What is the primary objective of a review of financial statements engagement?

To express an opinion on the overall financial statements.

To carry out audit procedures agreed in with the client and other users of the report.

To assist the client in the preparation of the financial statements.

To state whether anything has come to the auditor’s attention that indicates that the financial statements are not fairly
stated.

___2. When performing a review of financial statements, the auditor is required to perform which of the following?

To obtain corroborative evidence to support management’s responses to inquiries through tests of details and tests of
controls.

To test the accounting records that identify inconsistencies with the prior year’s financial statements.

To understand the accounting principles of the industry in which the business entity operates.

To perform risk assessment procedures through assessment of accounting and internal control systems and test of
control.

___3. A review does not provide assurance that the CPA will become aware of all significant matters that would be
disclosed in an audit. However, if the CPA becomes aware that information coming to his attention is incorrect,
incomplete, or otherwise unsatisfactory, he should

Withdraw immediately from the engagement.

Perform the additional procedures he deem necessary to achieve limited assurance.

Perform a complete audit and issue a standard audit report with appropriate qualifications.

Downgrade the engagements to a compilation and issue the appropriate report.

___4. Which of the following is true of the report based on agreed-upon procedures?

The report is restricted to those parties who have agreed to the procedures to be performed.

The CPA provides the recipients of the report limited assurance as to reasonableness of the assertions presented in
the financial information.

The report states that the auditor has not recognized any basis that requires revision of financial statements.

The report should state that the procedures performed are limited to analytical procedures and inquiry.

___5. Which of the following is incorrect about a compilation engagement?

The CPA uses his auditing expertise to collect, classify and summarize the financial information.

The engagement ordinarily entails reducing detailed data to a manageable and understandable form.

The CPA should exercise due care.

The procedures performed do not enable the accountant to express any form of assurance.

___6. Which of the following is not one of the requirements before accepting an assurance engagement?
The practitioner should be competent and independent.

The practitioner should accept the engagement only if the subject matter is the responsibility of another party.

The practitioner should accept the engagement only if the subject matter is identifiable and in the form that can be
subjected to evidence gathering procedures.

The responsible party and the intended user of assurance report should be from different organizations.

___7. An examination of financial forecast is a professional service that involves

Assembling financial forecast that is based on management assumptions.

Limiting the distribution of the accountants report to management and board of directors.

Assuming the responsibility on the financial forecast.

Evaluating the preparation of the financial forecast and the support underlying management assumptions.

___8. Which of the following is an example of an assurance engagement?

Management advisory services.

Reporting on financial statements prepared using other comprehensive basis of accounting.

Compilation of financial information.

Preparation of tax returns.

___9. Which of the following is not true about the reports provided by a CPA?

In the audit engagement, the auditor provides high level but not absolute assurance that the financial information is
free of material misstatement.

In a review engagement, the CPA’s moderate or limited assurance is expressed in the form of negative assurance.

For agreed-upon procedures, the CPA provided a report on factual findings and no assurance is expressed.

In a compilation engagement, no assurance is expressed and the users of financial information do not derive any
benefit from the CPA’s involvement.

___10. If there had been a material scope limitation on a review engagement, the CPA may

Express either qualified opinion or disclaim an opinion on the financial statements.

Not provide any assurance on the financial statements.

Issue the unqualified review report.

Issue an audit report that contains an unqualified opinion about the financial statements.

___11. Which of the following statements best describes assurance services?

Independent professional services that are intended to enhance the credibility of information to meet the needs of an
intended user.

Services designed to express an opinion on the fairness of historical financial statements based on the results of an
audit.
The preparation of financial statements or the collection