The following questions concern audits and reviews, assurance engagements, and compilations (related services).

Choose the best response.

a. A public accountant normally performs enquiry, analytical procedures and discussion in order to assess whether or not the information being reported on is plausible. If those procedures cause him or her to doubt the plausibility, the public accountant should

(1) provide a reservation in the review engagement report.

(2) resign.

(3) perform a compilation engagement.

(4) perform procedures similar to audit procedures.

b. A compilation is described as a "related service" because

(1) the public accountant has no liability for errors.

(2) the compilation is a form of consulting service.

(3) no assurance is provided by the public accountant.

(4) only the general standard of GAAS applies to compilations.

c. Section 7500 describes the auditor's responsibilities with respect to annual reports. Which of the following statements is not a part of Section 7500?

(1) The auditor must be satisfied that MD&A is not inconsistent with the financial statements.

(2) The auditor must be satisfied that the financial statements are accurately reproduced.

(3) The auditor must be satisfied that the aims and objectives of the company as discussed in the President's Report have been approved by the Board of Directors.

(4) The auditor must be satisfied that the annual report does not include any information that is inconsistent with the financial statements.

d. Which of the following statements about a compilation engagement is not true?

(1) The compiled statements must comply with GAAP.

(2) The accountant must be satisfied that the statements are not false or misleading.

(3) The public accountant does not have to have an objective state of mind.

(4) The public accountant should exercise due care.