When the CPA Is Not Independent with Respect to a Compilation

question 34

Multiple Choice

When the CPA is not independent with respect to a compilation client, what should the CPA do?

• A) The CPA must not accept the engagement.
• B) The CPA must include a separate paragraph in the report stating the lack of independence.
• C) The CPA must change the engagement to a review engagement.
• D) The CPA must issue a disclaimer.

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Definitions:

Relative Value

A method of determining an asset's value that takes into consideration the value of similar or related assets.

Functional Currency

The currency of the primary economic environment in which the entity operates, typically used in measuring and reporting its financial results.

Remeasure

The process of adjusting the value of a financial instrument or asset to reflect its current market value.

Financial Statements

Structured reports that detail the financial activities and condition of a business, including the balance sheet, income statement, and statement of cash flows.