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Subsequent to the year end there was fire and all closing inventory records were destroyed. The auditors did not conduct any tests in detail relating to cost and quantities of inventory. All other records were not damaged. The inventory is 28% of total assets and 81% of profit.
Describe the impact on the report if no change is done to the finanical statements.Disclaimer of opinion.
But in my opinion there was no fire at all, system was hacked because of virus.There are two problems.
1 Destruction of records means that audit work is likely to be imposSible on the inventory. Given the importance of inventory, this would lead to a disclaimer of opinikn7.
2 Dextraction of inventory after year end is a non-adjusting event. There should be a note, to the FS explaining what happened. If the notes, is there then there would also be an emphasis of matter para. If no note the audit opinion would mention this too.
Sir , do the examiner fail anyone if one could not write the right audit opinion ? I mistaken that question.
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