AAA – L3 – SA – Q1.1 – Engagement Type

Type of engagement for preparing tax computation.

Question

If a firm of accountants is engaged to prepare a company’s tax computation, what sort of engagement is this?

A Compilation

B Review

C Limited assurance

D Agreed-upon procedures

Answer

Explanation:
Drawing up (compiling) the tax computation is a compilation engagement. No assurance is provided in such an engagement, as the accountant prepares the computation based on information provided by the client without verifying its accuracy. Review, limited assurance, and agreed-upon procedures involve different levels of assurance or specific procedures, making A the correct answer.

Tags: Assurance services, Compilation engagement, ICAG, Tax Computation
Level: Level 3

Topic: Assurance Services

Uploader: Salamat Hamid