An auditor is performing a review of a nonissuer's financial statements. The auditor is not independent. Which of the following is the auditor's responsibility?

Answer options:

Withdraw from the engagement.

Disclose the lack of independence in the review report.

Issue a disclaimer of conclusion.

The auditor is precluded from issuing a review report.

How to approach this question

Review = Independence Required. No Indep = No Review. (You can Compile, but you can't Review).

Full Answer

D.The auditor is precluded from issuing a review report.✓ Correct

AR-C 90 states that the accountant must be independent of the entity when performing a review engagement. If the accountant is not independent, they are precluded from issuing a review report. They may, however, perform a compilation engagement (AR-C 80) and disclose the lack of independence.

Common mistakes

Thinking you can disclose lack of independence in a Review (like you can in a Compilation). You cannot.

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