When an accountant compiles projected financial statements, the accountant's report should include a separate paragraph that: Choice

"b" is correct. The report on compiled projected financial statements should include a separate paragraph that describes the limitations on the usefulness of the presented statements. A CPA firm should establish procedures for conducting and supervising work at all organizational levels to provide reasonable assurance that the work performed meets the firm's standards of quality. To achieve this goal, the firm most likely would establish procedures for: Choice "c" is correct. Procedures for reviewing audit documentation and engagement reports are established to ensure that the work performed meets the firm's quality standards. This relates to the quality control element of performance. A CPA firm would be reasonably assured of meeting its responsibility to provide services that conform with professional standards by: Choice "a" is correct. Quality control standards relate to the conduct of a firm's audit practice. They set forth standards for the establishment of policies and procedures to provide reasonable assurance of conforming with professional standards. One of a CPA firm's basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this basic objective is provided through: Choice "b" is correct. A system of quality control establishes policies and procedures that provide reasonable assurance of conforming with professional standards. Which of the following is not a comprehensive basis of accounting other than generally accepted accounting principles? Choice "a" is correct. A basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution is not a comprehensive basis because such a requirement, in itself, would not have substantial support. A comprehensive basis of accounting other than GAAP is one of the following: Which of the following accounting bases may be used to prepare financial statements in conformity with a comprehensive basis of accounting other than generally accepted accounting principles? Choice "b" is correct. Both the basis of accounting used by an entity to file its income tax return and the cash receipts and disbursements basis of accounting are comprehensive bases of accounting other than GAAP. OCBOAs also include: A basis prescribed by a regulatory agency A definite set of criteria having substantial support (e.g., price-level basis) A CPA is required to comply with the provisions of Statements on Standards for Accounting and Review Services when: No,NO When reporting on financial statements prepared on the same basis of accounting used for income tax purposes, the auditor should include in the report a paragraph that: Choice "c" is correct. When reporting on financial statements prepared on the same basis of accounting used for income tax purposes, the auditor should include in the report a paragraph

that states that the income tax basis of accounting is a comprehensive basis of accounting other than GAAP (included in the third paragraph of the special report). The objective of a review of interim financial information of a public entity is to provide the accountant with a basis for: Choice "b" is correct. The objective of a review of interim financial information of a public entity is to provide the accountant with a basis for reporting whether material modifications should be made to conform with GAAP. How does an accountant make the following representations when issuing the standard report for the compilation of a nonissuer's financial statements? Choice "d" is correct.( Explicitly Explicitly

Financial statements of a nonissuer that have been compiled should be accompanied by a report explicitly stating that the accountant has compiled the financial statements and stating that the accountant has not audited or reviewed the financial statements.

Performing inquiry and analytical procedures is the primary basis for an accountant to issue a: Choice "c" is correct. Performing inquiry and analytical procedures is the primary basis for an accountant to issue a review report on comparative financial statements for a nonissuer in its second year of operations. An auditor's report on financial statements prepared in accordance with an other comprehensive basis of accounting should include all of the following, except: Choice "b" is correct (An opinion as to whether the basis of accounting used is appropriate under the circumstances). The auditor would not indicate in his/her report an opinion as to whether the method of accounting used is appropriate. During a review of the financial statements of a nonissuer, an accountant becomes aware of a lack of adequate disclosure that is material to the financial statements. If management refuses to correct the financial statement presentations, the accountant should: Choice "b" is correct. If, during a review of the financial statements of a nonissuer, an accountant becomes aware of a lack of adequate disclosure that is material to the financial statements, and management refuses to correct the financial statement presentations, the accountant should disclose this departure from GAAP in a separate paragraph of the report. Unaudited financial statements for the prior year presented in comparative form with audited financial statements for the current year should be clearly marked to indicate their status and Choice "c" is correct. Either I or II. Unaudited FS for the prior year presented in comparative form with audited FS for the current year should be clearly marked to indicate their status ("unaudited"), and either the report on the prior period should be reissued or the report on the current period should include a separate explanatory paragraph describing the responsibility assumed for the prior period's financial statements. An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that:

Choice "a" is correct. An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that certain conditions are met, including that the use of the report be restricted to the specified parties. A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain: Choice "c" is correct. A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain a statement of restrictions on the use of the report. A CPA is engaged to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria. In performing this engagement, the CPA should comply with the provisions of: Choice "d" is correct. Statements on Standards for Attestation Engagements apply to engagements in which a practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or on an assertion about the subject matter, which is the responsibility of another party. An engagement to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria would fall within this scope. An accountant has compiled the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services (SSARS). The financial statements are expected to be used by a third party. Does SSARS require that the compilation report be printed on the accountant's letterhead and that the report be manually signed by the accountant? Choice "d" is correct (no,no). SSARS does not require that the compilation report be printed on the accountant's letterhead, nor does it require a manual signature. According to SSARS, a compilation report must state that a compilation has been performed, describe what a compilation is, and emphasize that since no audit or review was performed, no assurance is provided. Although a signature is required, it need not be manual. When providing limited assurance that the financial statements of a nonissuer require no material modifications to be in accordance with generally accepted accounting principles, the accountant should: Choice "d" is correct. In a review engagement, the auditor should possess a level of knowledge of the accounting principles and practices of the industry in which the entity operates. This will provide, through the performance of inquiry and analytical procedures, a reasonable basis for expressing limited assurance that there are no material modifications that should be made to the financial statements to be in conformity with generally accepted accounting principles. Each page of a nonissuer's financial statements reviewed by an accountant should include the following reference: Choice "b" is correct. Each page of the financial statements reviewed by the accountant should include a reference such as "See Independent Accountant's Review Report." North Co., a privately-held entity, asked its tax accountant, King, a CPA in public practice, to prepare North's interim financial statements on King's microcomputer when King prepared North's quarterly tax return. King should not submit these financial statements to North unless, as a minimum, King complies with the provisions of: Choice "c" is correct. An accountant should not submit unaudited financial statements unless the auditor complies with the provisions applicable to a compilation engagement (under SSARS).

Davis, CPA, accepted an engagement to audit the financial statements of Tech Resources, a nonissuer. Before the completion of the audit, Tech requested Davis to change the engagement to a compilation of financial statements. Before Davis agrees to change the engagement, Davis is required to consider the: Yes Yes

An accountant should perform analytical procedures during an engagement to: No Yes

Choice "b" is correct. Analytical procedures are part of a review engagement, but not necessary for a compilation engagement. Statements on Standards for Accounting and Review Services establish standards and procedures for which of the following engagements? Choice "a" is correct. Statements on Standards for Accounting and Review Services (SSARS) establish standards and procedures for an engagement to compile an individual's personal financial statements to be used to obtain a mortgage. Which of the following procedures does a CPA normally perform first in a review engagement in accordance with Statements on Standards for Accounting and Review Services (SSARS)? Choice "d" is correct. In performing a review engagement in accordance with SSARS, the accountant should inquire of management regarding the accounting principles and practices used, and the method of applying them. An accountant has been engaged to compile the financial statements of a nonpublic entity. The financial statements contain many departures from GAAP because of inadequacies in the accounting records. The accountant believes that modification of the compilation report is not adequate to indicate the deficiencies. Under these circumstances, the accountant should: Choice "b" is correct. If the accountant believes that modification of the compilation report would not be adequate to indicate the deficiencies in the financial statements, he or she should withdraw from the engagement and provide no further services. An accountant is required to comply with the provisions of Statements on Standards for Accounting and Review Services when: Choice "a" is correct ( Neither I nor II ). Statements on Standards for Accounting and Review Services (SSARS) provide standards with respect to compilations and reviews of financial statements. SSARS do not apply to the reproduction of client-prepared financial statements or to the preparation of standard monthly journal entries, since neither of these would be considered a compilation or a review. An accountant is required to comply with the provisions of the Statements on Standards for Accounting and Review Services when performing which of the following tasks? Choice "d" is correct. An accountant is required to comply with the provisions of the Statements on Standards for Accounting and Review Services (SSARS) when generating financial statements of a nonissuer. SSARS provide standards with respect to compilations and reviews of financial statements, and generating financial statements would be considered a compilation.