Area IV: Forming Conclusions and Reporting — CPA Practice Question 19

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Recall AR-C 80 rules for 'Omission of Substantially All Disclosures'. It is allowed, but you must warn the user.

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B.A statement that if the omitted disclosures were included, they might influence the user's conclusions about the financial statements.✓ Correct

A statement that if the omitted disclosures were included, they might influence the user's conclusions about the financial statements.

When management elects to omit substantially all disclosures in a compilation, the accountant's report must include a paragraph stating that the disclosures were omitted and that, if included, they might influence the user's conclusions. The accountant must also conclude that the omission was not intended to mislead.

Common mistakes

Thinking omission of disclosures is not allowed in compilations (it is, unlike reviews/audits).

An auditor is performing a compilation engagement for a nonissuer under SSARS. The client has omitted substantially all disclosures required by GAAP. The auditor decides to issue the compilation report. Which of the following statements MUST be included in the report?

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Practice the full CPA AUD Practice Exam 3

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