Chapter 2 Section 6: Attest Engagements

Question 1

What can attest engagements report on?

Answer 1

Compliance with laws and regs
Compliance with contracts
Internal control
Computer systems and software
Information supplemental to financials
Prospective information
Performance, physical characteristics, etc.

Question 2

What is a webtrust engagement?

Answer 2

Provide assurance related to e-commerce. It assesses a client’s website

Question 3

What is a systrust engagement?

Answer 3

Provides assurance related to reliability of any electronic system

Question 4

What standards are used for attest engagements?

Answer 4

Statements on Standards for Attestation Engagements

SSAE

Question 5

What are the major attestation services?

Answer 5

Agreed-upon procedures
Financial forecasts and projections
Pro forma financials
Internal control over financial reporting
Compliance
MD and A (required by SEC)

Question 6

What do the SSAE not apply to?

Answer 6

Audits
Comps and reviews of nonissuers
Return prep
Advocating for client in litigation
Consulting and advising
Operational audits

Question 7

How do attest standards compare to GAAS audits?

Answer 7

They are lower. They are a framework for the attest function beyond historical financials.

Question 8

What are the five general attestation standards?

TIPPY

Answer 8

Traning and proficiency
Independence
Performance/due professional care in planning and performance
Professional, adequate knowledge of subject matter
Your belief that the matter is capable of evaluation against suitable criteria (professional judgment)

Question 9

What are the two fieldwork standards and four reporting standards?

PA
SSER

Answer 9

Planning and supervision
Appropriate, sufficient evidence to provide a reasonable basis for conclusion
identify the Subject matter
disclose Significant reservations about the engagement
Express conclusions
Restrict the use of the report when needed

Question 10

When does the use need to be restricted?

Answer 10

When the criteria are only appropriate for or available to a limited number of parties
Reporting on a subject matter and a written assertion has not been provided
Reporting on agreed-upon procedures engagement

Question 11

How do you handle scope restrictions?

Answer 11

Consider withdrawing

Question 12

What are the three conclusions available?

Answer 12

Examination: positive opinion, high level of assurance
Review: negative assurance
Agreed upon procedures: no assurance

Question 13

What is a written assertion?

Answer 13

Obtained in examination and review engagements. It is usually necessary.

Question 14

What if there is no written assertion and the client is the responsible party?

Answer 14

Scope limitation - you should withdraw

Question 15

What if there is no written assertion and the client is not the responsible party?

Answer 15

Use should be restricted

Question 16

What is an agreed-upon procedure engagement?

Answer 16

The practitioner is engaged to issue a report of findings based on specific agreed-upon procedures.

Question 17

What are the conditions for an agreed-upon procedures engagement to exist?

I AM SURE

Answer 17

Independence of practitioner
Agreement of parties
Measurability and consistency
Sufficiency of the procedures
Use of the report is restricted
Responsibility for the subject matter
Engagements to perform agreed-upon procedures on prospective financials must include a summary of assumptions

Question 18

What is a financial forecast?

Answer 18

Based on expected conditions and courses of action. For general and limited use

Question 19

What is a financial projection?

Answer 19

Based on what if scenarios. For limited use only.

Question 20

What are the three ways a practitioner can be associated with prospective financials?

Answer 20

Comp agreement (no assurance)
Examination agreement (opinion)
Agreed-upon procedures engagement (disclaimer)
never a review

Question 21

What is the purpose of a comp of prospective financials?

Answer 21

Proper assembling. Provide no assurance and gather no supporting evidence.
Entity does need to disclose a summary of significant assumptions

Question 22

What goes into a comp report?

Answer 22

Compliance with attestation standards set by AICPA
Limited scope and no opinion or assurance
Caveat that prospective results may not be achieved
You assume no responsibility to update them

Question 23

What is the purpose of an examination of prospective financials?

Answer 23

Express an opinion on if they’re conforming with AICPA guidelines and the assumptions provide a reasonable bsis.

Question 24

What is required in an examination of prospectives?

Answer 24

Independence, evidence

Question 25

What can require the practitioner to modify an opinion on the examination of prospectives?

Answer 25

Guidelines are not followed
Assumptions are not disclosed
Basis is not reasonable
Scope limitation (disclaimer)

Question 26

What use are partial presentations good for?

Answer 26

Only limited use

Question 27

What are pro forma financials?

Answer 27

Not prospective. They may be used to demonstrate the effect of a future or hypothetical event by showing how it might have affected the historical financials if it had occurred during the period covered by them.

Question 28

What engagements can be done on pro formas?

Answer 28

Examination or review. Don’t reevaluate internal control, but do make sure the math and computations are correct.

Question 29

Who requires MD and A, and for what?

Answer 29

By the SEC for issuers.