Items a through j present various phrases or characteristics that may apply to a

Question

Items a through j present various phrases or characteristics that may apply to audits, reviews, and compilations. On your answer sheet place an X in the cell if the phrase or characteristic applies to the listed service:

Part Phrase or characteristic Audit Revie Compilation A Independence is required B Report provides reasonable assurance C Report provides reasonable assurance D Consists primarily of inquiries and analytical procedures. E Only performed on financial statements of nonpublic companies. F Report states that the financial statements are the responsibility (or representation) of the company’s management. G Report provides no explicit assurance H Requires performance of analytical procedures. I Report states that financial statements were prepared on a basis consistent with the preceding year. J Requires a report modification for substantial doubt about going concern status.

Explanation / Answer

Independence is required

work is to be performed by independent auditor

Report provides reasonable assurance

Review provide only reasonable assurance , Because it do not use extensive checking

Report provides reasonable assurance

Review provide only reasonable assurance , Because it do not use extensive checking

Consists primarily of inquiries and analytical procedures.

Audit requires carrying out analytical procedures to ealuate things

Only performed on financial statements of nonpublic companies.

Compilation is cheaper then Audit. So non public compnaies prefer complilation

Report states that the financial statements are the responsibility (or representation) of the company’s management.

Under review management takes resonisbility of representation of data

Report provides no explicit assurance

compilation of data does not provide any explicit assurance . As it is just compilying data, or collecting data

Requires performance of analytical procedures

Audit requires analytical procedures.

Report states that financial statements were prepared on a basis consistent with the preceding year.

Audit report provides this point of concictency

point J - Audit report contains all crucial data and is a report of 100 % assurance. So any substantial modification is required to be adjusted in report

Part Phrase or characteristic Audit Revie Compilation A

Independence is required

work is to be performed by independent auditor

x B

Report provides reasonable assurance

Review provide only reasonable assurance , Because it do not use extensive checking

x C

Report provides reasonable assurance

Review provide only reasonable assurance , Because it do not use extensive checking

x D

Consists primarily of inquiries and analytical procedures.

Audit requires carrying out analytical procedures to ealuate things

x E

Only performed on financial statements of nonpublic companies.

Compilation is cheaper then Audit. So non public compnaies prefer complilation

   x F

Report states that the financial statements are the responsibility (or representation) of the company’s management.

Under review management takes resonisbility of representation of data

x G

Report provides no explicit assurance

compilation of data does not provide any explicit assurance . As it is just compilying data, or collecting data

x H

Requires performance of analytical procedures

Audit requires analytical procedures.

x I

Report states that financial statements were prepared on a basis consistent with the preceding year.

Audit report provides this point of concictency

x J Requires a report modification for substantial doubt about going concern status.

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