Question

When compiling a nonpublic entity’s financial statements, an accountant would be least likely to

a)Perform analytical procedures designed to identify relationship that appear to be unusual.
b)Read the compiled financial statements and consider whether they appear to include adequate disclosure.
c)Omit substantially all of the disclosure required by generally accepted accounting principles.
d)Issue a compilation report on one or more, but not all, of the basic financial statements.

Answer 1

In compiling a nonpublic entity's financial statements, an accountant is least likely to omit all disclosure required by GAAP. Adequate disclosure should be considered, as well as analytical procedures, although there is some flexibility in presentation for compilations.

Step-by-step explanation:

When compiling a nonpublic entity's financial statements, an accountant is least likely to omit substantially all of the disclosure required by generally accepted accounting principles (GAAP). Compilations are a type of financial statement preparation that allows for some flexibility in the level of disclosure, however, completely omitting all disclosures would not typically be in accordance with GAAP unless a specific framework for compilation that allows such omission is being followed.

While accountants may issue a compilation report on one or more of the financial statements, they still read the compiled financial statements to consider whether they appear to include adequate disclosure and may perform analytical procedures designed to identify relationships that appear unusual to ensure the data's consistency and plausibility.