AR 90 Requires Adequate Documentation for a Review Engagement

question 78

Multiple Choice

AR 90 requires adequate documentation for a review engagement.Which items are required to be documented?

• A) Analytical procedures, yes; management representations, no; understanding of internal controls, no.
• B) Analytical procedures, no; management representations, yes; understanding of internal controls, no.
• C) Analytical procedures, yes; management representations, yes; understanding of internal controls, no.
• D) Analytical procedures, yes; management representations, yes; understanding of internal controls, yes.

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Definitions:

Overapplied Overhead

A situation where the actual manufacturing overhead costs are less than the overhead allocated to products during a specific period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, estimated before the costs are actually incurred.

Actual Overhead

The real costs incurred for overhead in manufacturing or providing services, as opposed to budgeted or estimated overhead.

Cost Accounting System

A system of accounting for operations that captures and records all costs associated with production activities to evaluate efficiency and manage expenses.