Modified Opinion – NBC Institute

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

Question

You are the partner responsible for the audit of JJ Industries Limited for the year ended 31 December 2017. The final audit has been completed, and you are aware that there is guidance for auditors relating to audit reports – ISA 706: Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report.

Required:

a. i. Explain “Emphasis of Matter paragraph” and provide three examples and the potential situations in which such a paragraph may be used. (6 Marks)

ii. Define “Other Matter paragraph” and give two examples of the use of such a paragraph. (4 Marks)

Note: You are not required to produce draft paragraphs.

b. ISA 705: Modifications to the Opinion in the Independent Auditor’s Report requires the auditor to modify their opinion in the audit report. Discuss the two situations under which the auditor must issue a modified opinion in line with ISA 705. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Emphasis of Matter, ISA 705, ISA 706, Modified Opinion, Other Matter
Level: Level 3

Topic: Audit Reporting

AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting

Discusses audit procedures for non-depreciation of buildings and the impact on the audit report if unresolved.

Question

ou are an audit intern in Transparency & Associates, a firm of Chartered Accountants. This year, one of your new clients is Obuse Ltd, a company having net assets of GH¢20,000,000. The audit work has been completed, but there is one outstanding matter you are currently investigating; the directors have decided not to provide depreciation on buildings in the financial statements, although International Financial Reporting Standards suggest that depreciation should be provided. The estimated depreciation is GH¢500,000.

Required:
i) State FOUR (4) additional audit procedures and actions you should take in respect of the above matter.
(6 marks)

ii) What should be the impact on the audit report if the issue remains unresolved at the reporting stage of the audit?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Depreciation, Financial Reporting, IFRS, Modified Opinion
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2021

AAA – May 2020 – Q5b – Reporting, Evaluation and Review

Discuss the impact of unresolved audit issues on the audit report and recommend completion stage procedures for two client scenarios.

Question

You are the audit manager of Onipa Hia & Co., a local firm of Chartered Accountants located in Adabraka in the Greater Accra Region. You are currently reviewing the audit files for several of your clients for which the audit fieldwork is complete. The Audit Senior has raised the following issues:

African Designs Co. Ltd (ADCL)
ADCL’s year-end is 30 September; however, subsequent to the year-end, the company’s sales ledger has been corrupted by a computer virus. ADCL’s Finance Director was able to produce the financial statements prior to this occurring; however, the audit team has been unable to access the sales ledger to undertake detailed testing of revenue or year-end receivables. All other accounting records are unaffected, and there are no backups available for the sales ledger. ADCL’s revenue is GH¢15.6 million, its receivables are GH¢3.4 million, and profit before tax is GH¢2 million.

Ghana Design Co. Ltd (GDCL)
GDCL has experienced difficult trading conditions, and as a result, it has lost significant market share. The cash flow forecast has been reviewed during the audit fieldwork, and it shows a significant net cash outflow. Management is confident that further funding can be obtained and so have prepared the financial statements on a going concern basis with no additional disclosures; the Audit Senior is highly skeptical about this. The prior year’s financial statements showed a profit before tax of GH¢1.2 million; however, the current year’s loss before tax is GH¢4.4 million, and the forecast net cash outflow for the next 12 months is GH¢3.2 million.

Required:
For each of the two issues:
i) Describe the impact on the audit report if the issues remain unresolved. (5 marks)
ii) Recommend procedures the audit team should undertake at the completion stage to try to resolve the issue. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit opinion, Audit Procedures, Going Concern, Modified Opinion, Revenue and Receivables
Level: Level 3

Topic: Evaluation and review, Reporting
Series: MAY 2020

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

Question

Required:

a. i. Explain “Emphasis of Matter paragraph” and provide three examples and the potential situations in which such a paragraph may be used. (6 Marks)

ii. Define “Other Matter paragraph” and give two examples of the use of such a paragraph. (4 Marks)

Note: You are not required to produce draft paragraphs.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Emphasis of Matter, ISA 705, ISA 706, Modified Opinion, Other Matter
Level: Level 3

Topic: Audit Reporting

AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting

Discusses audit procedures for non-depreciation of buildings and the impact on the audit report if unresolved.

Question

Required:
i) State FOUR (4) additional audit procedures and actions you should take in respect of the above matter.
(6 marks)

ii) What should be the impact on the audit report if the issue remains unresolved at the reporting stage of the audit?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Depreciation, Financial Reporting, IFRS, Modified Opinion
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2021

AAA – May 2020 – Q5b – Reporting, Evaluation and Review

Discuss the impact of unresolved audit issues on the audit report and recommend completion stage procedures for two client scenarios.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit opinion, Audit Procedures, Going Concern, Modified Opinion, Revenue and Receivables
Level: Level 3

Topic: Evaluation and review, Reporting
Series: MAY 2020

Question Tag: Modified Opinion

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AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting

Discusses audit procedures for non-depreciation of buildings and the impact on the audit report if unresolved.

AAA – May 2020 – Q5b – Reporting, Evaluation and Review

Discuss the impact of unresolved audit issues on the audit report and recommend completion stage procedures for two client scenarios.

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting

Discusses audit procedures for non-depreciation of buildings and the impact on the audit report if unresolved.

AAA – May 2020 – Q5b – Reporting, Evaluation and Review

Discuss the impact of unresolved audit issues on the audit report and recommend completion stage procedures for two client scenarios.

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AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

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AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting

Discusses audit procedures for non-depreciation of buildings and the impact on the audit report if unresolved.

You're reporting an error for "AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting"

AAA – May 2020 – Q5b – Reporting, Evaluation and Review

Discuss the impact of unresolved audit issues on the audit report and recommend completion stage procedures for two client scenarios.

You're reporting an error for "AAA – May 2020 – Q5b – Reporting, Evaluation and Review"

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

You're reporting an error for "AAA – Nov 2018 – L3 – Q7 – Audit Reporting"

AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting

Discusses audit procedures for non-depreciation of buildings and the impact on the audit report if unresolved.

You're reporting an error for "AA – Nov 2021 – L2 – Q4a – Completion Procedures and Reporting"

AAA – May 2020 – Q5b – Reporting, Evaluation and Review

Discuss the impact of unresolved audit issues on the audit report and recommend completion stage procedures for two client scenarios.

You're reporting an error for "AAA – May 2020 – Q5b – Reporting, Evaluation and Review"

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