Appendix 16a note those learning objectives marked

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(Appendix 16A) Note: Those learning objectives marked with an asterisk (*) and their corresponding topics are considered advanced material. Appendix 16A is located on the text Online Learning Centre. UNAUDITED FINANCIAL STATEMENTS Many PA practices offer accounting and review services for small-business clients. These engagements include bookkeeping, financial statement preparation, and financial statement review to help small businesses prepare financial communications. Until the late 1970s, auditing standards concentrated on one level of assurance based on a full audit, and appeared to deny small clients the full benefit of PAs’ services. The investigations by the Adams Committee in Canada and the U.S. Congress during 1977–78 highlighted the problem by focusing attention on the idea that auditing standards handicapped the business of small public accounting firms and the services they offered small-business clients. The argument has become known as the “Big GAAS–Little GAAS” question. Big GAAS was portrayed as the villain in the play, with its proposal that exist- ing standards were enacted under the influence of large PA firms whose practices are centred on big business. Even though this proposition is not true, the fact is that small PA firms want to give, and small businesses want to receive, some level of assurance as a result of accountants’ work even though an audit in accordance with GAAS is not per- formed. As a result, a separate part of the CICA Handbook , the 8000 sections, and International Standard on Review Engagements (ISRE) 2400 have been set aside to deal with review engagements. CICA Handbook, section 9200, and International Standard on Related Services (ISRS) 4410 deal with compilation engagements. Review Services The review services explained in this section apply specifically to accountants’ work on unaudited financial statements. In a review services engagement, an accountant performs some procedures to achieve a moderate level of assurance, not the same as that obtained L E A R N I N G O B J E C T I V E 1 Prepare reports for review and compilation of unaudited fi nancial statements, given spe- cific facts.
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628 PART IV Other Professional Services by performing an audit in accordance with GAAS. CICA Handbook paragraph 8100.05 states the following: Reviews are distinguishable from audits in that the scope of a review is less than that of an audit and therefore the level of assurance provided is lower. A review consists primarily of enquiry, analytical procedures, and discussions related to information supplied to the public accountant by the enterprise, with the limited objective of assessing whether the information is being reported on appropriate criteria. In this section, the word plausible is used in the sense of appearing to be worthy of belief based on the information obtained by the public accountant in connection with the review.
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  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

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