Before Issuing a Report on the Compilation of Financial Statements

question 91

Multiple Choice

Before issuing a report on the compilation of financial statements of a nonpublic entity,the accountant should

• A) Apply analytical procedures to selected financial data to discover any material misstatements.
• B) Corroborate at least a sample of the assertions management has embodied in the financial statements.
• C) Inquire of the client's personnel whether the financial statements omit substantially all disclosures.
• D) Read the financial statements to consider whether the financial statements are free from obvious material errors.

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Definitions:

Hawthorne Effect

Modification of behavior by study participants due to their awareness of being observed, highlighting the influence of observation on research outcomes.

Reactivity

The extent to which people alter their behavior or responses due to being observed or knowing they are being studied.

Subjectivity

The quality of being based on or influenced by personal feelings, tastes, or opinions.

Overgeneralization

The logical fallacy of making broad assumptions based on limited evidence or a few case studies.