ExpertMedium1 markMultiple Choice
CPA · Question 32 · Area IV: Reporting
An accountant is engaged to perform a compilation of a nonissuer's financial statements. The accountant is NOT independent of the entity. Which of the following is correct regarding the accountant's report?
An accountant is engaged to perform a compilation of a nonissuer's financial statements. The accountant is NOT independent of the entity. Which of the following is correct regarding the accountant's report?
Answer options:
A.
The accountant is precluded from issuing a compilation report if not independent.
B.
The accountant must disclose the lack of independence in the compilation report.
C.
The accountant must disclose the specific reasons for the lack of independence.
D.
The accountant should issue a review report instead.
How to approach this question
Compilation is the ONLY attest/SSARS service where independence is not required. But you must say so.
Full Answer
B.The accountant must disclose the lack of independence in the compilation report.✓ Correct
The accountant must disclose the lack of independence in the compilation report.
Under AR-C 80, independence is not required for a compilation, but the lack of independence must be disclosed in the report.
Common mistakes
Thinking independence is required for compilation (it's required for Review and Audit).
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