Question

Financial statements of a nonpublic entity that have been reviewed by an accountant should be accompanies by a report stating that a review

A. Provides no assurance about the fairness of the client's financial statements.

B. Consists primarily of inquiries of company personnel and analytical procedures applied to financial data.

C. Including examining, on a test basis, information that is the representation of management.

D. Does not contemplate obtaining corroborating evidential matter or applying any other procedures ordinarily performed during an audit.

Answer 1

Correct option is: C. Including examining, on a test basis, information that is the representation of management

Preparation of financial statements is the responsibility of management where as auditor is assigned to check the correctness of the financial statements - whether the financial statements provides a true and fair view. Therefore while reporting his opinion on the financial statements of the nonpublic entity auditor must state that information obtained is the representation of the management.