During a review of the financial statements of a nonpublic entity, the CPA finds that the financial statements contain a material departure from generally accepted accounting principles. If management refuses to correct the problem, the CPA should
A) Disclose the departure in a separate paragraph of the report.
B) Issue an adverse opinion.
C) Attach a footnote explaining the effects of the departure.
D) Issue a compilation report.

Question

Quizplus · Accepted Answer

The CPA should disclose the material departure from GAAP in a separate paragraph of the review report, as reviews do not provide an opinion like audits do.

During a Review of the Financial Statements of a Nonpublic