Compilation Engagements

Question 1

compilation

Answer 1

not required to perform procedures to verify accuracy or completeness of information provided by management

Question 2

accountants are permitted to compile F/S that omit substantially all GAAP disclosures if…

Answer 2

omissions are not intended to mislead users of F/S
alert users that the omissions might influence their conclusions about the F/S
issue modified report with separate paragraph

Question 3

for lack of independence with compilation report

Answer 3

CPA can disclose all reasons for impairment or simply state it

Question 4

forecasts use

Answer 4

expected economic conditions, ie. assumptions for general use

Question 5

projections use

Answer 5

hypothetical “what-ifs”, always restricted in use

Question 6

no assurance means CPA is

Answer 6

not responsible for verifying accuracy or completeness of information, cannot be relied on to disclose errors, fraud or illegal acts cannot have statements involving “reasonable” ie. thats assurance

Question 7

elements of a standard compilation report

Answer 7

Compiled F/S or F/S elements in accordance with SSARS
Did not audit or review F/S or preform procedures to verify their accuracy
Responsibility of management for F/S
Does not provide an opinion, conclusion or any level of assurance
AND
compiling forecasted or projected information
-forecasts or projections may not be achieved
-accountant assumes no responsibility to update report
**date on report is the date the compilation procedures were completed

Question 8

elements of compilation engagement letter

Answer 8

cannot be relied up to detect error, fraud or illegal acts

Question 9

prescribed form

Answer 9

is any standard preprinted form designed or adopted by the body to which it will be submitted

Question 9

pro forma F/S must be:

Answer 9

1. appropriately labeled
2. describe hypothetical event
3. describe underlying historical finanical information, including its source
4. assumptions used to develop the pro forma F/S including any uncertainties
5. should be read in conjuction with historical F/S
6. state they are not indicative of what would actually have happened

Question 10

information in a prescribed form can:

Answer 10

depart from the applicable financial reporting framework (GAAP) and/or fail to include all required disclosures (such that its all disclosed in the compilation report)

Question 11

a compilation report on F/S prepared in accordance with a special reporting framework (SPF) includes:

Answer 11

1. a separate paragraph identifying the SPF
2. stating that it is not GAAP
3. if applicable, refers to the note in F/S describing SPF