ExpertHard1 markMultiple Choice
CPA · Question 67 · Area IV: Reporting
Which of the following is a required procedure in a review of a nonissuer's financial statements?
Which of the following is a required procedure in a review of a nonissuer's financial statements?
Answer options:
A.
Confirmation of accounts receivable.
B.
Observation of inventory.
C.
Obtaining a management representation letter.
D.
Assessment of fraud risk.
How to approach this question
Review = Inquiry + Analytics + Rep Letter. No substantive testing (Confirm/Observe).
Full Answer
C.Obtaining a management representation letter.✓ Correct
Obtaining a management representation letter.
In a review engagement, the accountant must obtain a written representation letter from management. Procedures like confirmation, observation, and fraud risk assessment are specific to audits.
Common mistakes
Selecting audit procedures for a review.
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