I think the biggest thing to know here is that CPAs are not Attorneys. As such, “he or she is not expected to have the expertise of a person trained for qualified to engage in the practice of another profession or occupation” (i.e., law) [AT Section 201].
When performing agreed-upon procedures, the CPA is essentially performing procedures outlined by another party. The CPA makes no claim that the procedures performed indicate compliance with some bigger goal. For instance, if you performed an agreed upon procedure to verify cash balance in a bank account, you would not be providing any type of assurance that the balance tested indicates compliance with some sort of debt covenant. You are only indicating that you performed the procedure, and that the procedure indicated a certain balance. Nothing more.
This same logic is why a CPA can perform agree-upon procedures on compliance with a law. For instance, let's say were dealing with a banking law that requires a certain amount of customer deposits to be held in reserves. You could perform agreed upon procedures to test the balance of the deposits. Based on your performance of the agreed upon procedures, you leave it to the party that engaged you to make any conclusion on compliance with the law. Because you (the CPA) aren't really making the conclusion, you aren't practicing law (which is a big no-no).
So you can eliminate answer choices A and B.
As far as picking between answer choices C and D, I'm a little unsure there. If I remember correctly, an examination provides a HIGHER level of assurance than a REVIEW. So I would think you'd be permitted to perform a review before you'd be permitted to perform an examination (usually if you can perform a high assurance engagement [i.e., an examination] you can also perform a low/no assurance engagement [i.e., a review]).
I'm guessing there is some subtle nuance/standard and explanation as to why that is not the case here. Maybe someone else can help with that one if they know why.
AUD 99
BEC 96
FAR 94
REG 96
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