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CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services

Mehta & Associates have compiled financial statements of Narmada Foods Ltd. for management's internal use under SRS 4410 (Revised). The statements use a special purpose framework and are meant only for management. Which statement best describes the content of the practitioner's compilation report?

The report states that a compilation is not an assurance engagement, so the practitioner is not required to verify the accuracy or completeness of the information provided and expresses neither an audit opinion nor a review conclusion. Management remains responsible for the statements, and use of the report is restricted to management.

  1. AIt expresses limited assurance that the statements are free from material misstatement
  2. BIt states that the practitioner is not required to verify the accuracy or completeness of the information provided, and expresses no audit opinion or review conclusionCorrect
  3. CIt expresses a positive audit opinion on whether the statements comply with the stated basis of accounting
  4. DIt can be freely distributed to lenders and other third parties for credit decisions

Explanation

The illustrative report says a compilation is not an assurance engagement, so the practitioner need not verify the information and expresses no audit opinion or review conclusion. It also restricts the report to management's use. Limited or positive assurance would be wrong because no assurance is given, and the report states it should not be distributed to other parties.

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