Leon Frank,CPA performs an audit of RedHen,Inc. ,which keeps its financial statements on the tax basis of accounting.Leon is aware of this fact and audits the financial statements on the criteria of the tax basis.This type of an engagement
A)is not accepted by the AICPA.
B)is an audit that will cause the issuance of a special report.
C)is actually just a compilation.
D)is only performed by tax accountants who do not provide attest services.

Question

Quizplus · Accepted Answer

Auditing financial statements on the criteria of tax basis is an agreed-upon procedures engagement, which requires the issuance of a special report rather than an audit opinion. This engagement is accepted by the AICPA and can be performed by CPAs, but it is not equivalent to a compilation as it involves additional procedures to provide limited assurance on the financial statements.

Leon Frank,CPA Performs an Audit of RedHen,Inc