XYZ Ltd. has prepared financial statements that are not in accordance with GAAP. The review report should ________.

Question

Quizplus · Accepted Answer

When financial statements are not in accordance with GAAP, the review report should contain a reservation describing the nature of the departure from GAAP. This is required by professional standards to alert users of the financial statements that they may not be relying on an accurate representation of the company's financial position and results of operations. The review report should also ensure that the nature of the departure is described in the notes to the financial statements. Option C is incorrect as a review report is required to provide limited assurance on the financial statements in accordance with applicable professional standards. Option D is incorrect as it is not required to indicate the dollar effect of restatement for each affected account.

XYZ Ltd Has Prepared Financial Statements That Are Not in Accordance