cpa audit review ch1 review 1
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In performing an attest engagement, a CPA typically
Expresses a conclusion about a written assertion.
When a CPA in the practice of public accounting performs an attest engagement, the engagement is subject to the attestation standards. An attest engagement is one in which a practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about the subject matter, that is the responsibility of another party. Moreover, according to the second attestation standard of reporting, the report shall state the practitioner’s conclusion about the subject matter or the assertion in relation to the criteria against which the subject matter was evaluated. However, the conclusion may refer to that assertion or to the subject matter to which the assertion relates. Furthermore, given one or more material deviations from the criteria, the practitioner should modify the report and ordinarily should express the conclusion directly on the subject matter.
In pursuing a CPA firm’s quality control objectives, a CPA firm may maintain records indicating which partners or employees of the CPA firm were previously employed by the CPA firm’s clients. Which quality control element is this procedure most likely to satisfy?
Relevant ethical requirements.
CPA firms should avoid situations in which third parties might question the firm’s independence. Thus, they should adhere to the independence and other principles established by the AICPA Code of Professional Conduct and the requirements of regulators and other authorities (QC 10).
The authoritative body designated to promulgate standards concerning an accountant’s association with unaudited financial statements of an entity that is not required to file financial statements with an agency regulating the issuance of the entity’s securities is the
Accounting and Review Services Committee.
The AICPA bylaws designate the Accounting and Review Services Committee as the senior technical committee authorized to issue pronouncements in connection with the unaudited financial statements or other unaudited financial information of a nonissuer.
A CPA is required to comply with the provisions of Statements on Standards for Accounting and Review Services (SSARSs) when
SSARSs apply to the professional responsibilities of accountants who compile or review the unaudited financial statements or financial information of a nonpublic entity.
The objective of a compilation is to assist management in presenting financial information in the form of financial statements. But the accountant does not undertake to obtain or provide any assurance that no material modifications should be made for the statements to conform with the applicable financial reporting framework. The objective of a review is to obtain limited assurance that no material modifications should be made for the statement to conform with the applicable financial reporting framework (AR 60). Neither assisting in adjusting the books of account nor consulting on accounting matters is a compilation or review.
Is engagement performance an element of a CPA firm’s quality control policies and procedures applicable to the firm’s accounting and auditing practice?
Yes - Engagement performance relates to policies and procedures implemented by a CPA firm to ensure quality performance of each engagement. Matters addressed include responsibilities for consistency of performance, supervision, and review.
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