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“If the material misstatement relates to narrative disclosures, an explanation of how the disclosures are misstated should be included in the auditor’s report, or in the case of omitted disclosures, the disclosure should be included if the information is readily available. ”
sir i don’t understand if there is any material misstatement in the disclosure or that it is inadequate then why can’t the external auditors simply explain to the management the problem and get things sorted(internal truce sorta) rather than having it in the spot light by getting it published and freaking shareholders out.
That’s the point EXACTLY – it’s because the auditor would have to draw attention to it in the auditor’s report that is the auditor’s “clout” in persuading management to make the disclosure in the financial statements 🙂