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Procedures performed under an attestation engagement
In order to comply with terms of engagement under an attestation, the engagement should meet the intended purpose of the engagement.
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Anderson CPA’s entered into an Agreed upon Procedure engagement with Delany Inc. Management of Delany discussed the terms of the engagement with auditors but refused to put the terms in writing. Anderson should:
SSAE 18 requires that the terms of the engagement be in writing. Because management is refusing to express the terms in writing the firm should not accept the engagement and withdraw.
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The agreed-upon procedure report should:
All of the elements are included in the terms of the engagement. The engagement must express auditor independence, identify and address and include the identification of the engaging party.
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Accepting an engagement to examine an entity's financial projection most likely would be appropriate if the projection were to be distributed to:
Financial projections are hypothetical prospective financial statements. Because the user may need to ask the responsible party questions about the underlying assumptions, financial projections are restricted use reports, whose use is restricted to the responsible party and those third parties with whom the responsible party is negotiating directly.
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An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that:
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 is restricted to the specified parties.
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Agreed-upon procedures can be performed as long as the following conditions are present:
All of these factors must be present for an agreed-upon procedure engagement to be conducted.
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Government Accounting Standards
Under GASB standards the auditor is required to report on internal control. The written report is also required to establish compliance with applicable laws and regulations and may require a duty to report fraud.
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The Single Audit Act of 1984
The single audit act of 1984 requires audits of federal funds received over a threshold of $750,000.
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Governmental audits fall under standards developed by:
Governmental auditing standards are developed by the General Accounting Office who publishes Generally Accepted Governmental Audit Standards.
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When auditing the financial statements of a governmental entity, the auditor is required to report on A) Noteworthy accomplishments of the program B) The scope of the auditor's testing of internal controls
When auditing the financial statements of a governmental entity in accordance with GAS, the auditor is required to report on the scope of the auditor's testing of internal control but not on noteworthy accomplishments.
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An enterprise engaged a CPA to audit its financial statements in accordance with GAS because of the provisions of government grant funding agreements. Under these circumstances, the CPA is required to report on the enterprise's internal controls either in the report on the financial statements or in:
The report on the audit of the financial statements should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting and should either present the results of those tests or refer to a separate report containing that info.
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One of the most notable attributes of governmental audits is that ______.
This point about governmental audits is heavily tested and the other options are not true about governmental audits.
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An integrated audit
An integrated audit is not required by private corporations. The integrated audit is performed under PCAOB standards that govern public companies.
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Integrated audits are regulated by the:
Integrated audits are regulated under PCAOB standard number 5.
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As described by PCAOB auditing standard number 2, an effective internal control
According to PCAOB Accounting Standards: “Maintaining effective internal control over financial reporting means that no material weaknesses exist; therefore, the objective of the audit of internal control over financial reporting is to obtain reasonable assurance that no material weaknesses exist as of the date specified in management's assessment.”
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Of the following, which is true regarding PCAOB standards surrounding internal control?
PCAOB standards surrounding internal control apply only to audits of issuers.
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Each of the following types of controls is considered to be an entity-level control, except those:
Entity level controls include controls related to the control environment, the risk assessment process, and the policies over risk management policies. Controls regarding the company's annual shareholder meeting are controls related to a specific event rather than the entity as a whole.
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Internal control over financial reporting consists of which component?
The components not listed would include Information and communication and control environment. These 5 components make up ICFR.
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Procedures performed under an attestation engagement
In order to comply with terms of engagement under an attestation, the engagement should meet the intended purpose of the engagement.
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Anderson CPA’s entered into an Agreed upon Procedure engagement with Delany Inc. Management of Delany discussed the terms of the engagement with auditors but refused to put the terms in writing. Anderson should:
SSAE 18 requires that the terms of the engagement be in writing. Because management is refusing to express the terms in writing the firm should not accept the engagement and withdraw.
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