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a) When there is a material disagreement between the Auditor and management of a client, this could lead to the Auditor expressing a qualified opinion or an adverse opinion.
Required:
Evaluate the circumstances, when due to disagreement between Management and the auditor, an audit firm may express a qualified opinion or an adverse opinion in its report on the financial statements of a company.
(5 marks)
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The auditors of ABC Ltd issued an adverse opinion on the financial statements of the company for the year ended 31 December 2017. This was due to the fact that management could not make available the cash book, general ledger, and debtors ledger to the auditors for examination.
Some of the engagement team members may not agree to the issue of an adverse opinion and are suggesting an unmodified report with an emphasis of matter paragraph.
Required:
a. Comment on the action of the auditors to issue an adverse opinion. (10 marks)
b. Explain to your team members the circumstances that will make auditors include an emphasis of matter paragraph in the Independent Auditor’s report. (5 marks)
(Total: 15 marks)
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b) The Auditor of Pegasus Technologies, a fintech company, issued an adverse opinion on the financial statements for the year ended 31 December 2020. This was due to the fact that management could not make available the sales ledger, cash book, and other ledgers to the auditors due to a massive hack suffered by the company. Hackers used SIM cards to gain access to the company’s mobile money platform, stole funds, and destroyed company records. The hackers have been caught, and the IT unit has fixed the loophole that led to the hacking.
Required:
Comment on the Auditor’s issue of an adverse opinion and suggest whether another opinion would be more appropriate under ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report. (10 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
a) When there is a material disagreement between the Auditor and management of a client, this could lead to the Auditor expressing a qualified opinion or an adverse opinion.
Required:
Evaluate the circumstances, when due to disagreement between Management and the auditor, an audit firm may express a qualified opinion or an adverse opinion in its report on the financial statements of a company.
(5 marks)
Find Related Questions by Tags, levels, etc.
The auditors of ABC Ltd issued an adverse opinion on the financial statements of the company for the year ended 31 December 2017. This was due to the fact that management could not make available the cash book, general ledger, and debtors ledger to the auditors for examination.
Some of the engagement team members may not agree to the issue of an adverse opinion and are suggesting an unmodified report with an emphasis of matter paragraph.
Required:
a. Comment on the action of the auditors to issue an adverse opinion. (10 marks)
b. Explain to your team members the circumstances that will make auditors include an emphasis of matter paragraph in the Independent Auditor’s report. (5 marks)
(Total: 15 marks)
Find Related Questions by Tags, levels, etc.
b) The Auditor of Pegasus Technologies, a fintech company, issued an adverse opinion on the financial statements for the year ended 31 December 2020. This was due to the fact that management could not make available the sales ledger, cash book, and other ledgers to the auditors due to a massive hack suffered by the company. Hackers used SIM cards to gain access to the company’s mobile money platform, stole funds, and destroyed company records. The hackers have been caught, and the IT unit has fixed the loophole that led to the hacking.
Required:
Comment on the Auditor’s issue of an adverse opinion and suggest whether another opinion would be more appropriate under ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report. (10 marks)
Find Related Questions by Tags, levels, etc.
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