An auditor is engaged to perform a review of a nonissuer's financial statements under SSARS. The auditor learns that the client has omitted substantially all disclosures required by GAAP. The auditor concludes that the omission is not intended to mislead users. The auditor should:

Answer options:

Withdraw from the engagement.

Issue an adverse conclusion.

Disclose the omission in a separate paragraph of the review report.

Issue a standard review report.

How to approach this question

SSARS Rule: Omission of substantially all disclosures is permitted in Compilation and Review if disclosed in the report and not misleading.

Full Answer

C.Disclose the omission in a separate paragraph of the review report.✓ Correct

Disclose the omission in a separate paragraph of the review report.

Under SSARS (AR-C 90 for Reviews), if financial statements omit substantially all disclosures, the accountant can still issue a report provided the omission is disclosed in the report and is not intended to mislead. (Note: This is very common in Compilations, less so in Reviews, but permitted if disclosed).

Common mistakes

Thinking omitted disclosures always require withdrawal or adverse opinion.

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