The Financial Statements of Nonpublic Companies May Be Prepared,compiled,or Reviewed

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The Answer is a.Financial statement preparation involves preparing the financial statements using the client's records,documents,explanations and other information provided by management.To perform the engagement,the accountant should have or obtain an understanding of the financial framework adopted by management for preparation of the financial statements (e.g. ,generally accepted accounting principles)and the significant accounting policies adopted by management.
b.A compilation is limited to taking the representations of management and putting them in the form of financial statements.No explicit assurance is provided on the financial statements.
c.A review of financial statements involves the performance of inquiry and analytical procedures to provide the accountants with a reasonable basis for expressing limited assurance that the financial statements are in accordance with generally accepted accounting principles.
d.Procedures performed in the review of financial statements include (only three required):
-Inquiries of officers and other executives.
-Analytical procedures applied to financial data by reference to prior financial data,budgets,and other operating data.
-Inquiries concerning actions taken in meetings of stockholders,board of directors,and committees of the board.
-Additional procedures if the accountants become aware that the information may be incorrect,incomplete,or otherwise unsatisfactory.

The Financial Statements of Nonpublic Companies May Be Prepared,compiled,or Reviewed

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