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An accountant has been asked to issue a review report on the balance sheet of a nonissuer but not to report on the other basic financial statements. The accountant may not do so:
Suggested Answer: A
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Choice 'a' is correct. An auditor should obtain management's written assertion about the effectiveness of the entity's internal control.
Choice 'b' is incorrect. The accountant should disclaim (not qualify) an opinion on management's assertions that the cost of correcting weaknesses exceeds the benefits.
Choice 'c' is incorrect. The accountant has no responsibility to evaluate the effect of subsequent events. In fact, the report on an entity's internal control specifically states that projections of the internal control evaluation to future periods is inappropriate.
Choice 'd' is incorrect. The accountant does provide an opinion (and not a disclaimer) on the effective operation of internal control.
27 comments · newest first
JA
Jaclyn
11 months ago
D makes sense too, scope matters a lot!
DO
Dorothy
11 months ago
C could also be a factor if GAAP issues pop up.
SH
Shannan
12 months ago
Wait, are we sure about that? Seems odd to skip other statements.
JA
Janessa
12 months ago
Totally agree, can't just look at one part!
RO
Rodolfo
12 months ago
B is the right answer! Incomplete review for sure.
ST
Stevie
1 year ago
I feel like option A is too strict; I don't recall ethical standards preventing a review of just one statement.
AL
Alana
1 year ago
I think I saw a practice question similar to this, and it emphasized the importance of GAAP compliance, which might relate to option C.
TI
Tien
1 year ago
I'm not entirely sure, but I feel like option D could be relevant if the accountant's work is limited.
ZA
Zachary
1 year ago
I remember discussing how a review report should cover all financial statements, so I think option B makes sense.
OL
Ollie
1 year ago
I feel pretty confident about this one. Provider Search and Intelligent Appointment Management are the two capabilities that will best meet the requirements described in the question. The other options don't seem as directly relevant to the specific needs of the call center agent.
AN
Anika
1 year ago
Whew, this is a lot to consider. I'll need to really focus on understanding the relationship between the different systems and how they need to work together. Enabling SSO is a must, but I'm not sure about the other steps.
ER
Erasmo
1 year ago
Okay, I remember learning about the TCSEC divisions in class. I think Division B is the one based on MAC, but I'll review my material to confirm.
TE
Teddy
1 year ago
Ha! Imagine the accountant trying to hide a material GAAP departure in the balance sheet. That's just asking for trouble.
JO
Josefa
1 year ago
C) If the review of the balance sheet discloses material departures from GAAP.
SL
Slyvia
1 year ago
B) Because compliance with this request would result in an incomplete review.
EA
Earleen
1 year ago
A) Because compliance with this request would result in a violation of the ethical standards of the profession.
GA
Gail
1 year ago
I'm not sure about this one. Couldn't the accountant just disclose the limitations in the report and still issue a review on the balance sheet?
EV
Evangelina
1 year ago
C) If the review of the balance sheet discloses material departures from GAAP.
BO
Bobbie
1 year ago
B) Because compliance with this request would result in an incomplete review.
JO
Joanne
1 year ago
A) Because compliance with this request would result in a violation of the ethical standards of the profession.
IS
Isadora
1 year ago
I agree with Linn. Reviewing only part of the financial statements is not enough to provide a proper review report.
SH
Shaun
1 year ago
But what if the review of the balance sheet shows material departures from GAAP? Shouldn't the accountant report that?
GE
Gerald
1 year ago
I agree with Charlene. It's important to uphold ethical standards in the profession.
LI
Linn
1 year ago
I think option B is the correct answer. Reviewing only the balance sheet and not the other financial statements would result in an incomplete review.
LO
Louvenia
1 year ago
B) Because compliance with this request would result in an incomplete review.
IO
Iola
1 year ago
A) Because compliance with this request would result in a violation of the ethical standards of the profession.
CH
Charlene
1 year ago
I think the accountant should not issue the review report if it would violate ethical standards.