1) Due to a scope limitation, an auditor disclaimed an opinion on the financial statements taken as a whole, but the auditor's report included a statement that the current assetportion of the entity's balance sheet was fairly stated. The inclusion of this statement is @ A. Not appropriate because it may tend to contradict the auditor's disclaimer of opinion.O B. Not appropriate because the auditor is prohibited from reporting on only one basic financial statement.O C. Appropriate provided the basis for opinion section adequately describes the scope limitation. (] D. Appropriate provided the statement is in a separate section following the disclaimer of opinion section. An accountant has been engaged to review a nonissuer's financial statements. During the engagement, the accountant uncovered a complex scheme involving clientnoncompliance (ie, illegal acts) that materially and pervasively affects the financial statements. Management is unwilling to revise the financial statements, and the accountantbelieves that modification of the standard review report is not adequate to communicate the deficiencies. Under these circumstances, the accountant shouldA. Disclaim an opinion.) B. Issue an adverse conclusion.OC. Withdraw from the engagement.D. Issue a qualified conclusion. 12 A nonissuer has asked an accountant 1o compile its financizal statements that omit substantially all disclosures required by generally accepted accounting principles (GAAP). Theaccounant may comply with the entity's request provided that the O A. Financial statements are complled in conformity with a comprehensive basis of accounting other than GAAPO B. Financial statements will not be used to obtain credit from a third party financial institution.@ C. Omission is not employed In order to mislead the users of the financial statements and Is properly disclosed In the accountant's report. O D. Omission is acknowledged in the notes to the financial statements and is consistent with the prior year's financial statements. 13" Which of the following statements concerning a compilation of specific elements, accounts, or items of a financial statement is correct? O A. The accountant performing the compilation must be independent with regard to the client.@ B. The compilation cannot be relied upon to disclose errors, fraud, or illegal acts.O C. The compilation involves compiling financial statements for different subsidiaries of the company. O D. The compilation must be performed in conformance with an accounting basis consistent with GAAP. 14 When an accountant compiles projected financial statements, the accountant's report should include O A. An explanation of the difference between a compilation and a review.O B. Documentation of the assessment of the risk of material misstatement due to fraud.O C. An expression of limited assurance that the actual results may be within the projected range. @ D. A statement that the projected results may not be achieved. 15 Which of the following statements best serves as management's assertion of consistency in an MD&A presentation? O A@ &.O cO . Information included in the presentation is properly classified and described.Nonfinancial data have been accurately derived from related records.Reported transactions took place during a given period. Descriptions of all transactions are included to explain entity's financial condition. 416" Each of the following engagements may be performed by a CPA in connection with prospective financial statements except: @ A. Agreed-upon procedures.() B. Examinations.() C. Reviews. () D. Preparation. a7 After an audit report is issued, an auditor discovers that an important audit procedure was not performed. Which of the following procedures is acceptable in this situation? @ A. No further action is necessary if the audit report can still be supported.D B. Let the current report stand and correct material errors on the next audit report.O C. Immediately notify known users of the omitted audit procedure. CI D. Require that the client notify financial staterments users of the omitted procedures. 18" After Issuing an auditor's report, an auditor becomes aware of facts that exlisted at the report date that would have affected the report had the auditor known of the facts at thetime. What is the first thing the auditor should do? O A. Notify each member of the board of directors that the auditor's report may not be associated with the financial statements from this point forward. O B. Issue revised financial statements and auditor's repart describing the reason for the revision in a note to the financial statements. @ C. Determine whether there are persons currently relying on, or likely to rely on, the financial statements and whether those persons would attach importance to theinformation. O D. Motify regulatory agencies having jurisdiction over the client that the auditor's report should not be relied upon from this point forward. 419 Beta, CPA, was engaged by Delta, Inc. 1o apply agreed-upon procedures to financial data supplied by ABC Co. regarding ABC's written assertion about its security balances.Beta's report on these agreed-upoen procedures should contain a(n) O A. Opinion on the fair presentation of ABC's internal controls over financial reparting. @ B. Acknowledgement that Delta is responsible for the appropriateness of the procedures. O C. Disclaimer of opinion on the effectiveness of ABC's internal control activities regarding the approval of security purchases. O D. Acknowledgment that the appropriateness of the procedures is solely Beta's responsibility. 42" When qualifying an opinion because of an insufficiency of audit evidence, an auditor should refer to the situation in the Auditor's responsibilities MNotes {o the financial section statementsO A Yes Yes(® B. Yes No@N No Yes O D. No No 120 Which of the following Is required in a financial statement preparation engagement performed in accordance with SSARS? @] A. A cover page to the financial statements with a signed statement declaring the accounting framework used In the financial statements.O B. Elimination of any known material misstatements, or withdrawal from the engagement if management refuses to eliminate the material misstatements. O C. Discussing with management significant judgments affecting the financial statements which the accountant assisted in making, such that the client can takeresponsibility for the judgments. O D. A side-by-side comparison to GAAF if the financial statements are prepared in accordance with a non-GAAP accounting framework. 3Which of the following is not correct concerning information included in an audit report of financial statements issued under the requirements of the Public Company AccountingDversight Board?O A. The report should include the title "Report of Independent Registered Public Accounting Firm."() B. The report should refer to the standards of the PCACB.@ C. The report should include a paragraph referring to the auditor's report on compliance with laws and regulations. O D. The report should contain the city and state or country of the office that issued the report. 4 An entity changed from the straight-line method to the declining balance method of depreciation for all newly acquired assets. This change has no material effect on the currentyear's financial statements, but it is reasonably certain to have a substantial effect in |ater years. If the change is disclosed in the notes to the financial statements, the auditorshould issue a report with a (an) () A. Qualified opinion. O B. Emphasis-of-matter paragraph. (®) €. Unmodified cpinion. [:;] D. Other-matter paragraph. 5 A CPA's standard report on audited financial statements would be inappropriate if it referred to @ A. Management's responsibility for the financial statements.O B. An assessment of the entity's accounting policies.() €. significant estimates made by management. O D. The CPA's assessment of sampling risk factors. 47 Restrictions imposed by a client prevent an auditor from observing any physical inventories. These inventories account for 40% of the entity's assets. Alternative auditingprocedures cannot be applied due to the nature of the entity's records. Under these circumstances, the auditor should express a(n) (®) A. Disclaimer of opinion.() B. Qualified opinion.() ©. Adverse cpinion. C) D. Unmodified opinion with an explanatory paragraph. 8 Under which of the following circumstances would a disclaimer of opinion net be appropriate? O A. The financial statements fail to contain adequate disclosure of related party transactions.O B. The client refuses to permit its attorney to furnish information requested in a letter of audit inquiry.C C. The auditor is engaged after fiscal year end and is unable to observe physical inventories or apply alternative procedures to verify their balances. @ D. The auditor is unable to determine the amounts associated with noncompliance (illegal acts) committed by the client's management. 49 An accountant's standard report on a review of the financial statements of a nonissuer (nonpublic entity) should state that O A. The review was conducted in accordance with the AICPA standards issued by the PCAOB.O B. We believe that the results of our procedures provide a reasonable basis for our conclusion.@ C. We obtained reasonable assurance about whether the financial statements are free of material misstatement. O D. We evaluated the design effectiveness of internal control over financial reporting.