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I came across this statement while reading a technical article on new audit report:
‘When the auditor has expressed an adverse opinion on the financial statements and communicates KAM, it is important that the descriptions of such KAM do not imply that the financial statements as a whole are more credible in light of the adverse opinion’.
May you explain the meaning of the statement, I did not understand it.
Thank you.
The article that you read is:
When the auditor is including KAM paragraphs, these are by way of identification for the reader of … key audit matters that have caused the auditor greater / unusual care and effort to confirm
Where an adverse opinion is issue, the auditor is saying that the financial statements are, basically, wrong and cannot be relied upon
The fact that the auditor also includes KAM paragraphs MAY be taken as suggesting that these (incorrect and unreliable) financial statements may now be relied upon because we have explained those key audit matters
The extract is saying that great care should be taken to avoid that possibility of the reader being misled
OK?
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