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Regarding the impact on the audit report due to the fact that the coy did not disclose, you explained that although the explosion occured after the year end, and so is a non-adjusting event, a qualified opinion would be issued as the damage due to explosion is material but not pervasive.
What about stating that since it’s a non-adjusting event, the auditor should issue an unmodified opinion with an except for clause detailing this non-disclosure of the explosion to PPE. Is this right as this was what occurred to me first?
No.. I don’t think that’s right. Except for is only issued when auditor disagree with the figures in the financial statement.
But It’s a nonadjusting and issuing a qualified opinion just doesn’t seem right.
Please help, it’s confusing
No. Except for means that there is a material misstatement in the FS. That can be on the face of the SOFP or P&L or can be incorrect information in a note, or the absence of a note that ought to be there. Remember FS consist of SOFP, Statement of P&L, Cash Flow, Notes and statement of movements in reserves,. The audit report covers all of these.
So, if a non-adjusting event should be disclosed by way of a note and the note is not there, a qualified opinion is appropriate.
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