Preparation Engagements

Question 1

preparation engagement (nonattest service) must include on each page

Answer 1

-“no assurance is required/provided”
-management agrees that the omission be disclosed in order for CPA to prepare statements that omit substaintially
all required disclosures
UNLESS INTENTION IS TO MISLEAD

Question 2

accountant assists management with significant judgments used to prepare F/S and CPA should

Answer 2

discuss the judgments with management so management understands their significance and accepts responsibility for them

Question 3

preparation is not an attestation engagement that is

Answer 3

not covered by SSAE

Question 4

SSARS applies if preparation is the

Answer 4

highest level of service being provided

Question 5

SSARS does not apply if the CPA will also

Answer 5

compile, review or audit the F/S (preparation would count as bookkeeping)

Question 6

to prepare F/S, CPA must

Answer 6

1) include a note on each page stating “no assurance is provided” or “ F/S have no been subject to audit, review or compilation”
2) issue a disclaimer
3) perform a compilation
4) withdraw from the engagement

Question 7

preparation engagement letter includes

Answer 7

-managment acknowledgement of its responsibilities (including for I/C)
-identification of applicable financial reporting framework
-limitations of an engagement to prepare F/S
-any departures from GAAP agreed upon between client and CPA

Question 8

if independence required, management is

Answer 8

required to designate someone to oversee preparation but not required to be performed in accordance with SSARS