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Questions and Answers
What should a practitioner do when conducting the compilation?
What should a practitioner do when conducting the compilation?
- Propose appropriate amendments to management when the financial information is misleading (correct)
- Ignore any misleading compiled financial information
- Propose appropriate amendments to management when the financial information is consistent with the applicable reporting framework
- Refrain from proposing any amendments to management
What would make the compiled financial information not be materially misstated?
What would make the compiled financial information not be materially misstated?
- Proposing amendments to management when the financial information is misleading (correct)
- Referring to or describing the applicable financial reporting framework
- Compiling based on assumptions about future events and possible actions by an entity
- The financial information being consistent with the applicable reporting framework
In what situation should a practitioner refrain from proposing any amendments to management?
In what situation should a practitioner refrain from proposing any amendments to management?
- When the compiled financial information is misleading
- When the compiled financial information is not materially misstated
- When the financial information does not refer to or describe the applicable financial reporting framework
- When the financial information is consistent with the applicable reporting framework (correct)
What should be the basis for this financial information?
What should be the basis for this financial information?
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Study Notes
Conducting Compilation
- When conducting a compilation, a practitioner should obtain an understanding of the client's industry, business, and financial position.
- The practitioner should also understand the accounting principles and practices of the industry and the client's financial reporting framework.
Compiled Financial Information
- The compiled financial information is not materially misstated if it is free from material errors, omissions, and misstatements.
- The practitioner should ensure that the financial information is presented in accordance with the applicable financial reporting framework.
Proposing Amendments
- A practitioner should refrain from proposing any amendments to management if the financial information is materially misstated.
- The practitioner should discuss the matter with management and consider whether it is appropriate to withdraw from the compilation engagement.
Basis for Financial Information
- The basis for the financial information should be the client's underlying accounting records and other relevant data.
- The practitioner should not prepare the underlying records, but rather use the client's existing records to compile the financial information.
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