[jeff]

Welcome to the Q4 2016 CPA Exam Study Group for AUD.

If this is your first post in the study group – please post your target exam date (just the time frame to preserve your anonymity), and your past history with this exam (optional, of course).

[Forem004]

Correct, expressing a conclusion is an attest function which in turn cannot be a consulting function

[GiniC]

This is way more fun than hammering on questions alone!

[Forem004]

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:

A.
any difference in the facts, circumstances, or assumptions presented may change the report.

B.
the engagement was performed in accordance with Statements on Standards for Consulting Services.

C.
the guidance provided is for management use only and may not be communicated to the prior or continuing auditors.

D.
nothing came to the accountant's attention that caused the accountant to believe that the accounting principles violated GAAP.

[Forem004]

It's helping me to remember the ones that I got wrong….again….after I got them right four times. 🙁

[pharaoh]

I don't know why something is pushing me that it is an agreed upon procedures and the answer should be C but in the same time I have that feeling I am going to click it and then it will be D

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[YBD215]

A CPA is required to comply with the provisions of the Statements on Standards for Attestation Engagements when engaged to:

A) provide assurance on investment performance statistics prepared by an investment company on established criteria.

B) issue a letter for an underwriter, also known as a comfort letter, to a broker or dealer of securities.

C) compile financial statements in conformity with a comprehensive basis of accounting other than GAAP.

D) communicate with an audit committee regarding management's consultations with another CPA.

A is correct. But I don't understand why C is wrong since Compilations also follow Statements on Standards for Attestation Engagements. Cna someone help me with this?

[pharaoh]

@YBD215 – Answer A

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Forem004]

Pharaoh mine was A. This is because their conclusion in this situation can be significantly influence with any changes.

[Forem004]

@ybd…Compilations would follow SSARS wouldn't they?

[Forem004]

The auditor is responsible for which of the following concerning fair value measurements?

Making the fair value measurements and disclosures in the financial statements
Establishing an accounting and financial reporting process for determining the fair value measurements
Selecting appropriate valuation methods
A.
I only

B.
III only

C.
Either II or III

D.
Neither I, II or III

[pharaoh]

@forem004 oh wow!! so I was wrong 2 times in 1 question and still don't understand the answer

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[pharaoh]

III only

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Forem004]

Does their exact explanation help?

An accountant's report on the application of accounting principles to a specific transaction should include a statement that any difference in the facts, circumstances, or assumptions presented may change the report. This is necessary since the accountant's conclusion as to the application of generally accepted accounting principles may be significantly influenced by certain facts, circumstances, or assumptions, and changes could result in the financial statements becoming misleading. An engagement to report on the appropriate application of generally accepted accounting principles is performed in accordance with standards established by the American Institute of Certified Public Accountants. The report encourages management to consult with their continuing accountants and provides a description of the appropriate accounting principles (i.e., not negative assurance).

[pharaoh]

I found it in the book:

If an accountant is asked to give an opinion on the application of GAAP to a specific transaction by
a client of another CPA firm, the accountant must consult with the other CPA firm on the
transaction in question. If the accountant is being asked for this opinion as part of a proposal to
become the new auditor of the client, the report must specifically indicate that the conclusion
might change if there is a change in facts, circumstances, or assumptions behind the report. This is
needed to prevent a client from being able to “shop around” for accounting principles.

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[pharaoh]

Oh Sorry posted before reading your answer

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Author]

Replies