Question

CPA Anya is considering whether to accept a compilation agreement. Which statement regarding the conditions she must meet is INCORRECT?

1) If Anya is not independent, it must be disclosed in the compilation report.
2) Anya does not perform any procedures to verify or corroborate the client's accounting records.
3) The only requirement is for Anya to read the financial statements and determine whether they appear to be appropriate in form and free from obvious material misstatements based on her knowledge of the financial reporting framework.
4) Anya is required to be independent.

Answer 1

The incorrect condition for CPA Anya's compilation agreement is that she is required to be independent; independence is not a necessity for compilation engagements, though it must be disclosed if absent.

Step-by-step explanation:

The student is asking about the conditions that CPA Anya must meet to accept a compilation agreement. The incorrect statement among the provided options is that Anya is required to be independent. In a compilation engagement, independence is not a requirement, although a lack of independence must be disclosed in the compilation report. The correct conditions for a compilation are that the CPA will not perform any procedures to verify or corroborate the client's accounting records and is only required to read the financial statements and consider whether they appear to be appropriate in form and free from obvious material misstatements based on his or her knowledge of the applicable financial reporting framework.