During a review of the financial statements of a nonissuer, an accountant becomes aware of a lack of adequate disclosure that is material to the financial statements. If management refuses to correct the financial statement presentations, the accountant should:

Question

Quizplus · Accepted Answer

Choice "C" is correct. If, during a review of the financial statements of a nonissuer, an accountant becomes aware of a lack of adequate disclosure that is material to the financial statements, and management refuses to correct the financial statement presentations, the accountant should disclose this departure from GAAP in a separate paragraph of the report. Choices "A" and "B" are incorrect. Adverse opinions and "except for" qualified opinions pertain to audit reports. Opinions are not rendered based on review engagements. Choice "D" is incorrect. The accountant expresses only limited assurance on the financial statements as a result of a review even when there are no GAAP departures. GAAP departures require that a separate paragraph be added to the standard report, and that the limited assurance be modified to read, "…with the exception of the matter described in the following paragraph, I am not aware of any material modifications…"

During a Review of the Financial Statements of a Nonissuer