Professional Documents
Culture Documents
1. Assurance services improve the quality of information or its context for decision makers.
TRUE
Difficulty: Easy
2. Attestation services are similar, but go beyond assurance services in scope of procedures
and reporting.
FALSE
Difficulty: Medium
Difficulty: Medium
4. Practitioners may report on either an assertion about the subject matter, or on the subject
matter for most attestation engagements.
TRUE
Difficulty: Medium
5. Attestation risk, like audit risk consists of three components--inherent risk, control risk, and
substantiation risk.
FALSE
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
Difficulty: Medium
Difficulty: Medium
8. A WebTrust seal assures consumers that they will be satisfied with their purchases.
FALSE
Difficulty: Easy
9. Trust Services are a part of the AICPA's vision that increased trust in annual historical
financial statements is necessary.
FALSE
Difficulty: Medium
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
Difficulty: Medium
12. Conditions exist that result in a material deviation from the criteria against which the
subject matter was evaluated during an examination performed following the attestation
standards. The CPA's conclusion may be on:
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Medium
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Hard
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Chapter 20 - Additional Assurance Services: Other Information
14. When performing an attestation examination engagement, which of the following is not
always required?
A. Assertion.
B. Practitioner independence.
C. Subject matter.
D. Suitable criteria.
Difficulty: Hard
15. Which of the following engagements is most likely to consider availability, security,
integrity, and maintainability of a company's computer systems?
A. Internal control over financial reporting.
B. Trust Services.
C. Website Asssociate.
D. Financial statement audit.
Difficulty: Medium
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Hard
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Chapter 20 - Additional Assurance Services: Other Information
17. Which of the following is the least likely to be considered subject matter of an attestation
engagement?
A. Assertion.
B. Behavior.
C. Historical event.
D. Systems and processes.
Difficulty: Medium
18. Arel, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures
to financial data supplied by Modit Co. regarding Modit's written assertion about its
compliance with contractual requirements to pay royalties. Arel's report on these agreed-upon
procedures should contain a (an).
A. Disclaimer of opinion about the fair presentation of Modit's financial statements.
B. List of the procedures performed (or reference thereto) and Arel's findings.
C. Opinion about the effectiveness of Modit's internal control activities concerning royalty
payments.
D. Acknowledgment that the sufficiency of the procedures is solely Arel's responsibility.
Difficulty: Medium
19. Assurance services performed for decision makers may address the:
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
Difficulty: Hard
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Medium
22. Which of the following is notcurrently an acceptable form of association with prospective
financial statements?
A. Compilation.
B. Review.
C. Agreed-upon procedures.
D. Examination.
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
23. When a practitioner examines projected financial statements, the practitioner's report
should include a separate paragraph that:
A. Describes the limitations on the usefulness of the presentation.
B. Provides an explanation of the differences between an examination and a review.
C. States that the accountant is responsible for events and circumstances for a period not
exceeding one year after the report's date.
D. Disclaims an opinion on whether the assumptions provide a reasonable basis for the
projection.
Difficulty: Hard
Difficulty: Medium
25. When a financial forecast fails to disclose a significant assumption used to prepare that
forecast, which of the following reports become appropriate?
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Hard
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Chapter 20 - Additional Assurance Services: Other Information
26. When reporting upon a review engagements on an entity's management discussion and
analysis, the report is ordinarily:
A. A general use report.
B. A restricted use report.
C. Required to include a disclaimer of opinion.
D. Included with the entity's report on internal control over financial reporting.
Difficulty: Medium
Difficulty: Easy
28. When compared to the consideration of internal control for purposes of an audit, an
examination of management's assertion about the effectiveness of an entity's internal control
for a nonpublic company may be expected to require a(n):
A. Increased scope of tests of balances.
B. Increased scope of tests of controls.
C. Greater reliance upon analytical procedures.
D. Increased emphasis on fairness of future presentation.
Difficulty: Hard
Difficulty: Hard
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Chapter 20 - Additional Assurance Services: Other Information
30. Providing assurance using a series of reports provided simultaneously or shortly after the
related information is released is referred to as:
A. Continuous auditing.
B. Serial auditing.
C. Systems reliability auditing.
D. Simultaneity auditing.
Difficulty: Easy
31. The organization established to identify, develop and communicate new assurance service
opportunities is the:
A. Assurance Services Executive Committee.
B. Attestation Standards board.
C. Auditing Standards Board.
D. Counsel of Executives.
Difficulty: Medium
32. Many new services assurance services are performed in accordance with Statements on
A. Standards for Attestation Services.
B. Generally Accepted Assurance Standards.
C. Auditing Standards.
D. Accounting for other Assurance Services.
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Medium
34. A practitioner's unqualified opinion based upon an examination may ordinarily be on:
A. Option A
B. Option B
C. Option C
D. Option D
Difficulty: Medium
35. Which attest engagement aligns most directly with a financial statement audit in terms of
assurance provided?
A. Agreed-upon procedures.
B. Evaluation.
C. Examination.
D. Review.
Difficulty: Easy
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Chapter 20 - Additional Assurance Services: Other Information
Difficulty: Easy
Source: AICPA
37. Under the attestation standards, in which of the following circumstances is a review report
least likely to be issued?
A. Criteria are agreed-upon or only available to specified users.
B. Established criteria exist, but other criteria are used.
C. The subject matter departs from the criteria.
D. A significant limitation on the scope of the engagement has occurred.
Difficulty: Hard
38. To accept an engagement to examine a client's MD&A for annual financial statements, the
practitioners ordinarily must have:
A. Audited the most recent financial statement period to which the MD&A applies.
B. Determined that the client reports to the Securities and Exchange Commission.
C. Performed a detailed analysis of the client's controls over decision making.
D. Reviewed the quarterly MD&A information.
Difficulty: Hard
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
40. The five principles of a reliable system considered in a Trust Services engagement
include, availability, security, processing integrity, online privacy, and:
A. Control
B. Confidentiality.
C. Relevance.
D. Reliability.
Difficulty: Medium
41. When a CPA is associated with a forecast, all of the following should be disclosed except
the:
A. Sources of information.
B. Character of the work performed by the CPA.
C. Major assumptions in the preparation of the forecast.
D. Probability of achieving estimates.
Difficulty: Medium
Source: AICPA
42. Which of the following is a prospective financial statement for general use upon which a
practitioner may appropriately report?
A. Financial projection.
B. Partial presentation.
C. Pro forma financial statement.
D. Financial forecast.
Difficulty: Medium
Source: AICPA
43. The party responsible for assumptions identified in the preparation of prospective
financial statements is usually:
A. A third-party lending institution.
B. The client's management.
C. The reporting accountant.
D. The client's independent auditor.
Difficulty: Easy
Source: AICPA
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Chapter 20 - Additional Assurance Services: Other Information
44. Given one or more hypothetical assumptions, a responsible party may prepare an entity's
expected financial position, results of operations, and changes in financial position. Such
prospective financial statements are known as:
A. Pro forma financial statements.
B. Financial projections.
C. Partial Presentation.
D. Financial forecasts.
Difficulty: Medium
Source: AICPA
45. Accepting an engagement to examine an entity's financial projection most likely would be
appropriate if the projection were to be distributed to:
A. All employees who work for the entity.
B. Potential stockholders who request a prospectus or a registration statement.
C. A bank with which the entity is negotiating for a loan.
D. All stockholders of record as of the report date.
Difficulty: Hard
Source: AICPA
46. When an accountant compiles a financial forecast, the accountant's report should include
a(an)
A. Explanation of the differences between a financial forecast and a financial projection.
B. Caveat that the prospective results of the financial forecast may not be achieved.
C. Statement that the accountant's responsibility to update the report is limited to one year.
D. Disclaimer of opinion on the reliability of the entity's internal controls.
Difficulty: Medium
Source: AICPA
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Essay Questions
47. The Warren Corporation wants to enhance the market value of its stock by including in its
annual report a financial forecast for the next year. They also would like to have their auditors
examine the forecast.
a. Define a financial forecast.
b. Is an examination of a financial forecast similar in scope to a review of financial
statements? Explain.
a. A financial forecast is "an estimate of the most probable financial position, results of
operations, and changes in financial position for one or more future periods."
b. No. An examination of a financial forecast involves an extensive examination of the
assumptions underlying the forecast, to satisfy the CPAs that management has identified all
key assumptions and that the assumptions are suitably supported.
Difficulty: Medium
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Chapter 20 - Additional Assurance Services: Other Information
48. Practitioners may be engaged to attest to an entity's internal control over financial
reporting.
a. Comment on the accuracy of this statement: Accountants may be engaged to examine,
review, or perform agreed-upon procedures on an entity's internal control over financial
reporting.
b. Describe the nature of the four paragraphs included in an accountant's examination report
on internal control over financial reporting.
c. Describe two circumstances in which practitioners would issue an examination report that
is other than the unqualified standards report on internal control.
Difficulty: Medium
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