An auditor is engaged to review the financial statements of a non-issuer under SSARS. During the review, the auditor discovers a material departure from the applicable financial reporting framework. Management refuses to correct it. What should the auditor do?

Answer options:

Issue an adverse opinion.

Modify the review report by adding a separate paragraph disclosing the departure.

Express a qualified conclusion.

Withdraw from the engagement immediately.

How to approach this question

Review = Limited Assurance. If error found -> Modify Report (describe the error). Note: SSARS now uses 'Qualified/Adverse Conclusion' terminology, but the mechanism is adding the paragraph.

Full Answer

B.Modify the review report by adding a separate paragraph disclosing the departure.✓ Correct

Modify the review report by adding a separate paragraph disclosing the departure.

If the accountant becomes aware of a material departure from the framework, they should recommend correction. If not corrected, the accountant should modify the review report (add a paragraph describing the departure and its effects). If the report would still be misleading, they should withdraw.

Common mistakes

Thinking you issue an 'Adverse Opinion' (Audit term) vs 'Adverse Conclusion' (Review term) or just modifying the report.

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