Question

An accountant is engaged to perform compilation services for a new client in an industry with which the accountant has no previous experience. How should the accountant obtain sufficient knowledge of the industry to perform the compilation service?

Answer 1

Answer:

The options are given below:

A. By obtaining the most recent letter of credit from the entity's primary financial institution.

B. By consulting the AICPA guides, industry publications, or individuals knowledgeable about the industry.

C. By researching the entity's internet site and searching for current press releases.

D. By reviewing the predecessor accountant's work papers without the knowledge of the entity.

The correct option is B.

Explanation:

The AICPA (American Institute of Certified Public Accountants) refers to the association which develops and scores the Uniform Certified Public Accountants examination. The main purpose of the AICPA is financial accounting, therefore, the association will possess information about an industry in its guides.

The accountant can consult industry publications, as this is bound to possess information regarding the industry. Also, the accountant can consult individuals knowledgeable about the industry.