11. Which of the following statements concerning prospective financial statements is correct?

a. Only a financial forecast would normally be appropriate for limited use.

b. Only a financial projection would normally be appropriate for general use.

c. Any type of prospective financial statements would normally be appropriate for limited use.

d. Any type of prospective financial statements would normally be appropriate for general use.

12. 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.

13. An examination of a financial forecast is a professional service that involves

a. Compiling or assembling a financial forecast that is based on management's assumptions.

b. Limiting the distribution of the accountant's report to management and the board of directors.

c. Assuming responsibility to update management on key events for one year after the report's date.

d. Evaluating the preparation of a financial forecast and the support underlying management's assumptions.

14. When an accountant examines a financial forecast that fails to disclose several significant assumptions used to prepare the forecast, the accountant should describe the assumptions in the accountant's report and issue a(n)

a. "Except for" qualified opinion.

b. "Subject to" qualified opinion.

c. Unqualified opinion with a separate explanatory paragraph.

d. Adverse opinion.

Assurance Reports on Controls at a Service Organization

15. Dunn, CPA, is auditing the financial statements of Taft Co. Taft uses Quick Service Center (QSC) to process its payroll. Price, CPA, is expressing an opinion on a description of the controls implemented at QSC regarding the processing of its customers' payroll transactions. Dunn expects to consider the effects of Price's report on the Taft engagement. Price's report should contain a(n)

a. Description of the scope and nature of Price's procedures.

b. Statement that Dunn may assess control risk based on Price's report.

c. Assertion that Price assumes no responsibility to determine whether QSC's controls are suitably designed.

d. Opinion on the operating effectiveness of QSC's internal controls.

16. The auditor who audits the processing of transactions by a service organization may issue a report on controls

Implemented Operating effectiveness

a. Yes Yes

b. Yes No

c. No Yes

d. No No

17. In accordance with PSAE 3402, Assurance Reports on Controls at a Service Organization, an auditor's modified opinion may be

a. Qualified.

b. Adverse.

c. Disclaimer.

d. Any of the above.

Engagements on Greenhouse Gas (GHG) Statements

18. GHG statement is statement setting out constituent elements and quantifying an entity's GHG emissions for a period and, where applicable, comparative information and explanatory notes including a summary of significant quantification and reporting policies. A GHG statement is sometimes known as?

a. Emissions inventory.

b. Greenhouse gases.

c. Purchased offset.

d. Emissions factor.

19. Given the link between greenhouse gas (GHG) emissions and climate change, many entities are quantifying their GHG emissions for internal management purposes. Which of the following may also be a reason for preparing a GHG statement?

a. A regulatory disclosure regime.

b. An emissions trading scheme.

c. To inform investors and others on a voluntary basis that may be part of a sustainability report or in an entity's annual report.

d. All of the above.

20. The Philippine Framework for Assurance Engagements (the Assurance Framework) notes that an assurance engagement may be either an attestation engagement or a direct engagement. PSAE 3410 deals only with which assurance engagement?

a. Attestation

b. Direct

c. Both a and b

d. None of the above

WRONG ANSWERS WILL BE DISLIKED.