No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

AT 03-13 – Audit Reporting Part 2

Reporting on Special-Purpose Engagements and Other Audit-related Services

1. A financial reporting framework designed to meet the financial information needs of

specific users. The financial reporting framework may be a fair presentation framework
or a compliance framework.
a. Specific user framework
b. Special-purpose framework
c. Specific-purpose framework
d. General purpose framework

2. What differentiates a fair presentation framework from a compliance framework?

a. A fair presentation framework acknowledges explicitly or implicitly that, to
achieve fair presentation of the financial statements, it may be necessary for
management to provide disclosures beyond those specifically required by the
framework.
b. A fair presentation framework acknowledges explicitly that it may be necessary
for management to depart from a requirement of the framework to achieve fair
presentation of the financial statements. Such departures are expected to be
necessary only in extremely rare circumstances.
c. A fair presentation framework does not contain the acknowledgements in (a) or
(b) above.
d. Both A and B.

3. The following are examples of a special-purpose framework, except:

a. A tax basis of accounting for a set of financial statements that accompany an
entity’s tax return.
b. The financial reporting provisions established by a regulator to meet the
requirements of that regulator.
c. The cash receipts and disbursements basis of accounting for cash flow
information that an entity may be requested to prepare for creditors.
d. The financial reporting framework adopted by the Financial Reporting
Standards Council (FRSC).

4. When reporting under a special purpose framework, the auditor’s report shall include:
a. Other Matter Paragraph
b. Emphasis of Matter Paragraph
c. Key Audit Matters
d. Significant risk of material misstatement

5. The form and content of the auditor’s report on special purpose financial statements
shall include:
I. Purpose for which the financial statements are prepared.
II. Reference to auditor’s responsibility to determine the acceptability of the
applicable financial reporting framework.
III. An “other matter” paragraph to explain that the financial statements are
prepared using a special purpose framework.
a. I only
b. II only
c. I and II only
d. I, II and III

1P a g e JABELLAR/AIBAY/AJABINAL/RBERCASIO/JMAGLINAO/RSORIANO
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

6. If the auditor undertakes an engagement to report on a single financial statement or

on a specific element of a financial statement in conjunction with an engagement to
audit the entity's complete set of financial statements, the auditor shall
a. Express a single opinion for both engagements.
b. Express a separate opinion for each engagement.
c. Express an opinion on the complete set of financial statements only.
d. Any of the above.

7. Statement 1: Generally, the auditor is prohibited to issue an unmodified opinion on the

audit of single FS or specific element of it if he/she issues an adverse opinion or
disclaimer of opinion on the entity’s complete set of FS.
Statement 2: An auditor may also be engaged to audit specific elements, accounts or
items of financial statements and such engagement is still covered by the PSAs.
a. True, True
b. True, False
c. False, True
d. False, False

8. In deciding whether or not to accept an engagement to audit a single FS or a specific

element of a FS, the auditor must take into consideration the following:
a. Whether an audit in accordance with PSAs is practicable.
b. Whether the financial reporting framework applied is acceptable.
c. Whether the agreed terms of the audit engagement include the expected form
of any reports to be issued by the auditor.
d. All of the above.

9. Which of the following is FALSE about the audit of a single FS or specific element of
a FS?
a. The single FS or specific element being audited may be a part of a general
purpose FS or special purpose FS.
b. An emphasis of matter paragraph is required if the single FS or specific element
is part of a special purpose FS.
c. The auditor’s report for the audit of a single FS or specific element of a FS is
always restricted to specific users.
d. The auditor considers the implications of matters included in the auditor’s report
of the complete set of FS on the audit of a single FS or specific element of a
FS.

10. An auditor may report on summary financial statements that are derived from the
complete audited financial statements if the
a. Summary financial statements are distributed only to management and the
board of directors.
b. Auditor indicates whether the information in the summary financial statements
is consistent with the audited financial statements from which it was derived.
c. Auditor describes the additional review procedures performed on the summary
financial statements.
d. Summary financial statements are presented in comparative form with the prior
year’s summarized financial statements.

11. Statement 1: If the summary financial statements are not materially consistent with
the audited financial statements, a qualified or adverse opinion may be issued based
on the pervasiveness of its effects.

2P a g e JABELLAR/AIBAY/AJABINAL/RBERCASIO/JMAGLINAO/RSORIANO
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

Statement 2: If an adverse opinion is expressed on the audited financial statements,

the auditor shall express a denial (disclaimer) of opinion on the summary financial
statements.
a. True, True
b. True, False
c. False, True
d. False, False

12. You are being asked to express an opinion on Jenie Inc.’s summarized financial
statements. You may only accept this engagement if:
a. You are also auditing Jenie Inc.’s complete set of financial statements.
b. Jenie Inc.’s financial statements are prepared in conformity with GAAP.
c. Your report is available for distribution to Jenie Inc.’s other employees.
d. You would be provided the same amount of evidence to an audit of a complete
set of financial statements.

13. The objective of a review engagement

a. Is to enable the auditor to express an opinion whether the financial statements
are prepared in all material respects, in accordance with an identified financial
reporting framework
b. Is to enable the practitioner to state whether, on the basis of procedures which
do not provide all the evidence that would be required in an audit, anything has
come to the practitioner's attention that causes the practitioner to believe that
the financial statements are not prepared in all material respects, in accordance
with an identified financial reporting framework.
c. Is to carry out those procedures of an audit nature to which the auditor and the
entity and any appropriate third parties have agreed and to report on factual
findings.
d. Is to use accounting expertise as opposed to auditing expertise to collect,
classify and summarize financial information.

14. The main difference(s) between an audit engagement and a review engagement is:
a. The level of assurance provided by the auditor
b. The form of conclusion provided in the report
c. The procedures performed and evidenced gathered by the auditor
d. All of the above.

15. A summary of findings rather than assurance is MOST likely to be included in:
a. Examination report
b. Agreed-upon procedures report
c. Compilation report
d. Review report

16. Which of the following reports may be issued only by a CPA who is independent of a
client?
a. Report on consulting services
b. Standard report on an examination of a financial forecast
c. Compilation report on a financial projection
d. Compilation report on historical financial statement

17. Which of the following procedures is usually performed by the practitioner in a review
engagement of an entity?
a. Sending a letter of inquiry to the entity’s lawyer.

3P a g e JABELLAR/AIBAY/AJABINAL/RBERCASIO/JMAGLINAO/RSORIANO
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

b. Confirming a significant percentage of receivables by direct communication

with customers.
c. Comparing the financial statements with statements for comparable periods.
d. Communicating material weaknesses in the design or implementation of
internal control.

18. The date of the review report should

a. Not be earlier than the date on which the financial statements were approved
by management.
b. Be earlier than the date on which the financial statements were approved by
management.
c. Coincide with the date of the financial statements.
d. Not be later than the date of the financial statements.

19. A report may be based upon applying agreed-upon procedures to specified elements,
accounts, or items of a financial statement. The users of the report should participate
in establishing the procedures to be performed. If the auditor cannot discuss the
procedures with all the parties who will receive the report, he/she may:
I. Discuss the procedures to be applied with appropriate representatives of
the parties involved.
II. Review relevant correspondence from the parties involved.
III. Distribute a draft of the type of report that will be issued to the parties
involved.
a. I and II only
b. II and III only
c. I and III only
d. I, II and III

20. When compiling an entity’s financial statements, a practitioner would be least likely to:
a. Obtain an acknowledgment from management of its responsibility for the
financial statements.
b. Perform analytical procedures designed to identify relationships that appear to
be unusual.
c. Plan the compilation work.
d. Read the compiled financial statements and consider whether they appear to
include adequate disclosure.
*End of Handout*

4P a g e JABELLAR/AIBAY/AJABINAL/RBERCASIO/JMAGLINAO/RSORIANO