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ch15 - Other Assurance Services PDF
ch15 - Other Assurance Services PDF
MULTIPLE CHOICE:
1. A study and evaluation of internal control made in
connection with an annual audit is usually not sufficient
to express an opinion on an entity's internal control
because
a.
Weaknesses in the system may go unnoticed during the
audit engagement.
b.
A study and evaluation of internal control is not
necessarily made during an audit engagement.
c.
Only those controls of interest to the auditor are
reviewed, tested, and evaluated.
d.
Internal controls can change each year.
ANSWER:
2.
3.
4.
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d.
The CPA has previously audited the entity for which the
agreed-upon procedures are to be applied.
Users have participated in establishing the nature and
scope of the engagement, distribution of the report is
limited to the users involved, and the prospective
statements include a summary of significant
assumptions.
The set of agreed-upon procedures include, at a
minimum, a study and evaluation of the existing
internal control.
ANSWER:
5.
7.
6.
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256
8.
9.
10.
11.
ANSWER:
12.
14.
13.
257
258
15.
16.
17.
18.
ANSWER:
19.
21.
20.
259
260
d.
ANSWER:
22.
23.
24.
29.
28.
27.
26.
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262
ANSWER:
30.
31.
32.
33.
ANSWER:
34.
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COMPLETION:
35.
36.
assurance.
NEGATIVE
39.
38.
POSITIVE, NEGATIVE
37.
assurance and
DIRECT
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ANSWER:
40.
41.
44.
The
requires
that public companies establish and maintain adequate
systems of internal control.
ANSWER:
43.
DISCLAIMS, OPINION
If
procedures have been applied to unaudited
data, the CPA may give
in the comfort
letter to underwriters of proposed securities issues.
ANSWER:
42.
INDIRECT
REVIEW
ATTESTATION (OPINION)
MATCHING:
45.
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
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D
H
J
A
G
K
B
I
E
C
PROBLEM/ESSAY
46.For each of the following engagements, indicate the nature of
the service performed (i.e., audit, review, compilation,
266
B.
C.
D.
SOLUTION:
A.
Nature of service:
Applicable standards:
Type of report:
Level of assurance:
Principal procedures:
B.
Nature of service:
Applicable standards:
Type of report:
Level of assurance:
Principal procedures:
C.
Nature of service:
Applicable standards:
Type of report:
267
D.
46.
None
Understand industry accounting
practices
Read the financial statements
Nature of service:
Applicable standards:
Type of report:
Level of assurance:
Princpal procedures:
Compliance attestation
Attestation standards
Agreed-upon procedures report
None
As agreed (inquiry, reading
royalty agreement, recomputing
royalty amounts)
You have been asked by Kromleys Recreation and Fitness
Center to review its financial statements for the year
ending December 31, 2002. Kromlelys has requested a
substantial loan from Renters Life & Casualty Insurance Ltd.
The loan proceeds will be used to construct a second
facility in the western suburbs of the city. In the past you
have compiled Kromleys financial statements, but have never
audited or reviewed them.
Required:
a.
b.
c.
d.
SOLUTION:
a.
Procedures
Compilation
Inquiry
Read financial
statements
Review
Audit
Inquiry
Study and evaluate internal
Read financial
control
statements
Observe
Apply analytical Confirm
procedures
Examine
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Level of assurance
b.
None
Limited
Positive
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