XYZ Ltd.has prepared financial statements that contain a material departure from GAAP.The review report should ________.
A)ensure that the nature of the departure is described in the notes
B)contain a qualification and describe the nature of the departure from GAAP
C)be a standard review report,since a review is not an audit
D)indicate the dollar effect of restatement for each account affected

Question

Quizplus · Accepted Answer

A review report for financial statements with a material departure from GAAP should contain a qualification and describe the nature of the departure from GAAP. This is because a material departure from GAAP would affect the overall fairness of the financial statements and the review report should alert the reader of this departure. The review report should also ensure that the nature of the departure is described in the notes to the financial statements. The review report does not need to indicate the dollar effect of restatement for each account affected, since this level of detail is not required in a review.

XYZ Ltdhas Prepared Financial Statements That Contain a Material Departure from from GAAP.The