AUDIT FINAL EXAM TESTED QUESTIONS
2026 PRACTICE SOLUTION GRADED A+
⩥ Each page of the financial statements compiled and reported on by
an accountant may include a reference such as Answer: See
Accountant's Compilation Report.
⩥ Which procedure ordinarily is not performed during a review of
interim financial information? Answer: Vouching items in the
accounts and tracing source documents.
⩥ Which of the following engagements may an accountant or
practitioner perform when there is a lack of independence? Answer:
Compilation.
⩥ Which of the following accounting services is not a preparation
service under the Statements on Standards for Accounting and Review
Services?
Preparing a working trial balance
Preparing standard monthly journal entries Answer: Both I and II.
⩥ A client has requested that an accountant prepare an income
statement for the most recent 6-month period and present it
comparatively with the prior year's annual income statement. The
accountant may accept the engagement if Answer: Management
,instead requests comparison of the statement with a statement for the
previous 6-month period.
⩥ An accountant agreed to perform a compilation of a company's
financial statements under Statements of Standards for Accounting
and Review Services (SSARSs). During fieldwork, the accountant
decided to perform some analytical procedures. Which of the
following would the accountant do related to the compilation
engagement? Answer: Issue a compilation report even though review
procedures were performed on the engagement.
⩥ Statements on Standards for Accounting and Review Services
(SSARSs) require an accountant to report when the accountant has
Answer: Compiled, through the use of computer software, financial
statements to be used by third parties.
⩥ An accountant normally accepts a SSARSs engagement if Answer:
Management, not the accountant, accepts responsibility for the
financial statements.
⩥ Regardless of the service provided in a SSARSs engagement, the
accountant should expect Answer: Unrestricted access to all
information needed
⩥ May an accountant accept an engagement to compile or review the
financial statements of a not-for-profit entity if the accountant is
unfamiliar with the specialized industry accounting principles but
plans to obtain the required level of knowledge before compiling or
reviewing the financial statements? Answer: Compilation-yes
,review-yes
⩥ Which of the following circumstances would generally require an
accountant to decline to perform a compilation of financial statements
under Statements on Standards for Accounting and Review Services?
Answers Answer: The accountant was not able to come to an
understanding with representatives of the organization for services to
be performed.
⩥ An accountant is required to comply with the provisions of the
Statements on Standards for Accounting and Review Services when
performing which of the following tasks? Answer: Generating
financial statements of a nonissuer.
⩥ Which of the following procedures is an accountant required to
perform before issuing a compilation report under Statements on
Standards for Accounting and Review Services (SSARSs)? Answer:
Read the financial statements and consider whether such financial
statements appear to be free from obvious material errors.
⩥ Which item is not included in the accountant's documentation of a
preparation engagement? Answer: A statement about whether the
statements were fairly presented.
⩥ When an accountant is not independent with respect to an entity,
which of the following types of compilation reports may be issued?
Answer: A compilation report with special wording that notes the
accountant's lack of independence may be issued.
, ⩥ In a preparation service, management's omission of substantially
all disclosures ordinarily included in the financial statements should
be disclosed Answer: On the face of the financial statements.
⩥ The auditor should establish a clear understanding with the entity
about the services to be performed in a review of interim financial
information. Accordingly, the auditor should document the
understanding in writing. Thus, an engagement letter includes all of
the following except Answer: The form and content of the
documentation that will be maintained by the accountant.
⩥ To obtain an understanding of the applicable financial reporting
framework and the significant accounting policies adopted by
management, the accountant who performs a compilation service does
not Answer: Obtain an understanding of internal control and assess
fraud risks.
⩥ When engaged to compile the financial statements of a nonissuer,
an accountant should possess a level of knowledge of the entity's
accounting principles and practices. This most likely will include
obtaining a general understanding of the Answer: Significant
accounting policies adopted by management.
⩥ When an accountant compiles a client's financial statements
accompanied by supplemental information, which of the following is
a required element of the accountant's separate report on the
supplemental information? Answer: A statement that the information
2026 PRACTICE SOLUTION GRADED A+
⩥ Each page of the financial statements compiled and reported on by
an accountant may include a reference such as Answer: See
Accountant's Compilation Report.
⩥ Which procedure ordinarily is not performed during a review of
interim financial information? Answer: Vouching items in the
accounts and tracing source documents.
⩥ Which of the following engagements may an accountant or
practitioner perform when there is a lack of independence? Answer:
Compilation.
⩥ Which of the following accounting services is not a preparation
service under the Statements on Standards for Accounting and Review
Services?
Preparing a working trial balance
Preparing standard monthly journal entries Answer: Both I and II.
⩥ A client has requested that an accountant prepare an income
statement for the most recent 6-month period and present it
comparatively with the prior year's annual income statement. The
accountant may accept the engagement if Answer: Management
,instead requests comparison of the statement with a statement for the
previous 6-month period.
⩥ An accountant agreed to perform a compilation of a company's
financial statements under Statements of Standards for Accounting
and Review Services (SSARSs). During fieldwork, the accountant
decided to perform some analytical procedures. Which of the
following would the accountant do related to the compilation
engagement? Answer: Issue a compilation report even though review
procedures were performed on the engagement.
⩥ Statements on Standards for Accounting and Review Services
(SSARSs) require an accountant to report when the accountant has
Answer: Compiled, through the use of computer software, financial
statements to be used by third parties.
⩥ An accountant normally accepts a SSARSs engagement if Answer:
Management, not the accountant, accepts responsibility for the
financial statements.
⩥ Regardless of the service provided in a SSARSs engagement, the
accountant should expect Answer: Unrestricted access to all
information needed
⩥ May an accountant accept an engagement to compile or review the
financial statements of a not-for-profit entity if the accountant is
unfamiliar with the specialized industry accounting principles but
plans to obtain the required level of knowledge before compiling or
reviewing the financial statements? Answer: Compilation-yes
,review-yes
⩥ Which of the following circumstances would generally require an
accountant to decline to perform a compilation of financial statements
under Statements on Standards for Accounting and Review Services?
Answers Answer: The accountant was not able to come to an
understanding with representatives of the organization for services to
be performed.
⩥ An accountant is required to comply with the provisions of the
Statements on Standards for Accounting and Review Services when
performing which of the following tasks? Answer: Generating
financial statements of a nonissuer.
⩥ Which of the following procedures is an accountant required to
perform before issuing a compilation report under Statements on
Standards for Accounting and Review Services (SSARSs)? Answer:
Read the financial statements and consider whether such financial
statements appear to be free from obvious material errors.
⩥ Which item is not included in the accountant's documentation of a
preparation engagement? Answer: A statement about whether the
statements were fairly presented.
⩥ When an accountant is not independent with respect to an entity,
which of the following types of compilation reports may be issued?
Answer: A compilation report with special wording that notes the
accountant's lack of independence may be issued.
, ⩥ In a preparation service, management's omission of substantially
all disclosures ordinarily included in the financial statements should
be disclosed Answer: On the face of the financial statements.
⩥ The auditor should establish a clear understanding with the entity
about the services to be performed in a review of interim financial
information. Accordingly, the auditor should document the
understanding in writing. Thus, an engagement letter includes all of
the following except Answer: The form and content of the
documentation that will be maintained by the accountant.
⩥ To obtain an understanding of the applicable financial reporting
framework and the significant accounting policies adopted by
management, the accountant who performs a compilation service does
not Answer: Obtain an understanding of internal control and assess
fraud risks.
⩥ When engaged to compile the financial statements of a nonissuer,
an accountant should possess a level of knowledge of the entity's
accounting principles and practices. This most likely will include
obtaining a general understanding of the Answer: Significant
accounting policies adopted by management.
⩥ When an accountant compiles a client's financial statements
accompanied by supplemental information, which of the following is
a required element of the accountant's separate report on the
supplemental information? Answer: A statement that the information
