Which of the following is correct when a company is issuing summary financial statements developed from audited financial statements?
A)Such summary statements should always have a CPA's report associated with them when audited financial statements exist.
B)The CPA may issue a report on whether the summary information is fairly stated in all material respects in relation to the basic financial statements.
C)The CPA should perform a compilation and review of the summary financial statements.
D)The CPA who has audited the financial statements who is asked to report on the summary statements should decline the engagement because the summary statements do not include all disclosures necessary under generally accepted accounting principles.

Question

Quizplus · Accepted Answer

According to the Statement on Standards for Attestation Engagements No. 10, the CPA may issue a report on whether the summary information is fairly stated in all material respects in relation to the basic financial statements when audited financial statements exist. Therefore, choice B is correct. Choice A is incorrect because it is not always necessary to include a CPA's report with summary financial statements developed from audited financial statements. Choices C and D are also incorrect because the CPA is not required to perform a compilation or review of the summary financial statements, and declining the engagement is not necessary if the summary statements are fairly stated in relationship to the basic financial statements.

Which of the Following Is Correct When a Company Is