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Hi, in the situation where there is a Qualified Audit opinion issued as a result of a non pervasive material misstatement, why would it have gone this far, would the auditor not have asked the management to correct this error in the accounts and issue a clean, unmodified report. If the management had refused to restate the error, should we issue an adverse audit opinion instead of a qualified one?
Absolutely – and that’s why the majority of auditor’s reports in the real world have “clean” opinions – but modified opinions have to be in the auditor’s “armoury” – how else can the auditor fulfil his responsibilities of reporting to the shareholders?
Management’s refusal to make an adjustment does not make a matter pervasive.
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