AUD 5.3 - Attestation Engagements And Standards

Question 1

The need for independent expression of assurance on subject matters other than historical basic financial statements:

Answer 1

Attestation services

Question 2

Engagements in which a practitioner is engaged to issue or does issue an emancipation, review, or an agreed-upon procedures report on subject matter, OR on an assertion bout the subject matter that is the responsibility of another party:

Answer 2

Attestation engagements

Question 3

Each type of attestation service allows a different combination of reporting options under the SSAE. For agreed-upon procedures, what reporting options are there?

Answer 3

Agreed upon procedures report type

Question 4

Each type of attestation service allows a different combination of reporting options under the SSAE. For prospective financial statements, what reporting options are there?

Answer 4

Examination and agreed-upon procedures

Question 5

Each type of attestation service allows a different combination of reporting options under the SSAE. For pro forma financial statements, what reporting options are there?

Answer 5

Examination and review

Question 6

Each type of attestation service allows a different combination of reporting options under the SSAE. For compliance, what reporting options are there?

Answer 6

Examination and agreed-upon procedures

Question 7

Each type of attestation service allows a different combination of reporting options under the SSAE. For MD&A, what reporting options are there?

Answer 7

Examination and review

Question 8

Each type of attestation service allows a different combination of reporting options under the SSAE. For service organizations, what reporting options are there?

Answer 8

Examination

Question 9

What standard provides information addressing attestation services for:
Agreed-upon procedures, financial forecasts and projections, pro forma financial statements, compliance, managements discussion and analysis, and reporting on controls at service organizations?

Answer 9

The Statements on Standards for Attestation Engagements (SSAE) established by the AICPA

Question 10

What other two reporting options are allowed for prospective financial statements but are governed by who?

Answer 10

Preparation and compilation
Governed by SSARS rather than SSAE

Question 11

What standards apply to audit engagements?
What standards apply to preparation, compilation, and review engagements?
What standards apply to attest engagements?

Answer 11

1. Statements of auditing standards (SAS) and PCAOB
2. Statements on standards fr accounting and review services (SSARS)
3. Statements on standards for attestation engagements (SSAE)

Question 12

Statements on standards for attestation engagements (SSAE) do not apply to:

Answer 12

Audits
Preparation, compilations, and reviews of financials of nonissuers under SARS
Return preparation (income tax, etc)
Advocating for the client (litigation)
Providing consulting/advisory services
Audits of internal controls over financial reporting

Question 13

What are attestation standards intended to do? (SSAE)

Answer 13

Provide guidance
Set boundaries
Provide a measure of quality
Describe the objectives

Question 14

Attestation standards (SSAE) is an extension of the generally accepted auditing standards (GAAS), but differ from GAAS in what two ways?

Answer 14

1. No reference is made to historical financial statements
2. No reference is made to generally accepted accounting principles

Question 15

What are the concepts the attestation standards (SSAE) include guidance on that are common to all attestation engagements? (CAPE CORP)

Answer 15

Compliance with standards
Acceptance & continuance
Preconditions
Engagement documentation standards
Change in terms of the engagement
Work of other practitioner
Responsibility for quality control
Professional skepticism & judgement

Question 16

The risk that the practitioner expresses an inappropriate opinion or conclusion, as applicable, when the subject matter or assertion is materially misstated:

Answer 16

Attestation risk

Question 17

Attestation risk does not apply to what?

Answer 17

Agreed-upon procedures engagements

Question 18

Attestation risk formula is:

Answer 18

Inherent risk X control risk X detection risk

Question 19

If material misstatements or deviations occur in an attestation engagement, then….

Answer 19

The conclusion should be expressed directly on the subject matter (not the assertion itself)

Question 20

If reporting on the assertion in an attestation engagement, then…

Answer 20

It should accompany the practitioners report OR the assertion should be clearly stated in the report

Question 21

Concerns about the assertion, conformity with the criteria, or the adequacy of disclosure in an examination engagement can result in what?

Answer 21

A qualified or adverse opinion

Question 22

Concerns about the assertion, conformity with the criteria, or the adequacy of disclosure in a review engagement can result in what?

Answer 22

A modified conclusion

Question 23

Scope limitations of an examination engagement may result in what opinion?

Answer 23

Qualified, disclaimer of opinion, or a withdrawal

Question 24

Scope limitations in a review engagement will result in what opinion?

Answer 24

Withdrawal

Question 25

What are the two different types of examination engagements?

Answer 25

1. Assertion based examination engagement
2. Direct examination engagement

Question 26

In this type of examination engagement, the practitioner expresses opinion on whether the subject matter is in accordance with the criteria or on the responsible parties assertion:

Answer 26

Assertion based examination engagement
(Positive opinion)

Question 27

What type of examination engagement does the responsible party not provide an assertion, HOWEVER, is always required to acknowledge its responsibility for the underlying subject matter

Answer 27

A direct examination engagement

Question 28

Before accepting a direct examination engagement, the auditor should:

Answer 28

Obtain understanding from the responsible party on the purpose of the engagement
Inquire how the practitioner report will be used
Inquire why the party does not intend to provide an assertion

Question 29

This attestation engagement results in a conclusion, which provides a moderate level of assurance, generally based on inquiry and analytical procedures:

Answer 29

Review (limited assurance)

Question 30

This type of attestation engagement provides no assurance, but procedures and findings are listed:

Answer 30

Agreed upon procedures engagement

Question 31

Examination engagements provide what amount of assurance, result in what (opinion, conclusion, etc.), and are similar to what?

Answer 31

Reasonable assurance (positive)
Opinion
Similar to an Audit (SAS)

Question 32

Review engagements provide what amount of assurance, result in what (opinion, conclusion, etc.), and are similar to what?

Answer 32

Limited assurance (negative)
Conclusion
Review (SSARS)

Question 33

Agreed-upon procedures engagements provide what amount of assurance, result in what (opinion, conclusion, etc.), and are similar to what?

Answer 33

No assurance
A listing of findings
Similar to nothing

Question 34

If no written assertion is obtained from management, and the client is the responsible party, what happens if it is a examination engagement, review engagement or an agreed-upon procedures engagement?

Answer 34

Examination: withdraw
Review: withdraw
Agreed-upon procedures: modify based on the scope limitation

Question 35

If no written assertion is obtained from management, and the client is not the responsible party, what happens if it is a examination engagement, review engagement or an agreed-upon procedures engagement?

Answer 35

A report may be issued for each, as long as appropriate procedures are performed and sufficient evidence is obtained. BUT, the refusal should be disclosed and the report use should be restricted.