[StellaFL]

The answer that Wiley gives for this questions seems wrong to me:

Blue, Co. a privately held entity, asked its tax accountant, Cook, a CPA in public practice, to reproduce Blue’s internally prepared interim financial statements on Cook’s microcomputer when cook prepared Blue’s quarterly tax return. Cook should not submit these financial statements to Blue unless, at a minimum, cook complies with the provisions of:

A. Statements on Standards for Accounting and Review Services

B. Statements on Responsibilities on Tax Practice

C. Statements for Standards for Attest Engagements

D. Statements on Responsibilities in Unaudited Financial Services

Now, I know that the only possible answer would be A, SSARS, and that’s what Wiley says, but it was my understanding that if a CPA is simply REPRODUCING client prepared financial statements without modification, that practice does not fall under SSARS, and is not considered a compilation. The answer explanation states that, at a minimum, the CPA must meet the compilation requirements.

When I click on the text link for that question, here’s what it references:

When a CPA prepares financial statements for a client, he or she must—at a minimum— comply with the compilation requirements. More formally, the standards state that a CPA should not submit unaudited financial statements of a nonissuer (nonpublic) entity to a client or others unless, at a minimum, he or she has complied with the compilation requirements. To submit unaudited financial statements is to present to a client or third party one or more financial statements that the accountant has prepared either manually or through the use of computer software. However, the following are not considered submission of financial statements and therefore do not require adherence to the compilation standards:

• Reading client-prepared financial statements

• Typing or reproducing financial statements without modification

• Proposing journal entries and disclosures and providing a client with a financial statement format without dollar amounts

Doesn’t there seem to be a contradiction here? What am I missing?

REG 11/28/11 - 88
BEC 04/04/12 - 88
FAR 07/23/12 - 90
AUD 11/2012 - 92

Yaeger/Wiley

[Roma]

@StellaFL,

I guess it sort of comes down to the meaning of ‘reproducing' in the question.

If Cook is running the data thru computer software to re-create the internal financial INFO, then this would be beyond the scope of mere copying / typing as the possiblity of modification exists. This would be a compliation and would require Cook to question any variances that arise (e.g. validation issues, classification, formats, math, etc.).

Either way, it sounds like you have a good understanding of the concepts involved.

Good luck.

Using Wiley
FAR = 94 Feb 2012
BEC = 92 April 2012
AUD = 95 July 2012
REG = 91 Nov 2012

[StellaFL]

@Roma, thanks for your reply. I don't think it would be that ambiguous on the actual test, so I guess as long as I understand the concept, I should be OK on this type of question.

Awesome scores for you! Any last minute advice for me on AUD? This will be my last exam, but I'm not feeling nearly as confident about this one as I have on past sections!

REG 11/28/11 - 88
BEC 04/04/12 - 88
FAR 07/23/12 - 90
AUD 11/2012 - 92

Yaeger/Wiley

[Roma]

@StellaFL,

Thanks – the CPA gods were with me those days :).

I was a bit apprehensive walking into AUD with all the ga-zillion types of reports & exceptions. My advice for last minute studying would be NOT to focus on memorizing every possible audit report. Take a quick look at the Content Specs Outline (CSO) as they tell you exactly what is on the exam and their weights. You likely will not have time pressure on AUD as with the other sections.

I would make sure to have a good conceptual understanding of the different types of engagements re: planning, procedures, required evidence & report assurance given. Do you clearly understand Audit versus Review versus COMP versus AUP. ? What circumstances require deviation from the base audit report?

Of course the CSO indicates the importance of professional responsibilities (AICPA / SOX / PCAOB).

Most of all – go in with a fresh mind !!!

Best of luck to you.

Using Wiley
FAR = 94 Feb 2012
BEC = 92 April 2012
AUD = 95 July 2012
REG = 91 Nov 2012

[Author]

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