Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include:
A)Analytical procedures designed to identify reportable conditions related to internal control.
B)Inquiries about accounting principles and practices used.
C)Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter.
D)Inquiries of knowledgeable outside parties such as the client's attorneys and bankers.

Question

Quizplus · Accepted Answer

Inquiries about accounting principles and practices used are a standard part of the review process for nonpublic entities' financial statements. This involves asking management about the accounting policies adopted to ensure they are appropriate and consistently applied. Analytical procedures in a review are generally limited to understanding financial trends and identifying unusual transactions or events, not for testing internal controls or obtaining corroborative evidence as in an audit. Inquiries of outside parties are more common in audits than in reviews.

Inquiry and Analytical Procedures Ordinarily Performed During a Review of a Nonpublic