Exam AUD topic 1 question 226 discussion

Actual exam question from AICPA's AUD

Question #: 226
Topic #: 1

During an engagement to review the financial statements of a nonissuer an accountant becomes aware of a material departure from GAAP. If the accountant decides to modify the standard review report because management will not revise the financial statements, the accountant should:

A. Express negative assurance on the accounting principles that do not conform with GAAP.
B. Disclose the departure from GAAP in a separate paragraph of the report.
C. Issue an adverse or an "except for" qualified opinion, depending on materiality.
D. Express positive assurance on the accounting principles that conform with GAAP.

Show Suggested Answer

Suggested Answer: B 🗳️
Choice "B" is correct. If the accountant concludes that modification of the standard report is appropriate, the departure should be disclosed in a separate paragraph of the report.
Choice "A" is incorrect. An accountant would not express negative assurance on the accounting principles that do not conform with GAAP in a review engagement.
Choice "C" is incorrect. An accountant would not issue an opinion in a review engagement.
Choice "D" is incorrect. An accountant would not express positive assurance (i.e., an opinion) on the accounting principles that conform with GAAP in a review engagement.

by gemazyni at April 5, 2025, 4:21 p.m.

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