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I understand that if there is a disagreement of accounting polices, say the non-consolidation of subsidiary, this may give rise to an adverse opinion. When there is a limitation of scope of work , say the financial statements of subsidiary has not been produced for disclosure of figures required, this may give rise to disclaimer of opinion. However, in situations where both exists, could we give both disclaimer and adverse opinion at the same time? Or only either one is permissible under the IAS? Please kindly give me some help in this.
No, I don’t believe you would qualify on both counts. If the subsidiary’s figures are not available, this is NOT a situation where the consolidated financial statements MAY in fact be correct – but, because of the limitation of scope, we are unable to form and express an opinion. Your only choice surely would be an adverse opinion – because of the failure to comply with IFRS the consolidated financial statements DO NOT show a true and fair view.
All of the above, of course, depends upon the materiality of the omitted subsidiary. If the subsidiary is not material to the group, then no mention and an unqualified opinion.
Now, here’s a question for you! If the subsidiary figures are not made available to the auditor, how do you know whether or not it’s material?
😉
By knowing the remaining part of the group’s value and total group’s value :))
I just thought of it, did not read that anywhere. Is that wrong ?“If the subsidiary figures are not made available to the auditor, how do you know whether or not it’s material?” How does “knowing the remaining part of the group’s value and total group’s value” help us to determine the materiality of a subsidiary when we don’t know the subsidiary’s figures?
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In the parent company’s statement of financial position there will be a figure for investment in subsidiary company. I guess that we can use that figure to determine if it is material or not based on the total assets.. ?
Geoklean but you will not be able to differentiate unless and until complete information is given ! And thats all ! Audit is not about shortcuts !
We need details of subsidiary assets , profits everything ! To asses the materiality of subsidiary.
Muneeb, you’re correct. Do you mind if I correct a spelling mistake? “Asses” in English English is the plural of “ass” and an ass is a donkey.
In American English it has a totally different meaning and is probably not a good word to include in a professional exam.
The word you seek is “assess”
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Thank you for your reply and all the help.
You’re welcome – always happy to help improve the quality of English usage – and that comment is by no means restricted to those for whom English is not their first language
Hahaha Mike that was just a mistake , and i do know what is asses and assess LOL 😀
Muneeb, some mistakes don’t cause amusement. My favourite one ever, from an English student who wanted to say “assess whether the warehouse controls were strong” wrote “asses wether the whorehouse controls were strong” You may not know the word “wether” but it is the word to describe a male sheep that has been (for want of a better word) “doctored”
So we had the sentence concerning donkeys, doctored sheep and a “house of ill repute”
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