AICPA CPA-Auditing Exam Dumps

Choice 'd' is correct. For a particular entity's FS to be presented fairly in conformity with GAAP, it is not required that the principles selected be applied on a basis consistent with those followed in the prior year, merely that any changes in accounting principle be properly accounted for and disclosed.

Choice 'a' is incorrect. The principles selected must be appropriate in the circumstances for the particular entity.

Choice 'b' is incorrect. The principles selected must reflect transactions in a manner that present the FS within a range of acceptable limits.

Choice 'c' is incorrect. The principles selected must present information in the FS that is classified and summarized in a reasonable manner.

Choice 'd' is correct. In a typical comfort letter, the accountants express an opinion (i.e., positive assurance) concerning the financial statements' compliance (as to form) with the pertinent accounting requirements of the SEC.

Choice 'a' is incorrect. No assurance is generally provided in a comfort letter regarding the operation of an entity's internal control.

Choice 'b' is incorrect. A typical comfort letter is addressed to the underwriters of the securities.

Government Auditing Standards and the Single Audit Act are not applicable to a comfort letter related to the issuance of securities.

Choice 'c' is incorrect. Negative assurance (not positive) is typically provided regarding unaudited condensed financial information.

Choice 'd' is correct. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.

Choice 'a' is incorrect. On rare occasions, the auditor may depart from the guidance provided by the SASs, but he or she must justify such departures.

Choice 'b' is incorrect. Lack of familiarity with a SAS is not a valid reason for departing from its guidance.

The auditor is expected to have sufficient knowledge of the SASs to identify those that are applicable to a given audit engagement.

Choice 'c' is incorrect. The cost associated with following the guidance provided by a SAS is not an acceptable reason for departing from its guidance.

Choice 'b' is correct. When compiling the financial statements of a nonissuer, an accountant should understand the accounting principles and practices of the entity's industry.

Choice 'a' is incorrect. Reviewing agreements with financial institutions for restrictions is generally performed during an audit.

Choice 'c' is incorrect. Inquiring of key personnel concerning related parties and subsequent events is not required in a compilation.

Choice 'd' is incorrect. Performing ratio analyses of the financial data of comparable prior periods is generally performed for review engagements and audits, not compilations.