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(in the question) a group has 3 subsidiairy
– number 1 sub has no issue
– number 2 sub has going concern issue (Which the question specifically mention it has going concern issue)
– number 3 sub has not adjusted material misstatement and we have to issue qualified opinion since management have not adjusted itWhen we issue group audit opinion, how do we issue a group audit opinion in this case ?
because when we look at group 2, it’s adverse opinion while number 3 seems like it’s qualified opinion. Then what do we issue for group audit opinion ?The group auditor’s report in on the consolidated financial statements.
A component is only part of group – so even if a misstatement was,say, 10% of a subsidiary’s profit – if the subsidiary contributes less than 50% of the group’s profit, it won’t be material to the consolidated financial statements.
Also bear in mind that group management could make a consolidation adjustment to correct the effects of a misstatement in subsidiary’s financial statements.Please be careful how you refer to going concern. I would take “has a GC issue” to mean that there is material uncertainty (i,e, MURGC if adequately disclosed or qualified if not). An adverse opinion on GC really means that it is almost certain that the entity is NOT a going concern.
In the last sentence, you mentioned that when a company has GC issue, there will be MURGC (if adequately disclosed) or qualified (if no disclosure assuming mgmt don’t adjust).
And you mentioned adverse on GC really means entity is not going concern.
Then how do you actually judge whether it will be qualified or adverse if the question simply states GC issue ?
I feel like this depends on the people who answer the question when the question just say “the entity has GC issue”
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