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

Answer options:

The auditor must withdraw from the engagement.

The report must include a paragraph stating that the disclosures are omitted and that if included, they might influence the user's conclusions.

The auditor must issue an adverse opinion.

The auditor must restrict the use of the report to management only.

How to approach this question

Compilation + Omitted Disclosures = OK, but MUST warn the user.

Full Answer

B.The report must include a paragraph stating that the disclosures are omitted and that if included, they might influence the user's conclusions.✓ Correct

When management elects to omit substantially all disclosures, the accountant can issue the compilation report provided the omission is not intended to mislead users. The report must include a specific paragraph alerting users to the omission.

Common mistakes

Thinking omitted disclosures requires withdrawal or adverse opinion (only true for Audits/Reviews, not Compilations if disclosed).

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