Paul company has approached your CPA firm with some questions.Paul's management has spoken with a bank about obtaining a loan toexpand its operations. The bank has informed Paul that the bankwill not make the requested loan unless the company submitsfinancial statements. Further, the interest rate on the loan willdepend on whether Paul's financial statements are compiled,reviewed, or audited by an independent auditor. Paul's managementis not familiar with the differences between these three servicesand wonders why the interest rate charged on the loan would dependon the type of service they obtain from your CPA firm.
Describe for Paul Company the differences between compilation,review, and audit engagements. Be sure to include the level ofassurance provided by each one as part of your explanation.
Paul company has approached your CPA firm with some questions.Paul's management has spoken with a bank about obtaining a loan toexpand its operations. The bank has informed Paul that the bankwill not make the requested loan unless the company submitsfinancial statements. Further, the interest rate on the loan willdepend on whether Paul's financial statements are compiled,reviewed, or audited by an independent auditor. Paul's managementis not familiar with the differences between these three servicesand wonders why the interest rate charged on the loan would dependon the type of service they obtain from your CPA firm.
Describe for Paul Company the differences between compilation,review, and audit engagements. Be sure to include the level ofassurance provided by each one as part of your explanation.
