When a practitioner examines projected financial statements The report should include a separate paragraph that?

11. The public has turned to CPAs to provide assurance services primarily because
A. The independence and objectivity of CPAs increase the public trust.
B. There is a need to develop new revenue streams for accounting firms.
C. Audits do not provide reliable information for decision makers.
D. CPAs have been proactive in identifying new types of assurance services to market to customers.

A. The independence and objectivity of CPAs increase the public trust.

12. Which of the following is the authoritative body designated to promulgate attestation standards for nonpublic entities?
A. AICPA (Auditing Standards Board).
B. Governmental Accounting Standards Board.
C. Financial Accounting Standards Board.
D. General Accounting Office.

A. AICPA (Auditing Standards Board).

13. In performing an attestation engagement, a CPA typically
A. Supplies litigation support services.
B. Assesses control risk at a low level.
C. Expresses a conclusion about an assertion.
D. Provides management consulting advice.

C. Expresses a conclusion about an assertion

14. Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?
A. The attestation standards provide a framework for the attest function beyond historical financial statements.
B. The requirement that the practitioner be independent in mental attitude is omitted from the attestation standards.
C. The attestation standards do not permit an attest engagement to be part of a business acquisition study or a feasibility study.
D. None of the standards of fieldwork in generally accepted auditing standards are included in the attestation standards.

A. The attestation standards provide a framework for the attest function beyond historical financial statements.

15. Which of the following conditions is necessary for a practitioner to accept an attest engagement to examine and report on an entity's internal control over financial reporting?
A. The practitioner anticipates relying on the entity's internal control in a financial statement audit.
B. Management accepts responsibility for the effectiveness of internal control.
C. The practitioner is a continuing auditor who previously has audited the entity's financial statements.
D. Management agrees not to present the practitioner's report in a general-use document to stockholders.

B. Management accepts responsibility for the effectiveness of internal control.

16. An accountant's report expressing an opinion on an entity's internal controls should state that
A. Only those controls on which the accountant intends to rely for purposes of the financial statement audit were reviewed, tested, and evaluated.
B. The establishment and maintenance of the internal controls is the responsibility of management.
C. The study and evaluation of the internal controls was conducted in accordance with generally accepted auditing standards.
D. Distribution of the report is restricted for use only by management and the board of directors.

B. The establishment and maintenance of the internal controls is the responsibility of management.

17. For a practitioner to examine management's assertions about the effectiveness of internal controls, all of the following conditions are necessary except:
A. Sufficient competent evidence can be developed to support the evaluation.
B. The practitioner must have already concluded that the financial statements are fairly presented in accordance with the applicable accounting framework.
C. The entity's management accepts responsibility for the effectiveness of its internal control.
D. All of the conditions above are necessary.

B. The practitioner must have already concluded that the financial statements are fairly presented in accordance with the applicable accounting framework.

18. Prospective financial statements may be prepared for
A. General use.
B. Limited use.
C. Internal use.
D. All of the above.

19. Given one or more hypothetical assumptions, a responsible party may prepare, to the best of his knowledge and belief, an entity's expected financial position, results of operations, and changes in cash flows. Such prospective financial statements are known as
A. Pro forma financial statements.
B. Financial projections.
C. Partial presentations.
D. Financial forecasts.

B. Financial projections.

20. Which of the following are prospective financial statements upon which an accountant may appropriately report for general use?
A. Pro forma financial statements.
B. Financial projections.
C. Partial presentations.
D. Financial forecasts.

21. Accepting an engagement to examine an entity's financial projections would most likely be appropriate if distribution of the projections were limited to
A. The general public on the entity's website.
B. Potential stockholders who request a prospectus or a registration statement.
C. A bank with which the entity is negotiating for a loan.
D. All stockholders of record as of the report date.

C. A bank with which the entity is negotiating for a loan.

22. An examination of a financial forecast is a professional service that involves
A. Compiling or assembling a financial forecast that is based on management's assumptions.
B. Limiting the distribution of the accountant's report to management and the board of directors.
C. Assuming responsibility to update management on key events for one year after the report's date.
D. Evaluating the preparation of a financial forecast and the support underlying management's assumptions.

D. Evaluating the preparation of a financial forecast and the support underlying management's assumptions.

23. An accountant's standard report on a compilation of a projection should not include
A. A statement that he or she does not express an opinion on the statements or assumptions.
B. A statement that a compilation of a projection is limited in scope.
C. A disclaimer of responsibility to update the report for events occurring after the report's date.
D. A statement that the accountant expresses only limited assurance that the results may be achieved.

D. A statement that the accountant expresses only limited assurance that the results may be achieved.

24. Limited assurance is provided in
A. An audit engagement.
B. A compilation engagement.
C. A review engagement.
D. None of the above.

25. Absolute assurance is provided in
A. An audit engagement.
B. A compilation engagement.
C. A review engagement.
D. None of the above.

26. Reasonable assurance is provided in
A. An audit engagement.
B. A compilation engagement.
C. A review engagement.
D. None of the above.

27. Which of the following should not be included in an accountant's standard report based upon the compilation of an entity's financial statements?
A. A statement that a compilation is limited to presenting, in the form of financial statements, information that is the representation of management.
B. A statement that the compilation was performed in accordance with standards established by the American Institute of CPAs.
C. A statement that the accountant has not audited or reviewed the financial statements.
D. A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements.

D. A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements.

28. Before issuing a report on the compilation of financial statements of a nonpublic 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.

D. Read the financial statements to consider whether the financial statements are free from obvious material errors.

29. During a review of the financial statements of a nonpublic entity, the CPA finds that the financial statements contain a material departure from generally accepted accounting principles. If management refuses to correct the problem, the CPA should
A. Disclose the departure in a separate paragraph of the report.
B. Issue an adverse opinion.
C. Attach a footnote explaining the effects of the departure.
D. Issue a compilation report.

A. Disclose the departure in a separate paragraph of the report.

30. Which of the following procedures is not included in a review engagement of a nonpublic entity?
A. Inquiries of management.
B. Inquiries regarding significant events subsequent to the balance sheet date.
C. Any procedures designed to identify relationships among data that appear to be unusual.
D. A study and evaluation of internal control.

D. A study and evaluation of internal control.

31. Inquiry of the entity's personnel and analytical procedures are the primary bases for the issuance of a(n)
A. Compilation report on financial statements for a nonpublic company in its first year of operations.
B. Auditor's report on financial statements supplemented with price-level information.
C. Review report on comparative financial statements for a nonpublic company in its second year of operations.
D. Management advisory report prepared at the request of the client's audit committee.

C. Review report on comparative financial statements for a nonpublic company in its second year of operations.

32. The report of a CPA on a review of the financial statements of a nonpublic entity should not include a statement that
A. All information included in the financial statements is the representation of the entity's management.
B. The review was performed in accordance with generally accepted auditing standards.
C. The CPA is not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles.
D. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data.

B. The review was performed in accordance with generally accepted auditing standards.

33. Prior to commencing the compilation of financial statements of a nonpublic entity, the accountant should
A. Perform analytical procedures sufficient to determine whether fluctuations among account balances appear reasonable.
B. Complete the preliminary phase of the study and evaluation of the entity's internal control.
C. Verify that the financial information supplied by the entity agrees with the books of original entry and supporting documentation.
D. Acquire a knowledge of any specialized accounting principles and practices used in the entity's industry.

D. Acquire a knowledge of any specialized accounting principles and practices used in the entity's industry.

34. Compilation reports may include
A. Compilations when the accountant is not independent.
B. Compilations with full disclosure.
C. Compilations that omits substantially all disclosures.
D. Any of the above.

35. In an examination of prospective financial statements, which of the following would not require a departure from the standard examination report?
A. Scope limitation.
B. Unreasonable assumptions.
C. Departure from AICPA presentation guidelines.
D. All of the above would require a departure from the standard examination report.

D. All of the above would require a departure from the standard examination report.

36. May an accountant plan and perform an engagement to compile or review the financial statements of a not-for-profit entity if the accountant is unfamiliar with the specialized industry accounting principles?
A. Only a compilation could be performed without the specialized knowledge.
B. Only a review could be performed without the specialized knowledge.
C. Both a compilation and a review could be performed without the specialized knowledge.
D. Neither a compilation nor a review could be performed without the specialized knowledge.

D. Neither a compilation nor a review could be performed without the specialized knowledge.

37. The report in a review engagement provides
A. Limited assurance.
B. Positive assurance.
C. An opinion.
D. A summary of findings.

38. Compilations provide which of the following types of assurance about the fair presentation of financial statements?
A. No assurance.
B. Negative assurance.
C. Limited assurance.
D. Reasonable assurance.

39. Which of the following is not a main goal of the internal auditing profession?
A. Add value to an organization's operations.
B. Help an organization to accomplish its objectives.
C. Provide reliable information to external users.
D. Improve the effectiveness of risk management of an organization.

C. Provide reliable information to external users.

40. The International Professional Practices Framework developed by the IIA includes all of the following types of guidance, except:
A. Standards.
B. Interpretations of Standards.
C. Practice advisories.
D. Practice guides.

B. Interpretations of Standards.

41. Which of the following statements best describes the guidance developed by the AICPA related to WebTrust services?
A. The Trust Services principles require the CPA to focus exclusively on the financial information presented on a website.
B. Once earned, the WebTrust seal can remain on a website until the entity controlling the site informs the CPA that the information on the site has changed.
C. In performing a WebTrust assurance engagement, a CPA does not have to consider auditing or attestation standards.
D. The Trust Services principles provide a broad set of criteria that guide practitioners in testing and evaluating websites.

D. The Trust Services principles provide a broad set of criteria that guide practitioners in testing and evaluating websites.

42. Which of the following statements is true regarding the performance of an assurance service on information systems reliability by a CPA?
A. The CPA is not permitted to provide any other services for the client if he or she is to perform the service.
B. The service will require the CPA to apply all of the attestation and auditing standards.
C. The service provides information regarding whether the information system provides reliable information for internal operating decisions.
D. Performing the service will not require the collection of evidence.

C. The service provides information regarding whether the information system provides reliable information for internal operating decisions.

43. Which of the following statements is not true concerning assurance services?
A. The growth in assurance services has been driven in part by users' demands for more relevant information.
B. Assurance services focus on improving the quality of information or its context, for decision makers.
C. Unlike audit and attestation engagements, an engagement to perform assurance services does not require the CPA to consider information reliability.
D. Auditing and attestation services can be viewed as subsets of assurance services since there is overlap in their objectives.

C. Unlike audit and attestation engagements, an engagement to perform assurance services does not require the CPA to consider information reliability.

44. An entity engaged a CPA to determine whether the client's websites meet defined criteria for standard business practices and controls over transaction integrity and information protection. In performing this engagement, the CPA should comply with the provisions of
A. Statements on Assurance Standards.
B. Statements on Standards for Attestation Engagements.
C. Statements on Standards for Management Consulting Services.
D. Statements on Auditing Standards.

B. Statements on Standards for Attestation Engagements.

45. Which of the following would be considered a part of a consulting services (non-assurance) engagement?
I. Expressing a conclusion about the reliability of a client's financial statements.
II. Reviewing and commenting on a client-prepared business plan.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.

46. Independence is required
A. Under GAAS but not attestation standards.
B. Under both GAAS and attestation standards.
C. Under attestation standards but not GAAS.
D. Is preferred but not required under both GAAS and attestation standards.

B. Under both GAAS and attestation standards.

47. Blue Co., a privately-held entity, asked its tax accountant, Cook, a CPA in public practice, to reproduce Blue's internally-prepared interim financial statements on Cook's computer when Cook prepared Blue's quarterly tax return. Cook should not submit these financial statements to Blue unless, at a minimum, Cook complies with the provisions of
A. Statements on Responsibilities in Tax Practice.
B. Statements on Standards for Accounting and Review Services.
C. Statements on Responsibilities in Unaudited Financial Services.
D. Statements on Standards for Attestation Engagements

B. Statements on Standards for Accounting and Review Services.

48. Snow, CPA, was engaged by Master Co., a privately-held company, to examine and report on management's written assertion about the effectiveness of Master's internal control over financial reporting. Snow's report should state that
A. Because of inherent limitations of any internal controls, errors or fraud may occur and not be detected.
B. Management's assertion is based on criteria established by the American Institute of Certified Public Accountants.
C. The results of Snow's tests will form the basis for Snow's opinion on the fairness of Master's financial statements in conformity with GAAP.
D. The purpose of the engagement is to enable Snow to plan an audit and determine the nature, timing, and extent of tests to be performed.

A. Because of inherent limitations of any internal controls, errors or fraud may occur and not be detected.

49. An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that
A. Distribution of the report is restricted to the specified users involved.
B. The prospective financial statements also are examined.
C. Responsibility for the adequacy of the procedures performed is taken by the accountant.
D. Negative assurance is expressed on the prospective financial statements taken as a whole.

A. Distribution of the report is restricted to the specified users involved.

50. Accepting an engagement to compile a financial projection for a public company most likely would be inappropriate if the projection were to be distributed to
A. A bank with which the entity is negotiating for a loan.
B. A labor union with which the entity is negotiating a contract.
C. The principal stockholder, to the exclusion of the other stockholders.
D. All stockholders of record as of the report date.

D. All stockholders of record as of the report date.

51. When third party use of prospective financial statements is expected, an accountant may not accept an engagement to
A. Perform a review.
B. Perform a compilation.
C. Perform an examination.
D. Apply agreed-upon procedures.

52. The party responsible for assumptions identified in the preparation of prospective financial statements is usually
A. A third-party lending institution.
B. The client's management.
C. The reporting accountant.
D. The client's independent auditor.

B. The client's management.

53. An accountant's compilation report on a financial forecast should include a statement that the
A. Compilation does not include evaluation of the assumptions underlying the forecast.
B. Hypothetical assumptions used in the forecast are reasonable.
C. Range of assumptions selected is one in which one end of the range is less likely to occur than the other.
D. Prospective statements are limited to presenting, in the form of a forecast, information that is the accountant's representation.

A. Compilation does not include evaluation of the assumptions underlying the forecast.

54. Responding to a question such as "What would happen if ¼" is an attribute of which of the following types of engagements?
A. Financial projection.
B. Financial forecast.
C. Financial forecast and financial projection.
D. Review.

55. When an accountant is not independent of a client and is requested to perform a compilation of the client's financial statements, the accountant
A. Is precluded from accepting the engagement.
B. May accept the engagement and need not disclose the lack of independence.
C. May accept the engagement and should disclose the lack of independence, but need not indicate the reason for the lack of independence.
D. May accept the engagement and should disclose both the lack of independence and the reason for the lack of independence.

C. May accept the engagement and should disclose the lack of independence, but need not indicate the reason for the lack of independence.

56. Before performing a compilation of the financial statements of a nonpublic entity, an accountant should
A. Perform a thorough study and evaluation of the internal control system.
B. Complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions.
C. Design working papers intended to provide sufficient competent evidential matter to afford a reasonable basis for a compilation opinion.
D. Obtain an understanding of the accounting principles and practices of the industry in which the entity operates.

D. Obtain an understanding of the accounting principles and practices of the industry in which the entity operates.

57. During a review of financial statements of a nonpublic entity, the CPA would be least likely to
A. Perform analytical procedures designed to identify relationships that appear to be unusual.
B. Obtain written confirmation from banks regarding loans to the entity.
C. Obtain reports from other accountants who reviewed a portion of the total entity.
D. Read the financial statements and consider their conformance with generally accepted accounting principles.

B. Obtain written confirmation from banks regarding loans to the entity.

58. Which of the following should be included in an accountant's standard report based upon the review of a nonpublic entity's financial statements?
A. A statement that the review was performed in accordance with generally accepted review standards.
B. A statement that a review consists principally of inquiries and analytical procedures.
C. A statement that the accountant is independent with respect to the entity.
D. A statement that a review is substantially greater in scope than a compilation.

B. A statement that a review consists principally of inquiries and analytical procedures.

59. Which of the following procedures is usually included in a review engagement of a nonpublic entity?
A. The confirmation of accounts receivable.
B. A study and evaluation of internal control.
C. An inquiry concerning subsequent events.
D. The observation of physical inventory counts.

C. An inquiry concerning subsequent events.

60. Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include
A. Analytical procedures designed to identify material weaknesses in internal control.
B. Inquiries concerning actions taken at meetings of the stockholders and the board of directors.
C. Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter.
D. Inquiries of knowledgeable outside parties such as the client's attorneys and bankers.

B. Inquiries concerning actions taken at meetings of the stockholders and the board of directors.

61. During a review of the financial statements of a nonpublic entity, an accountant becomes aware of inadequate disclosure that is material to the financial statements. If management refuses to correct the financial statement presentations, the accountant should
A. Issue an adverse opinion.
B. Issue an "except for" qualified opinion.
C. Disclose this departure from generally accepted accounting principles in a separate paragraph of the report.
D. Express only limited assurance on the financial statement presentations.

C. Disclose this departure from generally accepted accounting principles in a separate paragraph of the report.

62. Statements on Standards for Accounting and Review Services establish standards and procedures for which of the following engagements?
A. Assisting in adjusting the books of account for a partnership.
B. Examining prospective financial statements.
C. Processing financial data for clients of other accounting firms.
D. Compiling an individual's personal financial statement to be used to obtain a mortgage.

D. Compiling an individual's personal financial statement to be used to obtain a mortgage.

63. IIA Standards include
A. Practice advisories.
B. Code of Ethics.
C. Interpretations.
D. Both A and B.

64. An accountant is required to comply with the provisions of Statements on Standards for Accounting and Review Services when
I. Typing client-prepared financial statements, without modification, as an accommodation to a client.
II. Preparing standard monthly journal entries for depreciation and expiration of prepaid expenses.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.

65. A compilation of prospective financial statements involves all of the following except:
A. Performing analytical procedures.
B. Assembling the statements based on the responsible party's assumptions.
C. Issuing a compilation report.
D. Considering whether the statements appear to be not obviously inappropriate.

A. Performing analytical procedures.

66. In a review engagement, the accountant must make all of the following inquiries except those to:
A. Identify subsequent events having a material effect on the statements.
B. Understand internal controls.
C. Identify actions taken at stockholders' meetings.
D. Ascertain whether statements are in accordance with GAAP.

B. Understand internal controls.

67. Which of the following procedures is not usually performed by the accountant during a review engagement of a nonpublic entity?
A. Inquiry about actions taken at meetings of the board of directors that may affect the financial statements.
B. Issuance of a report stating that the review was performed in accordance with standards established by the AICPA.
C. Reading of the financial statements to determine if they conform with generally accepted accounting principles.
D. Communication of any material weaknesses discovered during the consideration of internal control.

D. Communication of any material weaknesses discovered during the consideration of internal control.

68. The expectation that an internal auditor does not accept gifts that may impair judgment is based on the principle of
A. Integrity.
B. Objectivity.
C. Confidentiality.
D. Competency.

69. Which of the following is not an aspect of the assurances provided by a CPA WebTrust report?
A. Product or service quality.
B. System availability.
C. Confidentiality.
D. Processing integrity.

A. Product or service quality.

70. In providing PrimePlus services, a CPA is likely to perform all of the following functions except:
A. Observe and report on the quality of care provided to older individuals.
B. Directly receive income and pay bills and provide an accounting for these transactions.
C. Directly evaluate the quality of health care services provided by physicians and other medical caregivers.
D. Perform assurance-related procedures by inspecting logs or other evidence to support that contracted services have been provided.

C. Directly evaluate the quality of health care services provided by physicians and other medical caregivers.

71. Direct services offered under PrimePlus include all of the following except:
A. Accounting for the client's income.
B. Providing assurances about the quality of care.
C. Supervising the client's investments.
D. Arranging for payment of care.

B. Providing assurances about the quality of care.

72. The type of report issued under a PrimePlus assurance engagement is likely which of the following?
A. Unqualified.
B. Assurance.
C. Audit.
D. Agreed-upon procedures.

D. Agreed-upon procedures.

73. Trust Service principles cover
A. Hardware design.
B. Confidentiality.
C. Software design.
D. Physical protection of computer systems.

74. An attestation report should state that the use of the report is restricted to specified parties under all of the following circumstances except when:
A. The criteria used to evaluate the subject matter are available only to specified parties.
B. The report is an attest engagement to apply agreed-upon procedures.
C. A written assertion on the subject matter of the report has not been provided by the responsible party.
D. All of the above are circumstances that would dictate that the use of the report is restricted to specific parties.

D. All of the above are circumstances that would dictate that the use of the report is restricted to specific parties.

75. Which of the following is not an attestation standard?
A. Sufficient evidence shall be obtained to provide a reasonable basis for the conclusion that is expressed in the report.
B. The report shall identify the subject matter or assertion being reported on and state the character of the engagement.
C. The work shall be adequately planned and assistants, if any, shall be properly supervised.
D. A sufficient understanding of internal controls shall be obtained to plan the engagement.

D. A sufficient understanding of internal controls shall be obtained to plan the engagement.

76. According to the Code of Professional Conduct, what response is appropriate when an accountant, who is not independent, performs a compilation of financial statements?
A. The accountant should indicate in the last sentence of the report that he/she is not independent.
B. The accountant should withdraw from the engagement.
C. The accountant should express a disclaimer opinion on the compilation.
D. The accountant should express an adverse opinion on the compilation.

A. The accountant should indicate in the last sentence of the report that he/she is not independent.

77. Which of the following would an accountant not need to know when conducting a compilation?
A. The accounting principles and practices of the industry in which the entity operates.
B. A general understanding of the nature of the entity's business transactions and the form of its accounting records.
C. The accounting basis on which the financial statements are to be presented.
D. The accountant would need to know all of the above when conducting a compilation.

D. The accountant would need to know all of the above when conducting a compilation.

78. When an accountant compiles a nonpublic entity's financial statements that omit substantially all disclosures required by generally accepted accounting principles, the accountant should indicate in the compilation report that the financial statements are
A. Restricted for internal use only by the entity's management.
B. Not to be given to financial institutions for the purpose of obtaining credit.
C. Compiled in conformity with a comprehensive basis of accounting other than generally accepted accounting principles.
D. Not designed for those who are uninformed about the omitted disclosures.

D. Not designed for those who are uninformed about the omitted disclosures.

79. Which of the following procedures is more likely to be performed in a review engagement of a nonpublic entity than in a compilation engagement?
A. Gaining an understanding of the entity's business transactions.
B. Making a preliminary assessment of control risk.
C. Obtaining a representation letter from the chief executive officer.
D. Assisting the entity in adjusting the accounting records.

C. Obtaining a representation letter from the chief executive officer.

80. Statements on Standards for Accounting and Review Services (SSARS) require an accountant to report when the accountant has
A. Typed client-prepared financial statements, without modification, as an accommodation to the client.
B. Provided a client with a financial statement format that does not include dollar amounts, to be used by the client in preparing financial statements.
C. Proposed correcting journal entries to be recorded by the client that change client-prepared financial statements.
D. Generated, through the use of computer software, financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP.

D. Generated, through the use of computer software, financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP.

81. A CPA's report on agreed-upon procedures related to management's assertion about an entity's compliance with specified requirements should contain
A. A statement of limitations on the use of the report.
B. An opinion about whether management's assertion is fairly stated.
C. Negative assurance that control risk has not been assessed.
D. An acknowledgement of responsibility for the sufficiency of the procedures.

A. A statement of limitations on the use of the report.

82. Which of the following represents the order from the least assurance to the most assurance provided for the types of services provided?
A. Review, compilation, audit.
B. Compilation, review, audit.
C. Audit, review, compilation.
D. Audit, compilation, review.

B. Compilation, review, audit.

83. Jones Retailing, a nonpublic entity, has asked Winters, CPA, to compile financial statements that omit substantially all disclosures required by generally accepted accounting principles. Winters may compile such financial statements, provided the
A. Reason for omitting the disclosures is explained in the engagement letter and acknowledged in the management representation letter.
B. Financial statements are prepared on a comprehensive basis of accounting other than generally accepted accounting principles.
C. Distribution of the financial statements is restricted to internal use only.
D. Omission is not undertaken to mislead the users of the financial statements and is properly disclosed in the accountant's report.

D. Omission is not undertaken to mislead the users of the financial statements and is properly disclosed in the accountant's report.

84. During an engagement to review the financial statements of a nonpublic entity, an accountant becomes aware of a material departure from GAAP. If the accountant decides to modify the standard review report because management will not revise the financial statements, the accountant should
A. Express negative assurance on the accounting principles that do not conform with GAAP.
B. Disclose the departure from GAAP in a separate paragraph of the report.
C. Issue an adverse or an "except for" qualified opinion, depending on materiality.
D. Express positive assurance on the accounting principles that conform with GAAP.

B. Disclose the departure from GAAP in a separate paragraph of the report.

85. Which set of standards was created by the AICPA to cover services relating to unaudited financial statements?
A. Standards on Selective Audits and Review Services (SSARS).
B. Statement on Auditing Standards (SAS).
C. Statements on Compilation and Review Standards (SCRS).
D. Statements on Standards for Accounting and Review Services (SSARS).

D. Statements on Standards for Accounting and Review Services (SSARS).

86. When engaged to compile the financial statements of a nonpublic entity, an accountant is required to possess a level of knowledge of the entity's accounting principles and practices. This requirement most likely will include obtaining a general understanding of the
A. Stated qualifications of the entity's accounting personnel.
B. Design of the entity's internal controls placed in operation.
C. Risk factors relating to misstatements arising from illegal acts.
D. Internal control awareness of the entity's senior management.

A. Stated qualifications of the entity's accounting personnel.

87. This concept, while used by both internal and external auditors, is typically assessed quite differently for each.
A. Competence.
B. Objectivity.
C. Integrity.
D. Materiality.

88. An entity's WebTrust seal is managed by
A. The CPA who performed the service.
B. The AICPA.
C. A third-party service organization.
D. The entity receiving the seal.

C. A third-party service organization

89. A SysTrust engagement is conducted under which of the following sets of standards?
A. AICPA.
B. Review.
C. Attestation.
D. Audit.

When an accountant compiles a financial forecast the accountant's report should include a N ):?

Who is the party responsible for assumptions in prospective f s?

Can prospective financial statements be audited?

Which of the following is always present in an assurance engagement?