M & Co.

M & Co. has been engaged under SRS 4410 (Revised) to assist Nova Ltd. in compiling financial information.

During the engagement, the practitioner becomes aware that certain expense information supplied by management appears inconsistent with the applicable financial reporting framework.

Management responds:

“We have appointed you only to compile the financial information. Therefore, you should neither question the information provided by us nor suggest any changes to it.”

The practitioner discusses the matter with management and requests that the apparent misstatement be corrected. Management refuses to make the correction.

Which ONE of the following is most appropriate?

A. The practitioner should continue the engagement without considering the matter further, since responsibility for the financial information rests with management.

B. The practitioner should perform an audit of the affected expense information before deciding whether the matter requires any further action.

C. The practitioner should consider the implications of management’s refusal, including whether the matter remains unresolved and whether it affects the practitioner’s ability to complete or report on the compilation engagement.

D. The practitioner should independently determine the appropriate accounting treatment and incorporate the necessary adjustment into the compiled financial information without obtaining further approval from management.