Question

Define the term "compilation engagements" and distinguish between reasonable assurance

engagements and limited assurance engagements.
(8 marks)

Answer 1

Answer: See explanation

Step-by-step explanation:

A compilation engagement refers to a form of engagement whereby there's an engagement of an outside accountant by a company for the preparation and the presentation of its financial statements.

In a reasonable assurance engagement, the level of assurance is high. Here, there is the likelihood that the prevention or detection of the material misstatements will not be timely.

The limited assurance engagement refers to the assurance engagement risk being reduced to an acceptable level, but where the risk is still more than the reasonable assurance engagement. Here, less evidence is being collected unlike the reasonable assurance engagement.

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