$18-9$ Financial Statement versus Nonfinancial Statement

Assertions in Agreed$-$Upon Procedures Engagements

Understanding whether agreed$-$upon procedures relate to a specified element, account, or item of a financial statement or to a nonfinancial statement assertion is important because the professional pronouncements for each differs: SAS No$.75,$Engagements to Apply Agreed$-$Upon Procedures to Specified Elements, Accounts or Items of a Financial Statement$$; and SSAE No$.4,$Agreed$-$Upon Procedures Engagements.$$ Following are a series of items for which an independent accountant might apply agreed$-$upon procedures.

a$.$ The cash accounts included in an entity$$s general ledger maintained for the purpose of preparing financial statements represented as being in accordance with generally accepted accounting principles.

b$.$ A schedule of accounts receivable on an entity that reflects the accounts receivable presented in conformity with generally accepted accounting principles.

c$.$ An entity maintained an effective internal control over financial reporting based on established criteria.

d$.$ The accounts included in the caption property and equipment identified in a statement of assets, liabilities, and capital presented on an income tax basis.

e$.$ An entity complied with requirements of specified laws, regulations, rules, contracts, and grants.

f$.$ Investment securities were traded on approved exchanges.

g$.$ The gross income component of a statement of operations presented in accordance with the rules of a regulatory agency.

h$.$ Statistical production data complied with policy.

Required: Indicate whether each item is a specified element, account, or item of a financial statement or a nonfinancial statement assertion.

$18-10$ Personal Financial Statements

Roger Francoeur, a candidate for town council, is campaigning on a platform of open government and fiscal responsibility. During his campaign, Francoeur requests that you prepare personal financial statements, fully disclosing his financial position for the twelve month period ended June $30,2007.$ Unfamiliar with the nature of personal financial statements, Francoeur asks that you explain the major similarities and differences between the financial statements and audit reports that are issued for personal and corporate financial statements.

Required: Describe the major similarities and differences alluded to by Francoeur, indicating the rationale underlying each difference. Ignore differences related to the titles of financial statements.