Auditing - Compilation Engagements

What should be marked on each page of financial statements?

"See Accountant's Compilation Report"

What should auditor do if there are departures from applicable financial framework?

1. Disclose 2. Withdraw DO NOT GIVE ADVERSE OPINION

What should be documented in a compilation?

1. Engagement letter 2. A copy of financial statements 3. A copy of the accountants report

Compiled financial statements that omit GAAP disclosures are acceptable if:

1. Financial statements are otherwise in conformity with GAAP 2. Reason for omission was not to deceive the user 3. Compilation report warns the user of missing disclosures

When are additional paragraphs required in compilation report?

1. Financial statements are prepared in accordance with a special purpose framework (to describe framework) 2. Disclosures are omitted (missing statement of cash flows) 3. The accountant is not independent 4. The are known departures from the applicable financial reporting framework 5. The financial statements include supplementary information

What must an accountant understand about the client's business?

1. Staff qualifications 2. Transaction types and frequency 3. Accounting basis used to prepare financial statements 4. Form of the accounting records 5. Financial statement form and content

Compilation

Apply accounting and financial reporting expertise to assist management in the presentation of financial statements without providing assurance or opinion Non issuer only Independence not required but must disclose if not independent

True or False: In compilation report stating that a compilation is substantially less in scope than an audit is appropriate

False

True or false: Compiled financial statements that omit substantially all disclosures required by GAAP are comparable to those that include all GAAP disclosures

False

If disclosures are omitted, does use have to be restricted?

NO A warning statement is just added to report

What should be the date on a compilation report?

The date the compilation was completed

What common report element is missing from compilation report?

Title

Why must an auditor read client's financial statements?

To ensure never associated with false fraudulent or misleading financial statements Also want to check for appropriate form and noticeable errors

True of False: If there is an indication of an uncertainty about entity's ability to continue as going concern, the accountant should request that management consider possible effects on financial statements

True

True or False: The documentation of communications to the appropriate level of management regarding fraud that came to accountant's attention are required in compilation engagement?

True