Jesson, a new staff member of the professional services firm, has drafted a compilation report on a set of pro forma financial statements for a client. Kale, the supervisor, has prepared comments on the report draft. For each comment, determine whether Jessons original draft is correct, Kales comment is correct, or neither Jessons original draft nor Kales comment is correct.

Management is responsible for the accompanying pro forma balance sheet of ABC Company as of December 31, 20X1, and the related pro forma statement of income for the year then ended, based on the criteria from the AICPA. The accompanying historical financial statements of ABC Company were compiled by us. The pro forma adjustments are based on managements assumptions described in Note 1. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the PCAOB. We did not examine or review the pro forma financial information nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on the pro forma financial information.

The objective of this pro forma financial information is to show what the significant effects on the prospective financial information might have been had the underlying transaction (or event) occurred at an earlier date. However, the pro forma financial statements are not necessarily indicative of the results of operations or related effects on financial position that would have been attained had the above mentioned actually occurred at such earlier date.

O.U.R. CPA Firm Any City, Any State February 22, 20X2

Kale's commentAnswer1. In the first sentence, Management is responsible should be replaced with Our firm is responsible. 2. In the first sentence, criteria from the AICPA should be replaced with criteria in Note 1, which presents the criteria for the adjustments. 3. The second sentence should be removed. We should not refer to the financial statements on which the pro forma adjustments were made. 4. The fourth sentence should state, promulgated by the Accounting and Review Services Committee of the SEC. 5. In the last sentence of the first paragraph, remove the phrase nor provide any form of assurance. 6. In the first sentence of the second paragraph, the statement should read, the significant effects on the historical financial information. 7. A final sentence in the second paragraph should be added, In the final analysis, we have concluded that the pro forma financial statements are fairly stated