If financial statements do not conform with generally accepted accounting principles, auditors may:

When financial statements do not conform with generally accepted accounting principles (GAAP), the appropriate response from auditors is to describe the departure and its effects. This is crucial because transparency is a fundamental principle in the auditing profession. By outlining the nature of the departure from GAAP and its implications, auditors provide users of the financial statements with a clearer understanding of how these deviations might affect the reliability and comparability of the reported information.

This approach not only maintains the integrity of the audit process but also assists stakeholders in making informed decisions based on the financial statements. It allows users to assess the potential risks associated with relying on the financial information presented, ensuring that they are aware of any limitations or discrepancies.

Additionally, documenting the departure is essential for maintaining professional standards and compliance with regulatory requirements. It reflects a commitment to ethical conduct and the provision of quality assurance in financial reporting. In summary, describing the departure and its effects aligns with the auditors’ responsibility to report fairly and accurately, ensuring that all material issues are communicated effectively to the users of the financial statements.