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My apology for bringing similar question..
1) rgarding previous question, if ” impact on auditors report when immeterial items are material in aggregate” is to be qualified, will this be except for or adverse?
2) i am having problem in ansering reporting question. We have to evaluate matter individually and in aggregate right?
If, among matter 1 2 3, say 1 and 2 are material individually and thus require amendments. When matters are evaluated in aggregate this surely needs to be amdended right? So my problem is will this be adverse or except for… if management refuses all amendement.
How should individual and aggregate questuon be dealt?
Thank you so much…
Please see in the notes (Chapter 25) – the distinction between qualified and adverse/disclaimer is whether the matter(s) is/(are) pervasive or not – it has nothing to do with the number of matters giving rise to modification.
So you could have one matter which is pervasive (a good example is accounts incorrectly prepared on a going concern basis – see example of page 118).
More than one individually material misstatement does not automatically mean adverse.Consider, for example:
“In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view…”
And the basis of opinion describes that PPE is misstated by $x due to … and inventory is misstated by $x due to … and ….. And if these adjustments had been made profit would have been $x ….”
As long as the auditor can convey to the reader the exceptions, the opinion is only qualified. An adverse opinion means “these accounts AS A WHOLE do not show a true and fair view” – that’s pretty extreme and only rarely found in practice.- Topics: 51
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Thank you 🙂
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