CPA Examination Questions -- Review and Compilation
1. Statements on Standards for Accounting and Review Services (SSARS) require an accountant to report when the 
accountant has
a. Typed client prepared financial statements, without modification, as an accommodation to the client.
b. Provided a client with a financial statement format that does not include dollar amounts, to be used by the client in 
preparing financial statements.
c. Proposed correcting journal entries to be recorded by the client that change client-prepared financial statements
d. Generated, through the use of computer software, financial statements prepared in accordance with a comprehensive 
basis of accounting other than GAAP.
2. When an accountant performs more than one level of service (for example, a compilation and a review, or a 
compilation and an audit) concerning the financial statements of a nonpublic entity, the accountant ordinarily should issue 
the report that is appropriate for
a. The lowest level of service rendered.
b. The highest level of service rendered.
c. A compilation engagement.
d. A review engagement
3. An accountant should not submit unaudited financial statements to the management of a nonpublic company unless, at a 
minimum, the accountant
a. Assists in adjusting the books of account and preparing the trial balance.
b. Types or reproduces the financial statements.
c. Complies with the standards applicable to compilation engagements.
d. Applies analytical procedures to the financial statements.
4. When compiling the financial statements of a nonpublic entity, an accountant should
a. Review agreements with financial institutions for restrictions on cash balances.
b. Understand the accounting principles and practices of the entity's industry.
c. Inquire of key personnel concerning related parties and subsequent events.
d. Perform ratio analyses of the financial data of comparable prior periods.
5. Which of the following procedures is ordinarily performed by an accountant in a compilation engagement of a 
nonpublic entity?
a. Reading the financial statements to consider whether they are free of obvious mistakes in the application of accounting 
principles
b. Obtaining written representations from management indicating that the compiled financial statements will not be used to 
obtain credit.
c. Making inquiries of management concerning actions taken at meetings of the stockholders and the board of directors.
d. Applying analytical procedures designed to corroborate management's assertions that are embodied in the financial 
statement components.
6. When compiling a nonpublic entity's financial statements, an accountant would be least likely to 
a. Perform analytical procedures designed to identify relationships that appear unusual.
b. Read the compiled financial statements and consider whether they appear to include adequate disclosures.
c. Omit substantially all of the disclosures required by generally accepted accounting principles.
d. Issue a compilation report on one or more, but not all, of the basic financial statements.
7. Which of the following should not be included in an accountant's standard report based upon the compilation of an 
entity's financial statements?
a. A statement that a compilation is limited to presenting in the form of financial statements information that is the 
representation of management.
b. A statement that the compilation was performed in accordance with Statements on Standards for Accounting and 
Review Services issued by the AICPA.
c. A statement that the accountant has not audited or reviewed the statements.
d. A statement that the accountant does not express an opinion but provides only negative assurance on the statements.
8. How does an accountant make the following representations when issuing the standard report for the compilation of a 
nonpublic entity's financial statements?
      The Financial Statements                       The Accountant has 
      Have Not Been Audited                 compiled the Financial Statements
a.		Implicitly						Implicitly
b.		Explicitly						Explicitly
c.		Implicitly						Explicitly
d.		Explicitly						Explicitly
9. Compiled financial statements should be accompanied by a report stating that
a. A compilation is limited to presenting in the form of financial statements information that is the representation of 
management.
b. The accountant has compiled the financial statements in accordance with standards established by the Auditing 
Standards Board.
c. A compilation is substantially less in scope than a review or an audit in accordance with generally accepted auditing 
standards.
d. The accountant does not express an opinion but expresses only limited assurance on the compiled financial statements.
10. Financial statements of a nonpublic entity compiled without audit or review by an accountant should be accompanied 
by a report stating that
a. The scope of the accountant's procedures has not been restricted in testing the financial information that is the 
representation of management.
b. The accountant assessed the accounting principles used and significant estimates made by management.
c. The accountant does not express an opinion or any other form of assurance on the financial statements.
d. A compilation consists principally of inquiries of entity personnel and analytical procedures applied to financial data.
11. When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all 
disclosures required by GAAP, the accountant should indicate in the compilation report that the financial statements are
a. Not designed for those who are uninformed about the omitted disclosures.
b. Prepared in conformity with a comprehensive basis of accounting other than GAAP.
c. Not compiled in accordance with Statements on Standards for Accounting and Review Services.
d. Special-purpose financial statements that are not comparable to those of prior periods.
12. An accountant may compile a nonpublic entity's financial statements that omit all of the disclosures required by 
GAAP only if the omission is:
I. Clearly indicated in the accountant's report
II. Not undertaken with the intention of misleading the financial statement users
a. I only
b. II only
c. Both I and II.
d. Either I or II.
13. Which of the following representations does an accountant make implicitly when issuing the standard report for the 
compilation of a nonpublic entity's financial statements?
a. the accountant is independent with respect to the entity.
b. The financial statements have not been audited.
c. A compilation consists principally of inquiries and analytical procedures.
d. The accountant does not express any assurance on the financial statements.
14. Miller, CPA, is engaged to compile the financial statements of Web Co., a nonpublic entity, in conformity with the 
income tax basis of accounting.  If Web's financial statements do not disclose the basis of accounting used, Miller should
a. Disclose the basis of accounting in the accountant's compilation report.
b. Clearly label each page "Distribution Restricted-Material Modifications Required."
c. Issue a special report describing the effect of the incomplete presentation.
d. Withdraw from the engagement and provide no further service to Web.
15. When providing limited assurances that the financial statements of a nonpublic entity require no material modifications 
to be in accordance with generally accepted accounting principles, the accountant should
a. understand the accounting principles of the industry in which the entity operates.
b. Develop audit programs to determine whether the entity's financial statements are fairly presented.
c. Assess the risk that a material misstatement could occur in a financial statement assertion.
d. Confirm with the entity's lawyer that material loss contingencies are disclosed.
16. Which of the following procedures most likely would not be included in a review engagement of a nonpublic entity?
a. Obtaining a management representation letter
b. Considering whether the financial statements conform with GAAP.
c. Assessing control risk.
d. Inquiring about subsequent events.
17. Which of the following procedures should an accountant perform during an engagement to review the financial 
statements of a nonpublic entity?
a. Communicating reportable conditions discovered during the assessment of control risk.
b. Obtaining a client representation letter from members of management.
c. Sending bank confirmation letters to the entity's financial institutions.
d. Examining cash disbursements in the subsequent period for unrecorded liabilities
18. Which of the following procedures is usually performed by the accountant in a review engagement of a nonpublic 
entity?
a. Sending a letter of inquiry to the entity's lawyer.
b. Comparing the financial statements with statements for comparable prior periods.
c. Confirming a significant percentage of receivables by direct communication with debtors.
d. Communicating reportable conditions discovered during the consideration of internal control.
19. Performing inquiry and analytical procedures is the primary basis for an accountant to issue a
a. Report on compliance with requirements governing major federal assistance programs in accordance with the Single 
Audit Act.
b. Review report on prospective financial statements that present an entity's expected financial position, given one or 
more hypothetical assumptions.
c. Management advisory report prepared at the request of a client's audit committee.
d. Review report on comparative financial statements for a nonpublic entity in its second year of operations.
20. Which of the following inquiry or analytical procedures ordinarily are performed in an engagement to review a 
nonpublic entity's financial statements?
a. Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter.
b. Inquiries concerning the entity's procedures for recording and summarizing transactions.
c. Analytical procedures designed to test management's assertions regarding continued existence.
d. Inquiries of the entity's attorney concerning contingent liabilities
21. Which of the following statements is true concerning both an engagement to compile and an engagement to review a 
nonpublic entity's financial statements?
a. The accountant does not contemplate obtaining an understanding of internal control.
b. The accountant must be independent in fact and appearance.
c. The accountant expresses no assurance on the financial statements.
d. The accountant should obtain a written management representation letter
22. Financial statements of a nonpublic entity that have been reviewed by an accountant should be accompanied by a 
report stating that a review
a. Provides only limited assurance that the financial statements are fairly presented.
b. Includes examining, on a test basis, information that is the representation of management.
c. Consists principally of inquiries of company personnel and analytical procedures applies to financial data.
d. Does not contemplate obtaining corroborating evidential matter or applying certain other procedures ordinarily 
performed during an audit.
23. An accountant who reviews the financial statements of a nonpublic entity should issue a report stating that a review
a. is substantially less ins cope than an audit.
b. Provides negative assurance that internal control is functioning as designed.
c. Provides only limited assurance that the financial statements are fairly presented
d. Is substantially more in scope than a compilation
24. Financial statements of a nonpublic entity that have been reviewed by an accountant should be accompanied by a 
report stating that
a. The scope f the inquiry and analytical procedures performed by the accountant has not bee restricted.
b.  All information included in the financial statements is the representation of the management of the entity.
c. A review includes examining, an a test basis evidence supporting the amounts and disclosures in the financial statements.
d. A review is greater in scope than a compilation, the objective of which is to present financial statements that are free of 
material misstatements
25. An accountant's standard report on a review of the financial statements of a nonpublic entity should state that the 
accountant
a. Does not express an opinion or any form of limited assurance on the financial statements
b. Is not aware of any material modifications that should be made to the financial statements for them to conform with 
GAAP.
c. Obtained reasonable assurance about whether the financial statements are free of material misstatement.
d. Examined evidence, on a test basis, supporting the amounts and disclosures in the financial statements
26. During an engagement to review the financial statements of a nonpublic entity, an accountant becomes aware of a 
material departure from GAAP.  If the accountant decides to modify the standard review report because management 
will not revise the financial statements, the accountant should
a. Express negative assurance on the accounting principles that do not conform with GAAP.
b. Disclose the departure from GAAP in a separate paragraph of the report.
c. Express an adverse of qualified opinion, depending on materiality
d. Express positive assurance on the accounting principles that conform with GAAP.
27. Baker, CPA, was engaged to review the financial statements of Hall Company, a nonpublic entity.  Evidence came 
to Baker's attention that indicated substantial doubt as to Hall's ability to continue as a going concern.  The principal 
conditions and events that caused the substantial doubt have been fully disclosed in the notes to Hall's financial statements. 
Which of the following statements best describes Baker's reporting responsibility concerning this matter?
a. Baker is not required to modify the accountant's review report.
b. Baker is not permitted to modify the accountant's review report.
c. Baker should issue an accountant's compilation report instead of a review report.
d. Baker should express a qualified opinion in the accountant's review report.
28. Baker, CPA, was engaged to review the financial statements of Hall Co., a nonpublic entity.  During the engagement, 
Baker uncovered a complex scheme involving client illegal acts and irregularities that materially affect Hall's financial 
statements.  If Baker believes that modification of the standard review report is not adequate to indicate the deficiencies in 
the financial statements, Baker should 
a. Disclaim an opinion
b. Express an adverse opinion.
c. Withdraw from the engagement.
d. Express a qualified opinion.
29. Each page of a nonpublic entity's financial statements review by an accountant should include the following reference:
a. See Accountant's Review Report
b. Reviewed, No Accountant's Assurance Expressed.
c. See Accompanying Accounting Footnotes.
d. Review, No Material Modifications Required.
30. Moore, CPA, has been asked to issue a review report on the balance sheet of Dover Co., a nonpublic entity.  
Moore will not be reporting on Dover's statements of income, retained earnings, and cashflows.  Moore may issue the 
review report provided the 
a. Balance sheet is presented in a prescribed form of an industry trade association.
b. Scope of the inquiry and analytical procedures has not been restricted. 
c. Balance sheet is not to be used to obtain credit or distributed to creditors.
d. Specialized accounting principles and practices of Dover's industry are disclosed.
31. An accountant who had begun an audit of the financial statements of a nonpublic entity was asked to change the 
engagement to a review because of a restriction on the scope of the audit.  If there is reasonable justification for the 
change, the accountant's review report should include reference to the 
   Original Engagement That                  Scope Limitation That Caused the
       Was Agreed To					Changed Engagement
a.		Yes							Yes
b.		Yes							No
c.		No							No
d.		No							No
32. Davis, CPA, accepted an engagement to audit the financial statements of Tech Resources, a nonpublic entity.  Before
the completion of the audit, Tech requested Davis to change the engagement to a compilation of financial statements.  
Before Davis agrees to change the engagement, Davis is required to consider the 
   Additional Audit Effort                       Reason Given for 
Necessary to Complete the Audit           Tech's Request
a. 		No						No
b.		Yes						Yes
c.		Yes						No
d.		No						Yes
33. Clark, CPA, compiled and properly reported on the financial statements of Green Co., a nonpublic entity, for the 
year ended March 31, 1995.  These financial statements omitted substantially all disclosures required by GAAP.  Green 
asked Clark to compile the statements for the year ended March 31, 1996, and to include all GAAP disclosures for 
the 1996 statements only, but otherwise present both years' financial statements in comparative form.  What is Clark's 
responsibility concerning the proposed engagement?  Clark may
a. Not report on the comparative financial statements because the 1995 statements are not comparable with the 1996 
statements that include the GAAP disclosures
b. Report on the comparative financial statements provided the 1995 statements do not contain any obvious material 
misstatements.
c. Report on the comparative financial statements provided an explanatory paragraph is added to Clark's report on the 
comparative financial statements.
d. Report on the comparative financial statements provided Clark updates the report on the 195 statements that do not 
include the GAAP disclosures.
34. An accountant has been asked to compile the financial statements of a nonpublic company on a prescribed form that 
omits substantially all the disclosures required by generally accepted accounting principles.  If the prescribed form is a 
standard preprinted form adopted by the company's industry trade association, and is to be transmitted only to such 
association, the accountant
a. Need not advise the industry trade association of the omission of all disclosures.
b. Should disclose the details of the omissions in separate paragraphs of the compilation report.
c. Is precluded from issuing a compilation report when all disclosures are omitted.
d. Should express limited assurance that the financial statements are free of material misstatements.
35. Gole, CPA, is engaged to review the 1996 financial statements of North Co., a nonpublic entity.  Previously, Gole 
audited North's 1995 financial statements and expressed an unqualified opinion.  Gole decided to include a separate 
paragraph in the 1996 review report because North plans to present comparative financial statements for 1996 and 1995.  
This separate paragraph should indicate that 
a. The 1996 review report is intended solely for the information of management and the board of directors.
b. The 1995 auditor's report may no longer be relied on.
c. No auditing procedures were preformed after the date of the 1995 auditor's report.
d. There are justifiable reasons for changing the level of service from an audit to a review.
36. Kell engaged March, CPA, to submit to Kell a written personal financial plan containing unaudited personal financial 
statements.  March anticipates omitting certain disclosures required by GAAP because the engagement's sole purpose 
is to assist Kell in developing a personal financial plan.  For March to be exempt from complying with the requirements 
of SSARS1, Compilation and Review of Financial Statements, Kell is required to agree that the 
a. Financial statements will not be presented in comparative form with those of the prior period.
b. Omitted disclosures required by GAAP are not material.
c. Financial statements will not be disclosed to a non-CPA financial planner.
d. Financial statements will not be used to obtain credit.


Question and Answer page
Back to the Auditing class home page
Back to Prof. Atkinson's home page