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Hello,
I understand that when ongoing litigation gives rise to a possible obligation, there is a risk of inadequate disclosure. But I’m wondering, will the audit opinion be qualified if the management refuses to make proper disclosure? Let me suppose the provision will not be made as it is not probable but the amount is material.
Thank you in advance.
Yes it would give rise to a modified (qualified “except for”) opinion because IAS 37 requires specific disclosures for each contingent liability.
If the amount was immaterial it would not matter to anyone whether or not it was disclosed so the opinion would not be modified in this case.
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