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Topic
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Becker Question –
Which of the following best describes a difference between a compilation of prospective financial statements and an examination of prospective financial statements?
1. A compilation does not contemplate the auditor providing any form of assurance whereas an examination does include assurance.
2. An examination includes a statement of positive assurance whereas a compilation includes a statement of negative assurance.
3. In an examination engagement, the practitioner should update his or her report for known changes occurring after the date of the report, whereas there is no similar requirement for a compilation engagement.
4.The compilation engagement is covered under SSARS while the examination engagement is covered under SSAE.
Choice “1” is correct. In an examination engagement, an auditor provides positive assurance regarding whether the statements are presented in conformity with AICPA guidelines, and whether the underlying assumptions provide a reasonable basis for the financial statements. In a compilation engagement, no assurance is provided.
Choice “2” is incorrect. In a compilation engagement, no assurance is provided.
Choice “4” is incorrect. Reports on prospective financial statements are covered under SSAE. Compilations of the financial statements of a nonpublic entity are covered under SSARS.
Choice “3” is incorrect. Regardless of whether the engagement is a compilation or an examination, the practitioner has no responsibility to update his/her report for changes occurring after the date of the report.AUD- 86 (10/2014)-passed
BEC- 84 (11/2014)-passed
FAR - 72 (04/2014), 71(08/2014), 88 (2/2015) passed
REG- 70 (5/2015) , scheduled 8/24/2015
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