AUD-Lesson 7 COMPILATIONS and Preparation_GRADUAL Flashcards

1
Q

What are the five categories in AR-C 60?

A
Financial Statements
Ethical Requirements
Professional Judgement
Conduct of the Engagement in Accordance with SSARS
Engagement Level Quality Control
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2
Q

Under a compilation, when is withdrawal required?

A

Management is unable or unwilling to provide info needed to satisfactorily complete the engagement

There are departures from the AFRF and management is unwilling to correct or disclose these departures

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3
Q

What is the length of the compilation report?

A

One paragraph report. (No assurance)

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4
Q

Which of the three types of SSARs engagements need a signed engagement letter?

A

All three – Preparation, Compilations, Reviews

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5
Q

What is the objective of a SSARS Financial Statement preparation engagement?

A

To prepare F/S in accordance with the applicable Financial Reporting Framework

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6
Q

What is the objective of a SSARS Compilations engagement?

A

Apply accounting and financial reporting expertise to assist management in the presentation of F/S and reporting in accordance with AR-C 80, without giving any assurance about the accuracy and completeness of F/S, and without making material modifications.

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7
Q

Is independence required for the preparation of F/S?

A

No.

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8
Q

Is independence required for Compilations?

A

No, but independence is assumed unless it the accountant states otherwise.

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9
Q

For F/S preparation, what is included in the engagement letter?

A

Objective of engagement
Management Responsibility: Preparation & presentation of F/S
Accountants Responsibility: Comply with SSARS
Limitations of the engagement
Applicable framework
Expected non-GAAP or inadequate disclosure
Management agrees that no assurance is provided (EACH PAGE)

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10
Q

For Compilations, what is included in the engagement letter?

A

Objective of engagement
Management Responsibility: Preparation & presentation of F/S
Accountants Responsibility: Comply with SSARS
Limitations of the engagement
Applicable framework
Expected form & content of compilation report

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11
Q

What kind of an engagement is F/S preparation?

A

None attest; no assurance

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12
Q

What kind of an engagement is a Compilation?

A

Attest engagement; no assurance

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13
Q

Is a report required for F/S preparation?

A

No

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14
Q

Is a report required for Compilations? What is included?

A

Yes. The report needs to statement that no procedures were performed to verify the accuracy of the F/S - A disclaimer of opinion.

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15
Q

What are the elements of a report for a Compilation?

A
CARD
Compiled Statements
AICPA Standards - included SSARs
Responsibility of Management
Disclaim opinion or assurance
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16
Q

What standards govern SSARS engagements?

A

Compilations are governed by SSARS (Statements on Standards for Accounting and Review Services)

17
Q

What disclosures are required for Compilation engagements?

A

Disclosures not necessary must state that they are not included

18
Q

What are the requirements for Agreed Upon Procedures?

A

Independence is required; Only limited use by the client is allowed.

19
Q

In simple terms, what is a compilation report?

A

When a CPA assists management in presenting F/S information that comply with an applicable financial reporting framework. Goal is to make sure F/S are free from obvious clerical errors or errors in applying accounting principles. Is an attest engagement, but does no assurance that there are not any material misstatements.

20
Q

What are the AR-C Sections for Preparations, Compilations, and Reviews

A

Preparation: AR-C 70

Compilation: AR-C 80