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Sir,
i understand that if the effect of a judgmental misstatement is immaterial and remain unadjusted, will not impact the audit opinion to be expressed. please correct me if i am wrong.
But, what if the judgmental misstatement is material? What are the procedures that the auditor should do?
Your post asks me to “correct me if I’m wrong”
No, you’re not wrong
You then ask “What if the judgemental misstatement WERE material”
You need to be a VERY strong willed auditor to qualify an audit opinion on the basis of a difference in the estimates of management and the auditor. In practice I can see this happening only very rarely.
Written representations of course MUST be VERY clear about the directors’ estimates and the auditor must be able to persuade him/herself that the directors are potentially more likely to be realistic than the auditor him/herself
Again, in practice, the auditor may be able to persuade the directors to make a further provision by way of “compromise”. That could keep both sides happy – the auditors because of the difference now being reduced to a more acceptable level and the directors because, by their capitulation, they have avoided ugly scenes and potential audit opinion qualification
Ok?
Dear Sir,
Could you please advice if the auditor will qualify the audit report if there are immaterial errors which are material in aggregate and have not been corrected by the management?
Many thanks
Yes of course. Not just the report. It is the OPINION that is qualified in the modified audit report
Any unadjusted material misstatement whether in isolation or in aggregate will lead to a qualified audit opinion in a modified audit report
The degree of the qualification of the opinion will depend on the auditor’s assessment of just how pervasive are the effects of the unadjusted material misstatement(s)
OK
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