Reference no: EM131622119
Qusetion: Compilation and Review Procedures. The following numbered items 1-10 state procedures accountants should consider in review engagements and compilation engagements on the annual financial statements of nonissuers (performed in accordance with AICPA Statements on Standards for Accounting and Review Services).
Required: For each item (taken separately), tell whether the item is required in all review engagements and/or required in all compilation engagements. For each item, give two responses, one regarding review engagements and the other regarding compilation engagements.
1. The accountants should establish an understanding in writing with the entity's management regarding the nature and limitations of the services to be performed.
2. The accountants should make inquiries concerning actions taken at the board of directors' meetings.
3. The accountants, as the entity's successor accountants, should communicate with the predecessor accountants to obtain access to the predecessors' audit documentation.
4. The accountants should obtain a level of knowledge of the accounting principles and practices of the entity's industry.
5. The accountants should obtain an understanding of the entity's internal control.
6. The accountants should perform analytical procedures designed to identify relationships that appear to be unusual.
7. The accountants should assess the risk of material misstatement.
8. The accountants should obtain a letter from the entity's attorney to corroborate the information furnished by management concerning litigation.
9. The accountants should obtain management representations from the entity.
10. The accountants should study the relationship of the financial statement elements that would be expected to conform to a predictable pattern.