Compiled financial statements of a nonpublic entity should be accompanied by a report stating that
A) The scope of the accountant's procedures has not been restricted in testing the financial information that is the representation of management.
B) The accountant assessed the accounting principles used and significant estimates made by management.
C) The accountant does not express an opinion or any other form of assurance on the financial statements.
D) A compilation consists primarily of inquiries of entity personnel and analytical procedures applied to financial data.

Question

Quizplus · Accepted Answer

When a certified public accountant is hired to compile financial statements of a nonpublic entity, they do not provide any form of assurance or opinion on the financial statements. Therefore, the report should clearly state that the accountant does not express any opinion or assurance on the financial statements. Option A is not necessary as the accountant is not required to test a nonpublic entity's financial information. Option B is also not required in a compilation report as the accountant does not need to assess the accounting principles used or estimate made by management. Option D is a correct statement, but it is not the best choice for a compilation report, as it does not clearly state the nature of the accountant's engagement.

Compiled Financial Statements of a Nonpublic Entity Should Be Accompanied