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a. “Although last year’s Auditor opinion was unmodified, if any previous years auditor’s reports were modified, the. The reason for modifications should be sought”. My question is, can audit opinion be unmodified an audit report modified?
Is it possible if I mention about the need to consider to use expert in part A? what if I also consider about it’s organization structure?
Strictly speaking, and to avoid confusion, we should reserve the term “modified” to describe the audit opinion – which can only take four forms – unmodified or modified (except for, adverse of disclaimer).
Historically (and this where the confusion arises), an auditor’s report would be described as “modified” if it included a modified opinion and/or an “emphasis of matter” para and/or an “other matters” para.
If the answer doesn’t mention an expert it is probably not relevant – you would have to be specific about who is this expert (surveyor/actuary etc) and why you might seek to rely on their work.
Although answers at this level tend to cover a wide range of relevant points it is always possible that other points, if relevant, could earn marks. Again, you have to be specific. A group structure would obviously be relevant in a group scenario.
Becayse I think Ted operates in gaming industry, perhaps Auditor finds it complex to audit it’s inventory, that’s y I want yo suggest the use if expert when asked for “Additional Information”. Is it correct?
Because there atenkw institutional investor and Dougle shares are now totally 30%, so I would suggest to know if organizational structure could change during the year. Is it correct?
I really don’t think the auditor should need an expert to count boxes of computer games – and valuation should be no issue as the product is manufactured (so there will be suppliers’ invoices). If the auditor doesn’t understand the industry the audit shouldn’t be accepted.
Dougal established the company 10 years ago – now he and his family hold only 30% – I would infer from this that before the listing he (with or without the family members) owned all the shares. Dougal seems to be the CEO and nothing has changed this. Institutional investors invest – they do not manage (they would only “interfere” if their investment was mis-managed which isn’t the case here since the company has only just “gone public”). So I do not see anything to suggest organisational changes.
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