Question

Which of the following statements is correct concerning both an engagement to compile and an engagement to review a nonissuer’s financial statements?

a. The accountant does not contemplate obtaining an understanding of internal control.
b. The accountant must be independent in fact and appearance.
c. The accountant expresses no assurance on the financial statements.
d. The accountant should obtain a written management representation letter.

Answer 1

The correct statement concerning both an engagement to compile and an engagement to review a nonissuer's financial statements is that the accountant should obtain a written management representation letter.

Step-by-step explanation:

The correct statement concerning both an engagement to compile and an engagement to review a nonissuer's financial statements is: d. The accountant should obtain a written management representation letter. In both engagements, the accountant should obtain a written management representation letter from the client. This letter confirms that management has provided all necessary financial information and acknowledges their responsibility for the financial statements.

In an engagement to compile, the accountant simply presents the financial statements without expressing any assurance or opinion. In an engagement to review, the accountant performs limited procedures to provide a moderate level of assurance that the financial statements are free from material misstatement.

In both engagements, the accountant must also be independent in fact and appearance. This means they should not have any personal or financial relationships that could compromise their objectivity and integrity.