[SoCalCPA]

I thought that a compilation report needs the following ..

1) Each page of FS marked to restrict its use

2) a written engagement letter is used to document the understanding with the client

but does NOT need a written rep letter (only reviews and audits do?). Maybe I’m not understanding the wording of the following question, so any help would be much appreciated!

Q) An accountant complies unaudited FS that are NOT expected to be used by a 3rd party. The accountant may decline to issue a compilation report provided:

1. Each page of the FS is clearly marked to restrict its use.

2. A written engagement letter is used to document the understanding with the client

3. A written rep letter is obtained from the client’s management.

Answer) 1. Yes 2. Yes. 3. No “The accountant may decline to issue a compilation report provided that each page of the FS is clearly marked to restrict its use and a written engagement letter is used to document the understanding with the client.”

– Why would an accountant decline to issue a compilation report under this case? I don’t understand the explanation, because I thought those are the necessary steps. So, I would think the answers are 1. No 2. No. 3. No, which is pretty much the exact opposite. Thanks again!

B - (4/2012)
A - (5/2012)
R - (1/2012) Done!
F - (10/2011) Done!

[mparker1904]

The only thing I could see is maybe the decline is used incorrectly. Maybe it was supposed to be decide or inclined. I took Bisk and Wiley and I noticed quite a few clerical errors like that. I wouldn't stress to much about that question and just remember the rules for doing a compilation.

BEC 76
AUD 86
REG 78
FAR 76 DONE!

[TheHonestMan]

I think this is just an interpretation issue due to poor wording. I interpreted the question as follows “Which of the follow conditions are necessary for an auditor to perform a compilation without issuing a report?” I believe you took the question to mean “what would cause an auditor to decline a compilation engagement?”

Those first two conditions are both required to perform a compilation without issuing a report. A representation letter has no bearing on whether a report is required.

Does that make sense?

AUD - 95
FAR - 92
REG - 79
BEC - 93 DONE!

[SoCalCPA]

Ya okay thanks everyone. I know now that I understand the concept, but I misinterpreted (or the question is written poorly haha).

B - (4/2012)
A - (5/2012)
R - (1/2012) Done!
F - (10/2011) Done!

[Author]

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