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Hello Mike sir,
If suppose, there is a transaction between the client and the director of the company where our client has given a loan (lets say $5,000) to the director. It is not material to the financial statements in terms of monetary value although it is a related party transaction as per IAS 24. The management chooses not to disclose this transaction in the notes to the accounts due to whatever reason they may have.
My question is, if this transaction which is non-material in terms of MONETARY VALUE but is material in terms of their NATURE, will it impact our audit opinion (maybe it will result in qualified opinion due to this matter)? Assume all other matters in financial statements are correct except this one.
And also in general terms apart from IAS 24, can you tell whether items which are not material in terms of monetary value but material in terms of nature and their impact on financial statements, will they affect the audit opinion or not?
“… this transaction which is non-material in terms of MONETARY VALUE but is material in terms of their NATURE, will it impact our audit opinion …”
It certainly will lead to a modified, qualified opinion on the basis of disagreement for the non-disclosure of a loan and breach of IAS 24
It’s highly improbable that it would be material and pervasive so an “except for” qualification would seem to be appropriate
And, in answer to your supplementary question, you say yourself “… but material in terms of nature …” so, yes, they are material and, yes, they would be the subject of an “except for” (probably) modified and qualified opinion
OK?
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