When Performing an Engagement to Review a Nonissuer's Financial Statements

question 389

Multiple Choice

When performing an engagement to review a nonissuer's financial statements, an accountant most likely would:

• A) Obtain an understanding of the entity's internal control.
• B) Limit the distribution of the accountant's report.
• C) Confirm a sample of significant accounts receivable balances.
• D) Ask about actions taken at board of directors' meetings.

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Definitions:

Contingent Decisions

Decisions made based on the specific conditions or circumstances prevailing at the time, rather than following a strict policy or guideline.

Decision Rules

Guidelines or criteria used to choose among alternatives in the decision-making process.

Conditions of Risk

Circumstances or factors that increase the probability of loss or danger in a given situation or environment.

Nonprogrammed Decisions

Decisions that are made in response to novel, unstructured, and infrequent problems that require a custom-tailored solution.