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

Sterling & Wade is asked to compile financial statements for Rowan Ltd, using a special purpose framework chosen by the directors to meet a lender's requirements. Which item must the compilation report include under ISRS 4410 (Revised)?

The report must describe the applicable financial reporting framework and, for special purpose statements, their purpose and basis. The report is not an audit or review, so it contains no opinion, conclusion or verification of going concern.

  1. AA statement that the statements have been audited under ISAs
  2. BA description of the applicable financial reporting framework, and, for special purpose statements, a description of the purpose and intended usersCorrect
  3. CA conclusion on whether the statements are free from material misstatement
  4. DA statement that the accountant has verified the going concern assumption

Explanation

The compilation report must describe the applicable financial reporting framework and, where a special purpose framework is used, the purpose of the statements and, if applicable, the basis. It also identifies the statements, describes the accountant's and management's responsibilities, and states no assurance is given. Audit or going concern statements would imply assurance.

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