An auditor is performing a 'preparation' engagement under SSARS. Which of the following is TRUE?

Answer options:

The auditor must be independent.

The auditor does not issue a report.

The auditor must verify the accuracy of the information.

The financial statements cannot omit disclosures.

How to approach this question

Preparation = No Report. Compilation = Report. Review = Report. Audit = Report.

Full Answer

B.The auditor does not issue a report.✓ Correct

In a preparation engagement (AR-C 70), the accountant prepares financial statements pursuant to a specified financial reporting framework but does not issue a report or provide any assurance.

Common mistakes

Confusing Preparation with Compilation (which requires a report).

Question 74 All questions Question 76

Practice the full CPA AUD Practice Exam 3

78 questions · hints · full answers · grading

More questions from this exam

Q01A CPA firm is performing an audit of a nonissuer in accordance with GAO Government Auditing Stand...Hard Q02During the audit of an issuer, the engagement partner learns that the firm's tax partner, who pro...Hard Q03An auditor is planning an audit of a nonissuer's financial statements. The auditor decides to use...Medium Q04An auditor is assessing control risk for a nonissuer's revenue cycle. The auditor identifies that...Hard Q05During the audit of a manufacturing company's inventory, the auditor utilizes a variables samplin...Hard

View all 78 questions →