Client Advisory Services Flashcards
7 cards from real CPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Advisory Services flashcards as text
A CPA providing Client Advisory Services (CAS) helps a small business owner implement a cloud-based accounting system. Which professional standard primarily governs this engagement?
Answer: AICPA SSCS No. 1
AICPA Statement on Standards for Consulting Services (SSCS) No. 1 governs CPA consulting and advisory engagements, including accounting system implementation.
Under a CAS engagement, a CPA notices the client's internal controls over cash disbursements are inadequate. The CPA's primary obligation is to:
Answer: Communicate the deficiency to management and those charged with governance
CPAs must promptly communicate identified internal control deficiencies to appropriate levels of management and governance.
A CPA providing outsourced CFO services prepares monthly financial statements for a client. This activity is best classified as:
Answer: A non-attest CAS engagement
Outsourced CFO services including financial statement preparation fall under non-attest CAS engagements governed by SSCS No. 1.
When a CPA assists a client in selecting Key Performance Indicators (KPIs) for their dashboard, the MOST important initial step is:
Answer: Understanding the client's strategic objectives and decision-making needs
Effective KPI selection must align with the client's specific strategic goals and the decisions management needs to make.
A CPA's CAS client asks for a cash flow forecast for the next 12 months to present to a bank for a loan. Which document should the CPA prepare?
Answer: Prospective financial statements — forecast
A forecast uses management's best estimate assumptions about expected conditions and is appropriate when third parties like lenders will rely on it.
During a CAS engagement, a CPA discovers evidence suggesting the client's controller is embezzling funds. The CPA should FIRST:
Answer: Inform the client's audit committee or board of directors
The CPA should escalate suspected fraud to the audit committee or board, as they represent the appropriate governance authority.
A CPA providing CAS is asked to also perform an audit of the same client's financial statements. The PRIMARY concern is:
Answer: Independence impairment due to self-review threat
Performing both CAS (bookkeeping/preparation) and an audit for the same client creates a self-review threat to independence under AICPA independence rules.