Problem 3

Nonpublic companies may have their financial statements audited, reviewed, compiled, or prepared by CPAs. The majority of this semester has been spent learning about audits of financial statements, but it is important to have a basic understanding of the other ways CPAs can be associated with the financial statements of their clients. IN YOUR OWN WORDS:

a. Briefly describe a review of financial statements. What level of assurance, if any, is provided? What type of report is issued? Include in your explanation three procedures that are performed by the CPA during a review engagement.

b. Briefly describe a compilation of financial statements. What level of assurance, if any, is provided? What type of report is issued?

c. Briefly describe preparation of financial statements. What level of assurance, if any, is provided? What type of report is issued?