An Accountant Has Compiled the Financial Statements of a Nonissuer

question 39

Multiple Choice

An accountant has compiled the financial statements of a nonissuer but declines to issue a compilation report. This is an example of:

• A) An inappropriate reporting decision, because SSARS require that a report be issued whenever an accountant is associated with financial statements.
• B) An inappropriate reporting decision, if the accountant is not independent with respect to the nonpublic entity.
• C) An appropriate reporting decision, if the compiled financial statements are not expected to be used by a third party.
• D) An appropriate reporting decision, as long as the financial statements are prepared in conformity with GAAP.

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Definitions:

Risk

The possibility of facing harm or loss, which can arise from a variety of sources, including financial uncertainty, strategic decisions, or external events.

Self-Interest

The focus on one's own advantage or well-being without necessarily considering that of others.

Acceptable

Considered suitable or satisfactory under the circumstances or by societal standards.

Optimal

Optimal describes the most desirable or advantageous condition or level of performance achievable under given circumstances.