1
Which of the following services would be considered an assurance engagement?
A)
Compilation of financial statements from an entity’s accounting records.
B)
Providing information systems advice to a former audit client.
C)
Reporting on compliance with a university’s accreditation requirements.
D)
Providing advice on the structure of the internal audit function for an entity whose external audit is performed by another firm.
2
Unlike auditing standards, the assurance standards do not contain a requirement that auditors obtain
A)
Independence of mind and in appearance
B)
Sufficient appropriate evidence to support the conclusion expressed in their report.
C)
Adequate background and knowledge in the subject matter being examined.
D)
Reasonable assurance about the subject matter as the only appropriate level of assurance.
3
A practitioner’s engaged to express his or her opinion on a management’s report on the effectiveness of the company’s internal control is an example of which of the following types of engagements?
A)
Audit engagement.
B)
Assurance engagement.
C)
Review engagement.
D)
Agreed-upon procedure engagement.
4
Which of the following professional services would be considered an attest engagement?
A)
A management consulting engagement to provide IT advice to a client.
B)
An engagement to report on compliance with statutory requirements.
C)
An income tax engagement to prepare the tax return.
D)
Compilation of financial statements from a client’s accounting records.
5
The practitioner provides absolute assurance to the user in the performance of
A)
An assurance engagement.
B)
A review engagement.
C)
An audit engagement.
D)
None of the above.
6
When conducting a review, the practitioner’s work would generally not include which of the following procedures?
A)
Performing analytical procedures.
B)
Obtaining a general understanding of the entity’s methods and policies related to the capitalization of assets.
C)
Obtaining a representation letter from management.
D)
Observing the year-end inventory count and subsequent testing of inventory counts.
7
A review engagement will typically
A)
Require the practitioner to obtain an understanding of the entity’s internal control.
B)
Result in a statement of limited assurance about the fair presentation of the financial information.
C)
Result in an explicit opinion about whether the financial information is presented fairly.
D)
Include only the gathering of financial data for the primary purpose of preparing the financial information with the related notes.
8
The standard report issued by a practitioner after reviewing the financial statements of an entity states that
A)
A review includes evaluating the appropriateness of the reasonableness of accounting estimates made by management.
B)
A review includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
C)
Nothing has come to the practitioner’s attention that causes he or her to believe that the financial statements do not present fairly, in all material respects.
D)
The practitioner does not express an opinion or any other form of assurance on the financial statements.
9
Financial statements of an entity that have been reviewed by an practitioner should be accompanied by a report stating that
A)
The scope of the inquiry and the analytical procedures performed by the accountant have not been restricted.
B)
All information included in the financial statements is the representation of the management of the entity.
C)
A review includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
D)
A review is greater in scope than a compilation, the objective of which is to present financial statements that are free of material misstatements.
10
Which of the following statements is correct concerning both an engagement to compile and an engagement to review an entity’s financial statements?
A)
The practitioner is not required to obtain an understanding of internal control.
B)
The practitioner must be independent of mind and in appearance.
C)
The practitioner expresses no assurance on the financial statements.
D)
The practitioner should obtain a written management representation letter.
11
When engaged to compile the financial statements, the practitioner is required to possess a general knowledge of the entity’s accounting principles and practices. This requirement will most likely include obtaining an understanding of the
A)
Qualifications of the accounting department personnel.
B)
Risk factors associated with potential non-compliance with laws.
C)
Internal control structure in place.
D)
None of the above are required for a compilation.
12
When compiling the financial statements of a non-public entity, an accountant should
A)
Review agreements with financial institutions for restrictions on cash balances.
B)
Understand the accounting principles and practices of the entity’s industry.
C)
Inquire of key personnel concerning related parties and subsequent events.
D)
Perform ratio analyses of the financial data of comparable prior periods.
13
The objectivity of an internal audit function will most likely be enhanced if the director of the IA department reports to the entity’s
A)
Those charged with governance.
B)
Chief financial officer [CFO].
C)
Controller.
D)
Senior management team [as a group].
14
Which of the following is a service least likely provided by the internal audit function?
A)
Audit of financial statements.
B)
Operational auditing.
C)
Compliance reviews.
D)
Evaluation of risks and controls.
15
Which of the following is not one of the Principles in the IIA Code of Ethics?
A)
Integrity.
B)
Objectivity.
C)
Due Professional Care.
D)
Competency.
16
Which of the following is a performance standard from the International Standards for the Professional Practice of Internal Auditing?
A)
Purpose, authority and responsibility.
B)
Proficiency and due professional care.
C)
Independence and objectivity.
D)
Managing the internal audit function.
17
The general accreditation granted by the Institute of Internal Auditors is known as the
A)
CFE.
B)
CGAP.
C)
CFSA.
D)
CIA.
18
Which of the following is not one of the general areas of the IIA’s International Standards for the Professional Practice of Internal Auditing?
A)
Performance standards.
B)
Implementation standards.
C)
Ethical standards.
D)
Attribute standards.
19
The four principles of the IIA Code of Ethics are
A)
Confidentiality, competency, objectivity, and integrity.
B)
Objectivity, independence, compliance, and due diligence.
C)
Honesty, integrity, independence, and competency.
D)
Integrity, confidentiality, independence, and compliance.
What are the procedures for review engagement?
Independent Review Working Papers. Accepting the engagement. Screen the client. Identify purpose and use. ... . Performing the engagement. Review the accounting system. Consider preparing financial statements. ... . Completing the engagement. Obtain a representation letter. Report reportable irregularities. ... . Reporting on the engagement.. Which type of documentation is required for a review engagement?
Review Engagement Documentation Requirements
Engagement letter. A copy of the reviewed financial statements. Accountant's review report. Communications with management and those charged with governance about significant matters arising during the engagement.
Which of the following procedures does a CPA normally perform first in a review engagement in accordance with Statements on Standards for Accounting and Review Services (SSARSs)? Inquiry regarding the client's principles and practices and the method of applying them.
What is standard on review engagement?
The purpose of this International Standard on Review Engagements (ISRE) is to establish standards and provide guidance on the practitioner's professional responsibilities when a practitioner, who is not the auditor of an entity, undertakes an engagement to review financial statements and on the form and content of the ...
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