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Whenever a negative opinion is provided, does the audit procedures to perform is restricted to analytical and inquiry?
For a cash flow forecast, a negative assurance is provided, so audit procedure such as reconciling cash flow forecast to profit forecast cannot be done.. please do clarify.
In exam Dec 2009 – Apricot question, there was a question based on the audit procedures to perform on cash flow forecast and the answers include:
Recalculate cash receipts from credit sales from revenue figures in profit forecast and ageing stucture of receivables. (IT IS A RECALCULATION NOT INQUIRY AND ANALYTICAL)
I find it quite difficult to reach a negative opinion on prospective financial information. I mean, how did you arrive at the conclusion that you couldnt give assurance without determining correctness?
Do you mean negative opinion or are you talking about negative assurance?
NO!!! A negative opinion is a qualified audit opinion “in our opinion the financial statements do not show a true and fair view”
Negative assurance is a non-audit conclusion “nothing has come to our attention to suggest that the figures are wrong”
Since a negative assurance is provided for PFI, does the audit procedures to perform is restricted to analytical and inquiry?
In exam Dec 2009 – Apricot question, there was a question based on the audit procedures to perform on cash flow forecast and the answers include:
Recalculate cash receipts from credit sales from revenue figures in profit forecast and ageing stucture of receivables. (IT IS A RECALCULATION NOT INQUIRY AND ANALYTICAL)
Darshini, I’ve answered this some 4 posts ago! I don’t / can’t envisage a situation where you could avoid at least some degree of recalculation as part of your analytical procedures!
The other point to mention is that if in fact your premise is correct and the recalculation point is not accepted by the marker as an appropriate procedure, what have you lost? You certainly haven’t lost a mark. The worst thing that can happen is that that particular point in your answer doesn’t score a mark!
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