1. Review engagements are often used by:

a. Small, owner-managed companies

b. mid-market public companies

c. large public companies

d. government agencies

2. Which of the following procedures would most likely be included in a review engagement of a nonpublic entity?

a. Preparing a bank transfer schedule.

b. Inquiring about related-party transactions.

c. Assessing internal control.

d. Performing cutoff tests on sales and purchases transactions.

3. Which of the following services performed by a CPA is an example of an assurance engagement that requires the CPA to be independent in fact and appearance?

a. Compilation of financial statements

b. Review of financial statements

c. Management consulting services

d. Giving tax advice

4. Because the same CPA firm does both the annual audit and the public company interim financial statement review, they are referred to as _______.

a. bookkeepers

b. accountants

c. auditors

d. CPAs

5. An accountant's review report on interim financial information of a public entity is most likely to include a

a. Statement that the interim financial information was examined in accordance with standards of the Public Company Accounting Oversight Board.

b. Statement that the interim financial information is the responsibility of the entity's shareholders.

c. Description of the procedures for a review.

d. Statement that a review of interim financial information is less in scope than a compilation conducted in accordance with standards.

6. Which of the following procedures ordinarily should be applied when an independent accountant conducts a review of interim financial information of a publicly held entity?

a. Verify changes in key account balances.

b. Read the minutes of the board of directors' meetings.

c. Inspect the open purchase order file.

d. Perform cut-off tests for cash receipts and disbursements.

7. A forecast is a form of future-oriented financial information. Which of the following best describes the nature of a forecast?

a. A forecast is based on the auditor's judgment concerning hypothetical future economic conditions.

b. A forecast presents a broad range of possible future economic conditions.

c. A forecast presents possible future scenarios consistent with the purpose of the information.

d. A forecast is based on management's judgment of the most likely future economic conditions.

8. 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.

9. Which of the following statements is correct relating to an auditor's review engagements on an entity's management discussion and analysis (MD&A)?

a. A review consists principally of applying analytical procedures and search and verification procedures.

b. The review report of a public entity should be restricted to the use of specified parties.

c. No consideration of internal control is necessary.

d. The report issued will ordinarily include a summary of findings, but no negative assurance.

10. An auditor should not issue a report on

a. The achievability of forecasts.

b. Internal control.

c. Management performance.

d. Quarterly financial information.

STRICTLY CORRECT ANSWERS ONLY