Which of the Following Is a Difference Between Audits and Compilations

question 17

Multiple Choice

Which of the following is a difference between audits and compilations?

• A) The auditor's objective is to obtain reasonable assurance that the financial statements are free of material misstatements, whereas the objective of a compilation is to assist management in presenting financial information without obtaining any level of assurance.
• B) Audits do not require an understanding of the entity's internal controls and an assessment of fraud risk, whereas compilations require an understanding of the entity's internal controls and an assessment of fraud risk.
• C) Audits have a narrower scope as compared to reviews, whereas compilations have a broader scope as compared to reviews.
• D) Audits provide a reasonable level of assurance to the users of the financial statements, whereas compilations provide a limited level of assurance to the users of the financial statements.

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Definitions:

Bond Price

The market value of a bond, which can fluctuate based on interest rates, market conditions, and the credit quality of the issuer.

Interest Rate

The percentage charged on a loan or paid on deposits over a specific period, representing the cost of borrowing or the earnings from saving.

Market Interest Rate

The prevailing rate of interest available in the marketplace on investments, savings, or loans.

Bond Prices

Bond prices refer to the market value of a bond, which can fluctuate based on interest rates, the creditworthiness of the issuer, and other market factors.