CPA Test practice questions, page 11 of 13, with answer review and explanations.
Question 51
Which of the following is not true regarding an engagement to provide a written report on the application of accounting principles?
An accountant is prohibited from providing a report on the application of accounting principles to a transaction not involving the facts and circumstances of a specific entity.
The accountant's written report on the application of accounting principles should include an identification of the specific entity involved.
An accountant is prohibited from providing a report on the application of accounting principles to a proposed future transaction involving the facts and circumstances of a specific entity.
The accountant's written report on the application of accounting principles should include a paragraph restricting the use of the report.
Question 52
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:
Understand the accounting principles generally accepted in the other country.
Be certified by the appropriate auditing or accountancy board of the other country.
Notify management that the auditor is required to disclaim an opinion on the financial statements.
Receive a waiver from the auditor's state board of accountancy to perform the engagement.
Question 53
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:
Any difference in the facts, circumstances, or assumptions presented may change the report.
The engagement was performed in accordance with Statements on Standards for Consulting Services.
The guidance provided is for management use only and may not be communicated to the prior or continuing auditors.
Nothing came to the accountant's attention that caused the accountant to believe that the accounting principles violated GAAP.
Question 54
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:
Consult with the continuing CPA to obtain information relevant to the transaction.
Report the engagement's findings to the entity's audit committee, the continuing CPA, and management.
Disclaim any opinion that the hypothetical application of accounting principles conforms with generally accepted accounting principles.
Notify the entity that the report is for the general use of all interested parties.
Question 55
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? 1: A U.S.-style report (unmodified). 2: A U.S.-style report modified to report on the accounting principles of the parent's country. 3: The report form of the parent's country.