Reference no: EM131605358

Part A -

1. What is meant by the term "contingency" and under what circumstances must a contingent loss be accrued (under what circumstances must a contingent loss instead be disclosed)? What evidence gathering procedures would an auditor normally perform to detect the existence of contingencies having financial statement impact?

2. What procedures would an auditor normally perform to identify those lawyers to whom a letter of inquiry should be sent regarding litigation, claims, and assessments?

3. If an attorney receives a letter of inquiry regarding litigation, claims, and assessments that omits an "asserted claim," what should the lawyer do?

4. If an attorney receives a letter of inquiry regarding litigation, claims, and assessments that omits an "unasserted claim," what should the lawyer do?

5. What effect would a lawyer's failure to respond to the auditor's inquiry regarding litigation, claims, and assessments have on the auditor's report?

6. Specifically for "asserted claims," what information does the auditor request from the lawyer?

7. Define the term "subsequent event" affecting the financial statement presentation.

8. What evidence gathering procedures would an auditor normally perform to identify subsequent events that are material to the financial statements?

9. What is the purpose of obtaining a "management representation letter" that is required by AICPA professional standards? Who must sign the management representation letter and when must it be dated?

10. Identify 5 specific matters that are typically included among the representations in the management representations letter.

11. What is meant by the term "related party transaction" and what evidence gathering procedures would an auditor normally perform to identify the existence of related party transactions having financial statement impact? [See textbook regarding this issue.]

Part B -

1. We discussed a number of circumstances whereby an auditor might issue an unqualified ("unmodified") audit report having an explanatory paragraph following the opinion paragraph. Identify and briefly discuss 3 such circumstances that would warrant the addition of an "emphasis-of-matter paragraph" and/or an "other-matter paragraph" without changing the unqualified opinion.

2. Describe the auditor's responsibilities with respect to "other information" when the audit report and financial statements are included in a client-submitted document that includes other information (such as management's discussion and analysis).

3. What are the auditors' responsibilities when they conclude that there is "substantial doubt about the entity's ability to continue as a going concern"?

4. Describe the various circumstances that would warrant a "modified" audit report (that is, express an audit opinion different than an unqualified opinion).

5. Given a sample audit report, identify the deficiencies (organized by paragraph).

6. Give 2 examples of an "other comprehensive basis of accounting" (other than GAAP) that is now referred to as a "special-purpose framework" for financial reporting.

Part C -

1. Identify the 2 basic professional services associated with "Statements on Standards for Accounting and Review Services." What evidence gathering procedures, if any, would the CPA perform with respect to these 2 types of professional services?

2. Given a sample review report (or a sample compilation report), identify the deficiencies.

3. What is meant by the term "attest engagement" as the AICPA uses the term?

4. Identify and briefly describe the specific attestation services that constitute the "usual" menu of attestation engagements, as discussed in class.

5. Identify (that is, state or accurately paraphrase) the 11 criteria formerly known as "attestation standards". Compare and contrast the attestation standards with GAAS. What similarities and differences exist?

6. What is meant by the term "prospective" financial information? Identify and briefly describe the 2 basic categories of prospective financial statements. Identify and briefly describe the types of attestation engagements that are permitted with respect to prospective financial statements. (In other words, what is the "menu" of attestation engagements involving prospective financial statements?)