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Chapter 20 - Additional Assurance Services: Other Information
Chapter 20
Additional Assurance Services: Other Information
True / False Questions
1. Assurance services improve the quality of information or its contet for decision ma!ers.
"rue #alse
2. Attestation services are similar$ %ut &o %eyond assurance services in scope of procedures
and reportin&."rue #alse
'. Independence is required for the performance of all assurance services."rue #alse
(. )ractitioners may report on either an assertion a%out the su%*ect matter$ or on the su%*ect
matter for most attestation en&a&ements."rue #alse
+. Attestation ris!$ li!e audit ris! consists of three components--inherent ris!$ control ris!$ and
su%stantiation ris!."rue #alse
,. "he attestation standards prohi%it the eamination of prospective financial statements.
"rue #alse
. A practitioner may %e en&a&ed to perform a revie of mana&ement/s discussion and
analysis for an annual or an interim period."rue #alse
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Chapter 20 - Additional Assurance Services: Other Information
. A e%"rust seal assures consumers that they ill %e satisfied ith their purchases.
"rue #alse
. "rust Services are a part of the AIC)A/s vision that increased trust in annual historical
financial statements is necessary.
"rue #alse
10. Sys"rust en&a&ements relate only to data%ase systems.
"rue #alse
Multiple Choice Questions
11. hich of the folloin& is leastli!ely to %e included in an a&reed-upon proceduresattestation en&a&ement report3
A. "he specified party ta!es responsi%ility for the sufficiency of procedures.
4. 5se of the report is restricted.
C. 6imited assurance on the information presented.7. A summary of procedures performed.
12. Conditions eist that result in a material deviation from the criteria a&ainst hich thesu%*ect matter as evaluated durin& an eamination performed folloin& the attestation
standards. "he C)A/s conclusion may %e on:
A. Option A
4. Option 4
C. Option C7. Option 7
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Chapter 20 - Additional Assurance Services: Other Information
1'. Suita%le criteria in an attestation en&a&ement may %e availa%le:
A. Option A4. Option 4
C. Option C
7. Option 7
1(. hen performin& an attestation eamination en&a&ement$ hich of the folloin& is not
alays required3
A. Assertion.4. )ractitioner independence.
C. Su%*ect matter.
7. Suita%le criteria.
1+. hich of the folloin& en&a&ements is most li!ely to consider availa%ility$ security$
inte&rity$ and maintaina%ility of a company/s computer systems3
A. Internal control over financial reportin&.4. "rust Services.
C. e%site Asssociate.
7. #inancial statement audit.
1,. hich of the folloin& are "rust Services principles3
A. Option A
4. Option 4
C. Option C7. Option 7
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Chapter 20 - Additional Assurance Services: Other Information
1. hich of the folloin& is the leastli!ely to %e considered su%*ect matter of an attestation
en&a&ement3A. Assertion.
4. 4ehavior.
C. 8istorical event.7. Systems and processes.
1. Arel$ C)A$ as en&a&ed %y a &roup of royalty recipients to apply a&reed-upon procedures
to financial data supplied %y 9odit Co. re&ardin& 9odit/s ritten assertion a%out its
compliance ith contractual requirements to pay royalties. Arel/s report on these a&reed-uponprocedures should contain a an;.
A. 7isclaimer of opinion a%out the fair presentation of 9odit/s financial statements.
4. 6ist of the procedures performed or reference thereto; and Arel/s findin&s.
C. Opinion a%out the effectiveness of 9odit/s internal control activities concernin& royaltypayments.
7. Ac!noled&ment that the sufficiency of the procedures is solely Arel/s responsi%ility.
1. Assurance services performed for decision ma!ers may address the:
A. Option A
4. Option 4
C. Option C
7. Option 7
20. hich of the folloin& is notnecessarily an attest en&a&ement3
A. An elder care en&a&ement.
4. A e%"rust en&a&ement.C. An eamination of internal control over financial reportin& for a nonpu%lic company.
7. A revie of mana&ement/s discussion and analysis.
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Chapter 20 - Additional Assurance Services: Other Information
21. hich of the folloin& are required on all attestation en&a&ements3
A. Option A4. Option 4
C. Option C
7. Option 7
22. hich of the folloin& is notcurrently an accepta%le form of association ith prospective
financial statements3
A. Compilation.4.
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Chapter 20 - Additional Assurance Services: Other Information
2+. hen a financial forecast fails to disclose a si&nificant assumption used to prepare that
forecast$ hich of the folloin& reports %ecome appropriate3
A. Option A
4. Option 4C. Option C
7. Option 7
2,. hen reportin& upon a revie en&a&ements on an entity/s mana&ement discussion andanalysis$ the report is ordinarily:
A. A &eneral use report.
4. A restricted use report.
C.
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Chapter 20 - Additional Assurance Services: Other Information
2. hich of the folloin& is leastli!ely to result in modification of an opinion on
mana&ement/s assertion a%out the effectiveness of an entity/s internal control3A. Si&nificant circumstance imposed scope limitations.
4. Si&nificant mana&ement imposed scope limitations.
C.
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Chapter 20 - Additional Assurance Services: Other Information
''. Independence is required hen performin&:
A. Option A
4. Option 4C. Option C
7. Option 7
'(. A practitioner/s unqualified opinion %ased upon an eamination may ordinarily %e on:
A. Option A
4. Option 4C. Option C
7. Option 7
'+. hich attest en&a&ement ali&ns most directly ith a financial statement audit in terms of
assurance provided3
A. A&reed-upon procedures.4. =valuation.
C. =amination.
7.
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Chapter 20 - Additional Assurance Services: Other Information
'. 5nder the attestation standards$ in hich of the folloin& circumstances is a revie reportleastli!ely to %e issued3A. Criteria are a&reed-upon or only availa%le to specified users.
4. =sta%lished criteria eist$ %ut other criteria are used.
C. "he su%*ect matter departs from the criteria.7. A si&nificant limitation on the scope of the en&a&ement has occurred.
'. "o accept an en&a&ement to eamine a client/s 97@A for annual financial statements$ the
practitioners ordinarily must have:
A. Audited the most recent financial statement period to hich the 97@A applies.4. 7etermined that the client reports to the Securities and =chan&e Commission.
C. )erformed a detailed analysis of the client/s controls over decision ma!in&.
7.
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Chapter 20 - Additional Assurance Services: Other Information
(2. hich of the folloin& is a prospective financial statement for &eneral use upon hich a
practitioner may appropriately report3A. #inancial pro*ection.
4. )artial presentation.
C. )ro forma financial statement.7. #inancial forecast.
('. "he party responsi%le for assumptions identified in the preparation of prospective
financial statements is usually:
A. A third-party lendin& institution.4. "he client/s mana&ement.
C. "he reportin& accountant.
7. "he client/s independent auditor.
((. >iven one or more hypothetical assumptions$ a responsi%le party may prepare an entity/s
epected financial position$ results of operations$ and chan&es in financial position. Such
prospective financial statements are !non as:A. )ro forma financial statements.
4. #inancial pro*ections.
C. )artial )resentation.7. #inancial forecasts.
(+. Acceptin& an en&a&ement to eamine an entity/s financial pro*ection most li!ely ould %e
appropriate if the pro*ection ere to %e distri%uted to:A. All employees ho or! for the entity.
4. )otential stoc!holders ho request a prospectus or a re&istration statement.
C. A %an! ith hich the entity is ne&otiatin& for a loan.7. All stoc!holders of record as of the report date.
(,. hen an accountant compiles a financial forecast$ the accountant/s report should includeaan;A. =planation of the differences %eteen a financial forecast and a financial pro*ection.
4. Caveat that the prospective results of the financial forecast may not%e achieved.
C. Statement that the accountant/s responsi%ility to update the report is limited to one year.7. 7isclaimer of opinion on the relia%ility of the entity/s internal controls.
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Chapter 20 - Additional Assurance Services: Other Information
ssa! Questions
(. "he arren Corporation ants to enhance the mar!et value of its stoc! %y includin& in its
annual report a financial forecast for the net year. "hey also ould li!e to have their auditorseamine the forecast.a. 7efine a financial forecast.
%. Is an eamination of a financial forecast similar in scope to a revie of financial
statements3 =plain.
(. )ractitioners may %e en&a&ed to attest to an entity/s internal control over financialreportin&.
a. Comment on the accuracy of this statement: Accountants may %e en&a&ed to eamine$
revie$ or perform a&reed-upon procedures on an entity/s internal control over financialreportin&.
%. 7escri%e the nature of the four para&raphs included in an accountant/s eamination report
on internal control over financial reportin&.
c. 7escri%e to circumstances in hich practitioners ould issue an eamination report thatis other than the unqualified standards report on internal control.
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Chapter 20 - Additional Assurance Services: Other Information
Chapter 20 Additional Assurance Services: Other Information Anserey
True / False Questions
1. Assurance services improve the quality of information or its contet for decision ma!ers.
T"#
Difficulty: Easy
2. Attestation services are similar$ %ut &o %eyond assurance services in scope of proceduresand reportin&.
FA$S
Difficulty: Medium
'. Independence is required for the performance of all assurance services.
T"#
Difficulty: Medium
(. )ractitioners may report on either an assertion a%out the su%*ect matter$ or on the su%*ect
matter for most attestation en&a&ements.
T"#
Difficulty: Medium
+. Attestation ris!$ li!e audit ris! consists of three components--inherent ris!$ control ris!$ and
su%stantiation ris!.
FA$S
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
,. "he attestation standards prohi%it the eamination of prospective financial statements.
FA$S
Difficulty: Medium
. A practitioner may %e en&a&ed to perform a revie of mana&ement/s discussion andanalysis for an annual or an interim period.
T"#
Difficulty: Medium
. A e%"rust seal assures consumers that they ill %e satisfied ith their purchases.FA$S
Difficulty: Easy
. "rust Services are a part of the AIC)A/s vision that increased trust in annual historicalfinancial statements is necessary.
FA$S
Difficulty: Medium
10. Sys"rust en&a&ements relate only to data%ase systems.
FA$S
Difficulty: Medium
Multiple Choice Questions
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Chapter 20 - Additional Assurance Services: Other Information
11. hich of the folloin& is leastli!ely to %e included in an a&reed-upon procedures
attestation en&a&ement report3A."he specified party ta!es responsi%ility for the sufficiency of procedures.
4.5se of the report is restricted.
C%6imited assurance on the information presented.7.A summary of procedures performed.
Difficulty: Medium
12. Conditions eist that result in a material deviation from the criteria a&ainst hich the
su%*ect matter as evaluated durin& an eamination performed folloin& the attestation
standards. "he C)A/s conclusion may %e on:
A.Option A
&%Option 4C.Option C
7.Option 7
Difficulty: Medium
1'. Suita%le criteria in an attestation en&a&ement may %e availa%le:
A%Option A4.Option 4
C.Option C7.Option 7
Difficulty: Hard
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Chapter 20 - Additional Assurance Services: Other Information
1(. hen performin& an attestation eamination en&a&ement$ hich of the folloin& is not
alays required3
A%Assertion.
4.)ractitioner independence.
C.Su%*ect matter.7.Suita%le criteria.
Difficulty: Hard
1+. hich of the folloin& en&a&ements is most li!ely to consider availa%ility$ security$
inte&rity$ and maintaina%ility of a company/s computer systems3
A.Internal control over financial reportin&.
&%"rust Services.
C.e%site Asssociate.7.#inancial statement audit.
Difficulty: Medium
1,. hich of the folloin& are "rust Services principles3
A%Option A4.Option 4
C.Option C
7.Option 7
Difficulty: Hard
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Chapter 20 - Additional Assurance Services: Other Information
1. hich of the folloin& is the leastli!ely to %e considered su%*ect matter of an attestation
en&a&ement3
A%Assertion.
4.4ehavior.
C.8istorical event.7.Systems and processes.
Difficulty: Medium
1. Arel$ C)A$ as en&a&ed %y a &roup of royalty recipients to apply a&reed-upon procedures
to financial data supplied %y 9odit Co. re&ardin& 9odit/s ritten assertion a%out its
compliance ith contractual requirements to pay royalties. Arel/s report on these a&reed-upon
procedures should contain a an;.
A.7isclaimer of opinion a%out the fair presentation of 9odit/s financial statements.&%6ist of the procedures performed or reference thereto; and Arel/s findin&s.
C.Opinion a%out the effectiveness of 9odit/s internal control activities concernin& royaltypayments.
7.Ac!noled&ment that the sufficiency of the procedures is solely Arel/s responsi%ility.
Difficulty: Medium
1. Assurance services performed for decision ma!ers may address the:
A%Option A
4.Option 4
C.Option C7.Option 7
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
20. hich of the folloin& is notnecessarily an attest en&a&ement3
A%An elder care en&a&ement.4.A e%"rust en&a&ement.
C.An eamination of internal control over financial reportin& for a nonpu%lic company.
7.A revie of mana&ement/s discussion and analysis.
Difficulty: Hard
21. hich of the folloin& are required on all attestation en&a&ements3
A%Option A
4.Option 4
C.Option C7.Option 7
Difficulty: Medium
22. hich of the folloin& is notcurrently an accepta%le form of association ith prospectivefinancial statements3
A.Compilation.
&%
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Chapter 20 - Additional Assurance Services: Other Information
2'. hen a practitioner eamines pro*ected financial statements$ the practitioner/s report
should include a separate para&raph that:
A%7escri%es the limitations on the usefulness of the presentation.
4.)rovides an eplanation of the differences %eteen an eamination and a revie.
C.States that the accountant is responsi%le for events and circumstances for a period noteceedin& one year after the report/s date.7.7isclaims an opinion on hether the assumptions provide a reasona%le %asis for the
pro*ection.
Difficulty: Hard
2(. hich of the folloin& is correct relatin& to an en&a&ement to apply a&reed-upon
procedures to prospective financial statements3
A%5se of the report is restricted to the specified users.4.Such en&a&ements are permissi%le for forecasts %ut not for pro*ections.
C.
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Chapter 20 - Additional Assurance Services: Other Information
2,. hen reportin& upon a revie en&a&ements on an entity/s mana&ement discussion and
analysis$ the report is ordinarily:A.A &eneral use report.
&%A restricted use report.
C.
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Chapter 20 - Additional Assurance Services: Other Information
'0. )rovidin& assurance usin& a series of reports provided simultaneously or shortly after the
related information is released is referred to as:
A%Continuous auditin&.
4.Serial auditin&.
C.Systems relia%ility auditin&.7.Simultaneity auditin&.
Difficulty: Easy
'1. "he or&ani?ation esta%lished to identify$ develop and communicate ne assurance service
opportunities is the:
A%Assurance Services =ecutive Committee.
4.Attestation Standards %oard.
C.Auditin& Standards 4oard.7.Counsel of =ecutives.
Difficulty: Medium
'2. 9any ne services assurance services are performed in accordance ith Statements on
A%Standards for Attestation Services.4.>enerally Accepted Assurance Standards.
C.Auditin& Standards.
7.Accountin& for other Assurance Services.
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
''. Independence is required hen performin&:
A%Option A
4.Option 4C.Option C
7.Option 7
Difficulty: Medium
'(. A practitioner/s unqualified opinion %ased upon an eamination may ordinarily %e on:
A%Option A
4.Option 4C.Option C
7.Option 7
Difficulty: Medium
'+. hich attest en&a&ement ali&ns most directly ith a financial statement audit in terms of
assurance provided3A.A&reed-upon procedures.
4.=valuation.
C%=amination.
7.
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Chapter 20 - Additional Assurance Services: Other Information
',. "he e%"rust en&a&ement relates most directly to
A.#inancial statements maintained on the Internet.4.8ealth care facilities.
C.
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Chapter 20 - Additional Assurance Services: Other Information
(0. "he five principles of a relia%le system considered in a "rust Services en&a&ement
include$ availa%ility$ security$ processin& inte&rity$ online privacy$ and:A.Control
&%Confidentiality.
C.
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Chapter 20 - Additional Assurance Services: Other Information
((. >iven one or more hypothetical assumptions$ a responsi%le party may prepare an entity/s
epected financial position$ results of operations$ and chan&es in financial position. Suchprospective financial statements are !non as:
A.)ro forma financial statements.
&%#inancial pro*ections.C.)artial )resentation.7.#inancial forecasts.
Difficulty: Medium
Source: AICPA
(+. Acceptin& an en&a&ement to eamine an entity/s financial pro*ection most li!ely ould %e
appropriate if the pro*ection ere to %e distri%uted to:
A.All employees ho or! for the entity.4.)otential stoc!holders ho request a prospectus or a re&istration statement.
C%A %an! ith hich the entity is ne&otiatin& for a loan.7.All stoc!holders of record as of the report date.
Difficulty: Hard
Source: AICPA
(,. hen an accountant compiles a financial forecast$ the accountant/s report should include
aan;
A.=planation of the differences %eteen a financial forecast and a financial pro*ection.&%Caveat that the prospective results of the financial forecast may not%e achieved.
C.Statement that the accountant/s responsi%ility to update the report is limited to one year.
7.7isclaimer of opinion on the relia%ility of the entity/s internal controls.
Difficulty: Medium
Source: AICPA
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Chapter 20 - Additional Assurance Services: Other Information
ssa! Questions
(. "he arren Corporation ants to enhance the mar!et value of its stoc! %y includin& in itsannual report a financial forecast for the net year. "hey also ould li!e to have their auditors
eamine the forecast.
a. 7efine a financial forecast.%. Is an eamination of a financial forecast similar in scope to a revie of financial
statements3 =plain.
a. A financial forecast is Ban estimate of the most pro%a%le financial position$ results of
operations$ and chan&es in financial position for one or more future periods.B%. o. An eamination of a financial forecast involves an etensive eamination of the
assumptions underlyin& the forecast$ to satisfy the C)As that mana&ement has identified all
!ey assumptions and that the assumptions are suita%ly supported.
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
(. )ractitioners may %e en&a&ed to attest to an entity/s internal control over financial
reportin&.a. Comment on the accuracy of this statement: Accountants may %e en&a&ed to eamine$
revie$ or perform a&reed-upon procedures on an entity/s internal control over financial
reportin&.%. 7escri%e the nature of the four para&raphs included in an accountant/s eamination reporton internal control over financial reportin&.
c. 7escri%e to circumstances in hich practitioners ould issue an eamination report that
is other than the unqualified standards report on internal control.
a. A C)A may eamine or perform a&reed-upon procedures on an entity/s internal controlover financial reportin&$ %ut a revie of this information is not alloed.
%. A C)A/s report on internal control contained the folloin& four para&raphs:
"he first para&raph is an introductory para&raph that descri%es the assertion %ein& eamined.
"he second para&raph is a scope para&raph that descri%es the nature of an eamination of an
entity/s internal control over financial reportin&."he third para&raph descri%es the inherent limitations of internal control.
"he fourth para&raph epresses the C)A/s opinion on mana&ement/s assertion a%out internal
control.c. Internal control reports are modified for the folloin& reasons only to required;:
A qualified report is issued hen the scope of the accountant/s procedures has %een
restricted.
A disclaimer of opinion is issued hen the scope of the accountant/s procedures has %een
restricted %y the client$ or severely limited %y the circumstances.
An adverse report is issued hen the accountants %ecome aare of a material ea!ness that
is not ac!noled&ed in mana&ement/s report.A modified report is issued hen the accountants %ecome aare of a material ea!ness that
is ac!noled&ed in mana&ement/s report.
Difficulty: Medium