Question

An accountant agreed to perform a compilation of a company’s financial statements under Statements of Standards for Accounting and Review Services (SSARSs). During fieldwork, the accountant decided to perform some analytical procedures. Which of the following would the accountant do related to the compilation engagement?(A) Withdraw from the engagement because review procedures were performed on a compilation engagement.(B) Issue a review report because review procedures were performed.(C) Issue an audit report because audit procedures were performed.(D) Issue a compilation report even though review procedures were performed on the engagement.

Answer 1

D

Explanation: Even though analytical procedures were performed during fieldwork of a compilation engagement, the agreed upon procedure was a compilation engagement. Additional review procedures was used during the compilation engagement for reasons the accountant deemed necessary. A review report can only be issued if the initial agreed upon engagement was a review of the company's financial statements and a full review engagement was conducted and not simply additional review procedures during a compilation engagement.