Before Performing a Review of a Nonpublic Entity's Financial Statements

question 3

Multiple Choice

Before performing a review of a nonpublic entity's financial statements, an accountant should:

• A) complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions.
• B) obtain a sufficient level of knowledge of the accounting principles and practices of the industry in which the entity operates.
• C) inquire whether management has omitted substantially all of the disclosures required by generally accepted accounting principles.
• D) apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.

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Definitions:

Supplementary Disclosure

Additional information provided in financial statements, beyond the basic requirements, to give more insight into a company's financial status and operations.

Contingent Liabilities

Liabilities that may occur depending on the outcome of an uncertain future event.

Capital Commitments

Obligations of a company to spend capital in the future on items such as property, plant, and equipment or other significant investments.

AASB 11

Australian Accounting Standard Board's directive concerning the financial reporting of interests in joint arrangements to ensure transparency and comparability.