Exam AUD topic 1 question 204 discussion

Actual exam question from AICPA's AUD

Question #: 204
Topic #: 1

[All AUD Questions]

Compiled financial statements should be accompanied by an accountant's report stating that:

A. A compilation includes assessing the accounting principles used and significant management estimates, as well as evaluating the overall financial statement presentation.
B. The accountant compiled the financial statements in accordance with Statements on Standards for Accounting and Review Services.
C. A compilation is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.
D. The accountant is not aware of any material modifications that should be made to the financial statements to conform with GAAP.

Show Suggested Answer

Suggested Answer: B 🗳️
Choice "B" is correct. Compiled financial statements should be accompanied by a report stating that the financial statements were compiled in accordance with
SSARS issued by the AICPA.
Choice "A" is incorrect. An audit, not a compilation, includes assessing the accounting principles used and significant management estimates, as well as evaluating the overall financial statement presentation.
Choice "C" is incorrect. A review report, not a compilation report, includes the phrase, "is substantially less in scope than an audit."
Choice "D" is incorrect. The accountant expresses no such assurance in a compilation engagement; limited assurance (i.e., ""¦accountant is not aware of"¦") is expressed in a review engagement.

by gemazyni at April 5, 2025, 4:19 p.m.

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