Which statement about CPA compilations is correct?

Which statement about CPA compilations is correct?

• A. It provides assurance that the financial statements conform to GAAP.
• B. It includes an unqualified opinion on GAAP compliance.
• C. It is a presentation by a CPA without assurance that the information conforms to GAAP.
• D. It verifies the accuracy and completeness of the financial statements.

Answer: (C)

A compilation is a presentation of financial statements prepared by management, with the CPA simply presenting the information without providing any assurance about GAAP conformity or the accuracy of the figures. In this type of engagement, the CPA does not perform procedures to verify transactions or balances, so no opinion on GAAP compliance is issued. That’s why the statement is that it’s a presentation by a CPA without assurance. The other options imply that the CPA guarantees GAAP conformity, provides an opinion, or verifies accuracy—none of which happens in a compilation. If you need assurance on GAAP conformity or accuracy, an audit or review would be required.

A compilation is a presentation of financial statements prepared by management, with the CPA simply presenting the information without providing any assurance about GAAP conformity or the accuracy of the figures. In this type of engagement, the CPA does not perform procedures to verify transactions or balances, so no opinion on GAAP compliance is issued. That’s why the statement is that it’s a presentation by a CPA without assurance. The other options imply that the CPA guarantees GAAP conformity, provides an opinion, or verifies accuracy—none of which happens in a compilation. If you need assurance on GAAP conformity or accuracy, an audit or review would be required.