Question

A CPA performed the following engagements in February of Year 3. Which is considered an attestation engagement? 

I. Audit of year 2 financial statements

II. Examination of Year 4's proposed financial statements

Answer 1

I. and II. 

I. When an attestation is carried out on historic financial information, the attestation is known as an audit. An audit is the highest level of attestation service a CPA can provide. It involves providing an opinion so the CPA must be independent. It is important to note that an audit is just one type of attestation. Use the term audit when the CPA is doing an attestation engagement involving historic financial statements. 

II. While audits are attestations that look backward at historic financial information, examination engagements are attestations that look forward. Therefore, when the CPA examines in Year 3 what Year 4 may look like, this is an example of an attestation but not an audit.