Jones Retailing, a nonissuer, has asked Winters, CPA, to compile financial statements that omit substantially all disclosures required by generally accepted accounting principles. Winters may compile such financial statements provided the:

Question

Quizplus · Accepted Answer

Choice "D" is correct. An accountant may compile FS that omit substantially all disclosures required by GAAP provided the omission is not undertaken to mislead the users of the FS and is properly disclosed in the accountant's report as an additional third paragraph. Choice "A" is incorrect. There is no requirement that the reason for omitting the disclosures be explained in an engagement letter or acknowledged in the management representation letter (which, by the way, is not required for compilation engagements). Choice "B" is incorrect. Financial statements compiled in accordance with GAAP may omit substantially all required disclosures. Choice "C" is incorrect. Substantially all disclosures required by GAAP may be omitted in a compilation without restricting use to internal parties

Jones Retailing, a Nonissuer, Has Asked Winters, CPA, to Compile