedures.
Make inquiries of management. - correct answer B
If requested to perform a compilation engagement for a nonissuer in which an accountant has an immaterial direct financial interest, the accountant is:
Independent because the financial interest in the nonissuer is immaterial.
Not independent and, therefore, may not be associated with the financial statements.
Not independent and, therefore, may not issue a compilation report.
Not independent and, therefore, may issue a compilation report, but may not issue a review report. - correct answer D
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.
Assess whether the procedures meet the needs of the parties.
Express negative assurance on findings of work performed.
Report the differences between agreed-upon and audit procedures - correct answer A
5. 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?
Significant related party transactions are pervasive.
Usual trade credit from suppliers is denied.
Arrearages in preferred stock dividends are paid.
Restrictions on the disposal of principal assets are present. - correct answer B
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 under U.S. auditing standards should: - correct answer Include an emphasis -of-matterparagraphfollowing theopinionparagraph
Specificallyuse thewords "goingconcern"
Specificallyuse thewords"substantialdoubt"
Which of the following statements extracted from a client's lawyer's letter concerning litigation, claims, and assessments most likely would cause the auditor to request clarification?
"We believe that the possible liability to the company is nominal in amount."
"We believe that the action can be settled for less than the damages claimed."
"We believe that the plaintiff's case against the company is without merit."
"We believe that the company will be able to defend this action successfully." - correct answer B
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?
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