A compilation of financial statements involves presenting management's assertions in the form of financial statements without expressing any degree of assurance. Nevertheless, even though no assurance is expressed, an independent accountant must comply with the provisions of SSARS No. 1, "Compilation and Review of Financial Statements."

Required:

1. Identify the type of knowledge and understanding that an independent accountant should obtain in a compilation engagement.

2. How does an accountant inform users of the nature and limitations of a compilation?

3. What actions should an independent accountant take when he or she becomes aware of a material departure from GAAP in financial statements compiled?