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AT-5914_other services and reports

AT-5914_other services and reports - Page 1 of 7 CPA REVIEW...

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Page 1 of 7 CPA REVIEW SCHOOL OF THE PHILIPPINES M a n i l a AUDITING THEORY OTHER SERVICES AND REPORTS Related PSAs: PSA 910, 920, 930, 800, 810 PSA 910 – Engagements to Review Financial Statements 1. The objective of a review of financial statements is a. To enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with generally accepted accounting principles in the Philippines. b. For the auditor to carry out 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. c. For the accountant to use accounting expertise, as opposed to auditing expertise, to collect, classify and summarize financial information. d. To enable an auditor 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 auditor's attention that causes the auditor to believe that the financial statements are not prepared, in all material respects, in accordance with generally accepted accounting principles in the Philippines (negative assurance). 2. Which statement is incorrect regarding the general principles of a review engagement? a. The auditor is not required to comply with the “Code of Professional Ethics for Certified Public Accountants” promulgated by the Board of Accountancy. b. The auditor should conduct a review in accordance with PSA 910. c. The auditor should plan and perform the review with an attitude of professional skepticism recognizing that circumstances may exist which cause the financial statements to be materially misstated. d. For the purpose of expressing negative assurance in the review report, the auditor should obtain sufficient appropriate evidence primarily through inquiry and analytical procedures to be able to draw conclusions. 3. Which of the following is required to be performed in an audit but not in review engagement? 4. Engagement letter for a review of financial statements least likely includes a. The objective of the service being performed. b. The fact that the engagement cannot be relied upon to disclose errors, illegal acts or other irregularities, for example, fraud or defalcations that may exist. c. A statement that an audit is not being performed and that an audit opinion will not be expressed. d. The fact that because of the test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatement may remain undiscovered.
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