Question Tag: Alternative Opinions

You are a manager in the Quality Control Review department of Integritas & Co, and are currently responsible for reviewing the appropriateness of your firm’s proposed auditor’s reports on financial statements. The draft financial statements of Lamptey Group for the year to 30 June 2017 disclose the following notes.

Notes

i) Significant event
During the year, Lamptey Group sold a significant amount of its business and certain assets (plant and equipment and inventory) and commenced a systematic winding down of its operations. The Group’s remaining assets (including property, trade receivables, and cash) were sufficient to meet the group’s liabilities, as at 30 June 2017.

ii) Accounting policies
The consolidated financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. As described in Note (i), the group has commenced the winding down of its operations and remaining assets have been restated to their net realizable values.

There are no other disclosures relating to the going concern basis although the ‘significant event’ is referred to in the directors’ report under the heading ‘principal activities and business review.’ Lamptey Group ceased to trade in October 2017. The auditor’s report on Lamptey Group’s financial statements for the year ended 30 June 2016 was unmodified.

Required:
Comment on the suitability or otherwise of an unmodified auditor’s report for Lamptey Group for the year ended 30 June 2017. Your answer should discuss the appropriateness of alternative audit opinions.(10 marks)