CPA is a minority shareholder in ABC Co. ,and has just completed a compilation engagement for the company.The Notice to Reader should ________.
A)disclaim an opinion
B)provide negative assurance
C)include a statement that CPA is not independent.
D)not be issued,since CPA is not objective

Question

Quizplus · Accepted Answer

As a result of having completed a compilation engagement and being a minority shareholder in ABC Co., the CPA is not independent. Therefore, the Notice to Reader should include a statement disclosing the lack of independence. Option A is incorrect because disclaiming an opinion would only be relevant if the CPA had performed a review or audit engagement. Option B is incorrect because negative assurance is only relevant when the CPA is reporting on specific financial statement items or accounts. Option D is incorrect because objectivity is not a requirement for performing compilation engagements, and therefore, the Notice to Reader should be issued.

CPA Is a Minority Shareholder in ABC Co