[adsfasf]

When planning a review of an audit client’s interim financial statements, which of the following procedures should the accountant perform to update the accountant’s knowledge about the entity’s business and its internal control?
a. Consider the results of audit procedures performed with respect to the current-year’s financial statements.
b . Perform analytical procedures on selected accounts by comparing the interim amounts to the amounts for the previous audited fiscal year end.
c. Inquire of the entity’s outside legal counsel about the status of any previous pending
litigation and any new litigation involving the entity.
d . Select a sample of material revenue transactions occurring during the interim period and examine supporting documentation.

Correct answer is A. However, I don’t know why BCD are not right. Can anybody help me?

Fight!

[MaLoTu]

I think because it is asking for the step that relates to planning procedures and not to performing the review itself. From an auditor's perspective, you would take into consideration the results from the audit and plan accordingly with that knowledge. BCD all are actual procedures you might perform during the review.

This is more experience based than “study for the cpa exam” based, but I think that is the distinction.

Almost always from my phone... please excuse my typos!

All 4 passed - 2016

CA CPA

[Mike J]

To me, this is more about review engagements than it is a question about Interim Financial Statements.

It's asking if you know the difference between a review versus audit engagement.

Questions will often give you superfluous information. This is especially true for AUD.

So you have to be able to narrow-down the choices.

If you are going to review, there will be no outside contact to perform the audit. So that eliminates “external” legal counsel.

Next, only audits require testing account balances. That eliminates D.

Because it is a review of current financial statements it makes sense that you compare the quarterly​ Financial Statements to the annual audited financial.

B is close because reviews involve analytical procedures. BUT, A is the answer.

…

Also, being able to separate answer choices that relate to internal controls versus $ubstantive procedures will get you points on exam day

AUD - 90
BEC - 79
FAR - 77
REG - 77

They don't trust JUST ANYBODY to count beans

[adsfasf]

Thank you all for the reply.

Fight!

[Missy]

The important part of the question is accountant's knowledge about the entity's business and its internal control

The other answers are correct regarding interim financial statements but none of the other three will tell an auditor specifically about this business and its internal control.

Old timer,  A71'er since 2010.

Finance manager/HR manager

 

 

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Author]

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