Choice "C" is correct. An accountant performing an engagement to compile prospective financial statements should make inquiries about the accounting principles used in the preparation of the prospective financial statements.
Choice "a" is incorrect. The accountant does not test the entity's internal controls to determine if adequate controls exist so that financial projections can be reasonably achieved. The test of an entity's internal controls is an audit procedure, not a compilation procedure.
Choice "b" is incorrect. The practitioner has no responsibility to update the report for events and circumstances occurring after the date of the report.
Choice "d" is incorrect. This is not a required procedure when compiling prospective financial statements.