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Which of the following statements is correct regarding a review engagement of a nonpublic company's financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)? a. An accountant must establish an understanding with the client in an engagement letter. b. An accountant must obtain an understanding of the client's internal control when performing a review. c. A review provides an accountant with a basis for expressing limited assurance on the financial statements. d. A review report contains an accountant's opinion of the financial statements taken as a whole.
I think d A review report contains an accountant's opinion of the financial statements taken as a whole.is correct
3) the review engagement is a negative assurance, limited assurance.
Statements on Standards for Accounting and Review Services (SSARS) clearly states that;
1. Accountant must Posses level of knowledge of the accounting principles and practice of the industry in which the entity operates and an understanding of the entity's business.
2. Do NOT obtain an understanding of internal controls, assess control risk, or tests of details of balances. However, cannot ignore potential misstatements and should perform procedures appropriate to pursue issues that arise.
3. provide negative / Limited assurance on FS
Which of the following statements is correct regarding a review engagement of a nonpublic company's financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)?
The given below answer seems to be the correct answer.
d. A review report contains an accountant's opinion of the financial statements taken as a whole.
B-C-D are wrong, in a review the EXTERNAL AUDITOR do not express an opinion and do not need to understand internal controls.
A correct He must get an engagement letter from the management or it will be considered a scope limitation.
d)
The accountant must be free / independent
In a review engagement of a nonpublic company, the issuance of a report under SSARS would not be appropriate.
So to summarize the answer is C, according to AR 60.44: "Obtain evidence that will provide "a reasonable basis for obtaining limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework."
A and C are correct. Opinion is not required in review engagements, and so too the understanding of internal controls. Limited assurance, also called negative assurance is provided, by the reviewer as to the fact that nothing has come to his knowledge which may compromise the Financial Statements ability of presenting true and fair view of the entity's financial position and performance.
The external auditor must abide by the standards and principles of public accounting and has nothing to do with the internal system because the auditor’s report is concerned with controlling accounts and detecting errors or internal manipulation.
a. An accountant must establish an understanding with the client in an engagement letter.
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