Which statement describes a compilation?

Which statement describes a compilation?

• A. A presentation of financial statements by a CPA without assurance that the information conforms to GAAP
• B. An audit that provides GAAP conformity assurance
• C. A detailed tax return preparation
• D. A budget forecast

Answer: (A)

Compilation involves presenting financial statements that are prepared by a CPA from information provided by management, with no assurance about whether the statements conform to GAAP. The CPA doesn’t perform procedures to verify accuracy or GAAP compliance and does not issue an opinion or other assurance. This distinguishes it from an audit, which provides GAAP conformity assurance, and from services like detailed tax return preparation or a budget forecast, which are different types of engagements (tax work and planning/forecasting, respectively). So the statement describing a compilation is that it is a presentation of financial statements by a CPA without assurance that the information conforms to GAAP.

Compilation involves presenting financial statements that are prepared by a CPA from information provided by management, with no assurance about whether the statements conform to GAAP. The CPA doesn’t perform procedures to verify accuracy or GAAP compliance and does not issue an opinion or other assurance. This distinguishes it from an audit, which provides GAAP conformity assurance, and from services like detailed tax return preparation or a budget forecast, which are different types of engagements (tax work and planning/forecasting, respectively). So the statement describing a compilation is that it is a presentation of financial statements by a CPA without assurance that the information conforms to GAAP.