Compiled financial statements of a nonpublic entity should be accompanied by a report stating that:
A) the accountant does not express an opinion or any other form of assurance on the financial statements.
B) the scope of the accountant's procedures has not been restricted in testing the financial information that is the representation of management.
C) the accountant assessed the accounting principles used and significant estimates made by management.
D) a compilation consists primarily of inquiries of entity personnel and analytical procedures applied to financial data.
E) the financial statements were not audited.

Question

Quizplus · Accepted Answer

The report accompanying compiled financial statements of a nonpublic entity should clearly state that the accountant has not performed an audit or a review and does not express any assurance on the financial statements. A compilation primarily involves the preparation of financial statements by the accountant based on the information provided by management without any significant testing of the underlying data. Therefore, option A is the best choice that accurately reflects the nature and scope of compiled financial statements. Options B, C, D, and E do not provide a complete and accurate description of a compilation report.

Compiled Financial Statements of a Nonpublic Entity Should Be Accompanied