ExpertHard1 markMultiple Choice
CPA · Question 77 · Area IV: Reporting
An auditor is performing a 'preparation' engagement under SSARS. Which of the following is true?
An auditor is performing a 'preparation' engagement under SSARS. Which of the following is true?
Answer options:
A.
The auditor must issue a report.
B.
The auditor is not required to be independent.
C.
The auditor must verify the accuracy of the data.
D.
The engagement provides limited assurance.
How to approach this question
Preparation (AR-C 70) = No Assurance, No Report, No Independence required. It's just bookkeeping.
Full Answer
B.The auditor is not required to be independent.✓ Correct
A preparation engagement (AR-C 70) is a non-attest service where the accountant prepares financial statements. Independence is NOT required (unlike Review/Audit), and no report is issued.
Common mistakes
Thinking Preparation requires a report (Compilation does, Preparation does not).
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