Before reissuing a compilation report on the financial statements of a nonissuer for the prior year, the predecessor accountant is required to
A. Make inquiries of the entity’s lawyers concerning continuing litigation.
B. Review the successor accountant’s working papers for matters affecting the prior year.
C. Compare the prior year’s financial statements with those of the current year.
D. Obtain an updated management representation letter from the entity’s management.
Answer:C
C is corrent because a comparison to the prior year’s financial statements with those of the current year is required to help the predecessor accountant to determine that the report is still appropriate.
A is incorrect because the entity’s lawyers are not ordinarily contacted.
B is incorrect because the predecessor is not required to review the successor’s working papers.
D is incorrect because no requirement exists for obtaining an updated representation letter.
