M3-Compilation Engagement Flashcards
An accountant’s standard compilation report of an entity’s financial statements should not include a statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements. An accountant should not express any level of assurance on compiled financial statements. (true or false)
true
An accountant is required to read the financial statements and consider whether such financial statements appear to be free from obvious material errors before issuing a compilation report under SSARS. (true or false)
true
An accountant or practitioner may perform a compilation engagement when there is a lack of independence as long as the accountant or practitioner discloses the lack of independence. A compilation is not an assurance engagement, but it is an attest engagement. Although independence is not required, a determination of whether the accountant is independent of the entity is required. (true or false)
true
When an accountant compiles a client’s financial statements accompanied by supplemental information, the accountant’s separate report on the supplemental information should include a statement that the information has been compiled from information that is the representation of management without audit or review. (true or false)
true
Compiled financial statements should be accompanied by a report stating that the compilation was conducted in accordance with SSARS promulgated by the Accounting and Review Services Committee of the AICPA. (true or false)
true
If the accountant is not independent, he should specifically disclose the lack of independence. Otherwise, independence is implied. (true or false)
true
The date on a compilation report should be the date of completion of the compilation. (true or false)
true
The accountant may compile financial statements that omit substantially all disclosures provided that:
- The accountant’s report clearly indicates the omission by including an additional paragraph disclosing such omissions. This paragraph should state that if the disclosures were included, they might influence the user’s conclusions, and should indicate that the financial statements are not designed for those who are uniformed about the omitted disclosures; and
- To the accountant’s knowledge, the omission is not intended to mislead any person who might be expected to use such financial statements.
Documentation provides the support that the accountant compiled with SSARS when performing the compilation engagement. SSARS does not require internal control procedures, such as review of segregation of duties, to be performed in a compilation engagement. (true or false)
true
Significant issues, such as discussing with the client the proper presentation of investment purchases, which relate to the financial statements should be included in the documentation of a compilation.
A standard compilation report implies that substantially all disclosures required by GAAP are included in the financial statements. (true or false)
true
An accountant may ask about the integrity of the owner because an accountant should not accept a compilation or review engagement if there are doubts about management integrity. (true or false)
true
Compiled financial statements that omit substantially all the disclosures required by GAAP are not comparable to financial statements that do not include required GAAP disclosures. (true or false)
true
A compilation report does not contain a title. A review report should include the word “independent” in its title. (true or false)
true
Financial statements of a nonissuer that have been compiled should be accompanied by a report explicitly stating that the accountant does not express an opinion and stating that the accountant has not audited or reviewed the financial statements. (true or false)
true
SSARS does not require that the compilation report be printed on the accountant’s letterhead, nor does it require a manual signature. Although a signature is required, it need not be manual. (true or false)
true
Also, the report may be presented in the accountant’s letterhead, but is not required.
