When third party use of prospective financial statements is expected, an accountant may not accept an engagement to
A) Perform a review.
B) Perform a compilation.
C) Perform an examination.
D) Apply agreed-upon procedures.

Question

Quizplus · Accepted Answer

When third party use of prospective financial statements is expected, an accountant may not accept an engagement to perform a review because a review provides limited assurance, not sufficient for third-party reliance. In such cases, an examination or agreed-upon procedures engagement is necessary. A compilation engagement is not sufficient for third-party use regardless of whether prospective financial statements are involved or not.

When Third Party Use of Prospective Financial Statements Is Expected