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Hi Mike,
After reading exam of June 2011, Q5, I have a question.
In this exam a qualified opinion was given to a SIGNIFICANT component of the group. And then they explain the possible effects on the group audit report.But what if a qualified opinion was given to a subsidiary that is not material for a consolidated FS? Should group auditor ignore this? Or should they perform any procedures in this regard?
Maybe include EOM in a group audit report?Thanks!
Louisa
The group auditor should consider whether the matter giving rise to the subsidiary audit opinion being qualified is a matter that could potentially affect / be relevant to the entire group. On the assumption that it does have NO potential affect on the group or on other subsidiaries, then there would be no need for the group auditor to mention the matter, not even as an emphasis of matter.
Remember, an emphasis of matter is where the auditor wishes to bring to the attention of the reader a matter of such materiality that the auditor feels it necessary specifically to draw the reader’s attention to that material matter.
Why would you emphasise a matter that, in your words, is not material?
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