A6 M2 Preparation Engagements Flashcards
when preparation standards do not apply
1) engaged to perform audit, review, or compilation of F/S
2) solely for submission to taxing authorities
3) inclusion in written personal financial plans prepared by accountant
4) related to litigation services like proceedings
5) related to business valuation services
items in an engagement letter for preparation engagement
1) objectives of engagement
2) mgmt’s responsibilities
3) each page include no assurance provided on F/S or issue disclaimer of opinion (firm not not included)
4) acctnt’s responsibilities
5) limitations of engagement
6) identification of applicable financial reporting framework
7) whether F/S contain known departures or omit all disclosures required by applicable financial reporting framework
8) signed by acctnt and mgmt
performance requirements for a preparation engagement
1) possess knowledge of and understanding of entity’s financial reporting framework
2) prepare F/S
if acctnt unable to include no assurance statement on F/S
1) issue disclaimer that no assurance on F/S
2) perform compilation engagement
OR
3) withdraw from engagement and discuss with mgmt why withdrawing
where is the applicable financial reporting framework described?
-face of F/S
OR
-note to F/S
inaccurate or incomplete F/S
-acctnt’s not required to determine completeness and accuracy of F/S
-but if discover incorrect info, obtain more info or revised info from client
-if known departures, acctnt disclose material misstatement(s) in F/S or withdraw from engagement
F/S that omit substantially all disclosures
-can do so if requested by client if in conformity with applicable financial reporting framework
-acctnt should disclose omission either in F/S or accompanying disclaimer
-in professional judgment, such F/S not be misleading to users of F/S
-if limited disclosure acceptable and F/S include limited notes, notes labeled:
Selected info - substantially all disclosures required by [applicable financial reporting framework] are not included
documentation of preparation engagement inclusion
1) engagement letter
2) copy of F/S prepared by acctnt
3) significant findings or issues
4) oral or written communications with mgmt of fraud or noncompliance
5) justifications for departures of financial reporting framework
