During a review of the financial report of a non-reporting entity an assurance provider becomes aware of a lack of adequate disclosure that is material and pervasive to the financial report and results in it being misleading. If management refuses to correct the financial report presentations, the assurance provider should:
A) express only limited assurance on the financial report presentations.
B) disclose this departure from accounting standards in a separate paragraph of the report.
C) issue an adverse opinion.
D) issue an 'except for' opinion.

Question

Quizplus · Accepted Answer

If management refuses to correct the material and pervasive lack of adequate disclosure, it means that the financial report is misleading and does not present a true and fair view of the entity's financial position. Therefore, an adverse opinion is appropriate, as it informs users of the financial report that the entity's financial statements are not reliable. Options A and D are not appropriate because they suggest that the assurance provider can issue a limited or qualified opinion despite the material and pervasive departure from accounting standards. Option B is not necessary because the assurance provider should express an adverse opinion.

During a Review of the Financial Report of a Non-Reporting