Deck 3 Flashcards Preview

Audit > Deck 3 > Flashcards

Flashcards in Deck 3 Deck (19):

SSARS Applicability

An accountant who is engaged to prepare, compile, or review unaudited financial statements of a nonuser should comply with SSARS


Three-Party Relationship

Preparation, compilation, and review engagements involve three parties: management, an accountant in the practice of public accounting. and the intended users of the financial statements


If an accountant prepares the financial statements, accountant must issue what kind of report/opinion

Issue a disclaimer or indicate that no assurance is provided



Private company/non public



Public company


Which report doesn't have any separate paragraphs or headings?

Standard compilation report


Compiled financial statements that omit GAAP disclosures are acceptable if the:

- Financial statements are otherwise in conformity with GAAP
- Reason for omission was not to deceive the user
- Compilation report warns the user of missing disclosures


Which level of service (prepare, compile, or review) provides the highest level of service

A review


What does it mean to have an understanding with the client?

Accountant will receive an engagement letter


Engagement letter

A written communication documenting the understanding between an accountant and his or her client


SOAP (review report)

Summary of adjustments past


RAM (review report)

Reviewing, analytical procedures, making inquiries


Predecessor accountant's report reissued unchanged...what procedures are performed?

- read the statements and report of current period
- compare the prior period statements with those issued previously and currently
- obtain a letter form the successor accountants


When audited financial statements are presented in comparative form with unaudited financial statements from a prior year, the auditor should:

- Reissue the audit report on the unaudited financial statements
- The report on the audited financial statements should include a separate paragraph describing the responsibility assumed for the unaudited financial statements


Before reissuing a compilation report on the financial statements of a nonissuer for the prior year, the predecessor accountant is required to:

Compare the prior year's financial statements with those of the current year


When a CPA firm decides to take responsibility for another firm's audit work, the CPA firm should:

Review the other firm's audit work papers and reperform a subset of audit testing to validate the firm's conclusions


A review of interim financial statements of a publicly held company is conducted in accordance with what standards?

PCAOB standards only (not SSARS)


Securities Act of 1933

Imposes certain responsibilities on an auditor who prepares a report that is used in connection with a registration statement


Comfort letter

Letter from the CPA to the names underwriter and/or certain other requesting parties just before the registration of the client's securities;
Does not update the opinion