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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit-related and assurance services

Baxter & Co is engaged to compile the annual financial statements of Linden Ltd, a small retailer, under ISRS 4410 (Revised). The owner asks whether the accountant will give any assurance on the statements. Which statement best describes the accountant's position?

The accountant gives no assurance. A compilation under ISRS 4410 (Revised) is not an assurance engagement, so the accountant applies accounting expertise to help prepare the statements and the report states that no opinion or conclusion is expressed on them.

  1. AThe accountant expresses limited assurance, because the information is only compiled
  2. BThe accountant expresses no assurance, and the report states that the statements were compiled and no opinion or conclusion is givenCorrect
  3. CThe accountant gives reasonable assurance on the statements, but only if the owner requests it in the engagement letter
  4. DThe accountant gives assurance on the accounting policies but not on the figures

Explanation

A compilation engagement under ISRS 4410 (Revised) is not an assurance engagement. The accountant uses accounting expertise to help management prepare and present financial information and does not obtain evidence to express an opinion or conclusion. Option 0 is wrong because limited assurance is the level provided by a review, not a compilation.

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