A2 - Compilation and Review of Financial Statements

Question 1

T/F: Inability to assess the risk of material misstatement due to fraud requires a modification of the standard review report

Answer 1

False; modifications are made to the standard review report only when there is a departure from GAAP

Question 2

Under which circumstances is it allowable for an accountant to not be independent and still issue a report?

Answer 2

When issuing a compilation

Question 3

Which procedure is ordinarily performed by an accountant in a compilation engagement of a nonissuer?

Answer 3

Reading the financials to determine whether they are free from obvious mistakes

Question 4

T/F: When an accountant performs more than one level of service concerning the financial statements of a nonissuer, the accountant generally should issue the report that is appropriate for the lowest level of service rendered

Answer 4

False; appropriate for the highest level of service rendered