Which type of engagement primarily involves inquiries and analytical procedures?

The type of engagement that primarily involves inquiries and analytical procedures is a review. In a review engagement, the practitioner performs analytical procedures and makes inquiries of management to gather sufficient evidence to provide a moderate level of assurance. This process usually requires a less extensive examination than an audit, focusing mainly on the plausibility of financial information rather than verifying the underlying records.

During a review, the practitioner works to identify any material modifications that should be made for the financial statements to be in conformity with the applicable financial reporting framework. While inquiries and analytical procedures are essential components of a review, the level of assurance provided is lower than that of an audit, which involves a more comprehensive set of procedures, including detailed testing of transactions and internal controls.

In contrast, compilation engagements involve the preparation of financial statements based on information provided by management, without the same level of inquiry or analytical procedures. Assurance engagements encompass a broader category that includes audits and reviews as well as other forms of assurance work, but they do not specifically refer to the inquiries and analytical procedures characteristic of a review.