M2-Preparation Engagements

Question 1

An engagement letter should be included in the documentation of a preparation. (true or false)

Answer 1

true

Question 2

Each page of the financial statements in a preparation engagement should include a statement indicating that no assurance is provided. (true or false)

Answer 2

true

Question 3

A preparation engagement is considered a non-attest engagement. What are some examples of attest engagements?

Answer 3

• audit
• compilation
• review

Question 4

An engagement to prepare financial statements is a NON-Attest service and does NOT require determination about whether the accountant is independent of the entity. (true or false)

Answer 4

true

Question 5

If an accountant is unable to include a statement indicating that “no assurance is provided” on each page of the financial statements, then the auditor should either issuer a disclaimer that makes clear that no assurance is provided on the financial statements or perform a compilation engagement. (true or false)

Answer 5

true

Question 6

An accountant should establish an understanding with management, and when appropriate those charged with governance, regarding the services to be performed for the preparation engagement. This should be documented in the engagement letter. (true or false)

Answer 6

true