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Dear Mike,
Need your clarification and guidance for the below mentioned:
1. If Group Auditor cannot get access to subsidiary or cant get access to information then:
a- Disclaimer of Opinion in Components report.
b- Qualified “Except for” Paragraph in the group report.2. Subsidiary has MM in a Financial Statement.
a- Qualified “Except for” Paragraph in Components reports.
b- Qualified “Except for” Paragraph in the group report.3. Going concern assumption appropriate but with Material Uncertainty.
a. Qualified “Except for” Paragraph in the group report.
b. Material Uncertainty related to going concern (If disclosure is adequate). OR
Qualified “Except for (Mat. Only)” or “Adverse Opinion (Mat. & Perv.” ( if disclosure is inadequate)4. Going concern assumption is inappropriate.
a.Qualified “Except for” Paragraph in the group report.
b. For Component report, Unmodified Opinion “If FS prepared on relevant basis i.e. breakup” ( If disclosure is adequate) and include EOM to draw attention OR
If disclosure inadequate then “Adverse Opinion”Kindly consider the above are “correct” & kindly see the point no. 3 and 4 specifically.
and If there is any further points to be remembered, please mention it in detail.
1) The answer depends upon the reasons for the inability to get access to the subsidiary or information but your proposed solution appears doubtful
If the component auditor can get access and complete the audit, then there’s no need for a disclaimer in the component auditor’s report
If the subsidiary is apparently immaterial (it was last year and there’s no reason to believe that it isn’t still immaterial) no mention in the group report
If no-one can get access to the subsidiary or information, and potentially the subsidiary is material and access is being denied by local authority (or pestilence, war, famine or death (in some places these are the same as the local authority!)!) there is not likely to be a set of financial statements for the component so not likely an audit report and, for the group, an adverse opinion because of the omission of the material components figures and results
2) depends on materiality of the component when compared with the group. If the component is relatively immaterial, there could be no need to make any mention in the group audit report
For 3) and 4) you haven’t specified whether the uncertainty relates solely to the component, the parent or the group as a whole
3a) is incorrect – if there is a paragraph explaining the material uncertainty then there’s no qualified opinion
Your 4) question is not full enough for me to answer. If GC is inappropriate (component or group?) (material component or not?) but financial statements have been prepared on a going-concern basis, then that’s an adverse opinion in the audit report as appropriate (component or group) (dependent upon component materiality to the group as a whole)
Does that help?
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