One of the First Steps That Should Be Performed for a Review

question 4

Multiple Choice

One of the first steps that should be performed for a review of a nonpublic entity's financial statements is to

• A) read the financial statements.
• B) obtain knowledge of the accounting principles and practices of the client's industry.
• C) inquire whether management has omitted substantially all of the disclosures required by applicable accounting standards.
• D) apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.

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Definitions:

Flat Tire

A condition where a tire loses all or most of its air, causing it to be incapable of functioning properly.

Probability

A mathematical measure of the likelihood of occurrence of a particular event, expressed as a number between 0 and 1.

Major Earthquake

An earthquake of high magnitude that has the potential to cause significant damage and loss of life, usually above a magnitude of 7 on the Richter scale.

Poisson Model

A statistical model that predicts the probability of a given number of events happening in a fixed interval of time or space when these events occur with a known constant mean rate and independently of the time since the last event.