Register now or log in to join your professional community.
Which of the following describes how the objective of a review of financial statements differs from the objective of a compilation engagement? a. The primary objective of a review engagement is to test the completeness of the financial statements prepared, but a compilation tests for reasonableness. b. The primary objective of a review engagement is to provide positive assurance that the financial statements are fairly presented, but a compilation provides no such assurance. c. In a review engagement, accountants provide limited assurance, but a compilation expresses no assurance. d. In a review engagement, accountants provide reasonable or positive assurance that the financial statements are fairly presented, but a compilation provides limited assurance.
1. Compilation: Presenting financial statements that are the presentation of management without undertaking to express any assurance on the statements.
2. Review: Performing inquiry and analytical procedures that provide the accountantwith a reasonable basis for expressing limited assurance that there are no material modifications needed to be in conformance with GAAP or OCBOA.
So c option is correct
Option d sounds more accurate; where accountants have to provide limited assurance on completeness and fairly presentation of FS to the senior management.
A review engagement is conducted to provide limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with the financial reporting framework.
In a compilation engagement, the objective is to assist management in presenting financial information in the form of financial statements without undertaking to provide any assurance that there are no material modifications that should be made to the financial statements so they will conform to the acceptable financial reporting framework.
so C is the correct one.
c would be correct answer. compilation is purely preparation of the data based on a specific request from client , review engagements provide limited assurance.
