CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 21 of 41, with answer review and explanations.

Question 101

Before reporting on the financial statements of a U.S. entity that have been prepared in conformity with another country's accounting principles, an auditor practicing in the U.S. should:

  1. Understand the accounting principles generally accepted in the other country.
  2. Be certified by the appropriate auditing or accountancy board of the other country.
  3. Notify management that the auditor is required to disclaim an opinion on the financial statements.
  4. Receive a waiver from the auditor's state board of accountancy to perform the engagement.

Question 102

In connection with a proposal to obtain a new client, an accountant in public practice is asked to prepare a written report on the application of accounting principles to a specific transaction. The accountant's report should include a statement that:

  1. Any difference in the facts, circumstances, or assumptions presented may change the report.
  2. The engagement was performed in accordance with Statements on Standards for Consulting Services.
  3. The guidance provided is for management use only and may not be communicated to the prior or continuing auditors.
  4. Nothing came to the accountant's attention that caused the accountant to believe that the accounting principles violated GAAP.

Question 103

Blue, CPA, has been asked to render an opinion on the application of accounting principles to a specific transaction by an entity that is audited by another CPA. Blue may accept this engagement, but should:

  1. Consult with the continuing CPA to obtain information relevant to the transaction.
  2. Report the engagement's findings to the entity's audit committee, the continuing CPA, and management.
  3. Disclaim any opinion that the hypothetical application of accounting principles conforms with generally accepted accounting principles.
  4. Notify the entity that the report is for the general use of all interested parties.

Question 104

The financial statements of KCP America, a U.S. entity, are prepared for inclusion in the consolidated financial statements of its non-U.S. parent. These financial statements are prepared in conformity with the accounting principles generally accepted in the parent's country and are for use only in that country. How may KCP America's auditor report on these financial statements? I. A U.S.-style report (unmodified). II. A U.S.-style report modified to report on the accounting principles of the parent's country. III. The report form of the parent's country.

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Question 105

Which of the following is true regarding the auditor's responsibility to report on information accompanying the basic financial statements in a client-prepared document?

  1. The auditor may report on information accompanying the basic financial statements in a clientprepared document only if he or she has been specifically engaged to do so.
  2. The auditor is required to express an opinion on whether information accompanying the basic financial statements in a client-prepared document is fairly stated in all material respects in relation to the financial statements taken as a whole.
  3. If an auditor chooses to report on information accompanying the basic financial statements in a clientprepared document, the report should include a description of the character of the audit work performed.
  4. If an auditor chooses to report on information accompanying the basic financial statements in a clientprepared document, the report should include an opinion on the information but should not describe the character of the audit work performed.