When the CPA is not independent with respect to a compilation client, what should the CPA do?
A) The CPA must not accept the engagement.
B) The CPA must include a separate paragraph in the report stating the lack of independence.
C) The CPA must change the engagement to a review engagement.
D) The CPA must issue a disclaimer.

Question

Quizplus · Accepted Answer

When the CPA is not independent with respect to a compilation client, they must include a separate paragraph in the report stating the lack of independence. This is because a compilation engagement does not require independence, but the lack of independence must be disclosed in the report. A disclaimer or changing the engagement to a review engagement are not necessary as these options are only required when the CPA is not independent with respect to a review or audit engagement. If the CPA is not independent, they would not be allowed to accept the engagement in the first place, making option A incorrect.

When the CPA Is Not Independent with Respect to a Compilation