MATTER OF OPINION (Part 2)
ACCA F8 考试：MATTER OF OPINION (Part 2)
OTHER MATTERS
‘Other matter’ paragraphs are used to refer to matters that have not been disclosed in the financial statements that the auditor believes are significant to user understanding. One usage of these paragraphs is where the auditor concludes that there is a material inconsistency between the audited financial statements and the other (unaudited) information contained within the annual report and accounts, as required by ISA 720, The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements.
APPLICATION TO EXAM QUESTIONS
Now that we have recapped the basic principles of audit opinions let us consider how these may be applied to an exam scenario.
Questions on audit reports in Paper P7 typically fall into two distinct types: critical appraisal of an audit report that has already been written; or explanation of how matters will affect an audit opinion. In both cases the principles affecting the choice of audit opinion are the same.
If you face a question of this nature simplify your task by asking the following questions:
? Is there a misstatement in the financial statements (ie a fraud or error)?
? Has the auditor gathered sufficient appropriate evidence?
? Is/could the matter be material?
? Does the matter pervade the financial statements?
? Does the scenario refer to a disclosure made in the financial statements concerning an uncertain future event?
Based on this approach you should be able to pinpoint exactly what form of opinion is appropriate and whether an EOM paragraph is necessary.
As an example, Question 5 in the June 2009 Paper P7 exam asked candidates to ‘critically appraise the proposed audit report of Pluto Co for the year ended 31 March 2009’. Relevant extracts from the audit report are given in Illustration 1. The full text may be downloaded from the ACCA website.
Please note that the extract is from the International version of the syllabus and refers to International Accounting Standards.
This is largely irrelevant to our understanding of the audit opinion; however, the question does deal with matters where the financial reporting requirements across different accounting regimes are broadly similar. The company in the question is a listed company.
ILLUSTRATION 1 (when this question was written, ISA 701 was examinable and disagreement with management was a reason for qualifying a report)
Adverse opinion arising from disagreement about application of IAS 37
The directors have not recognised a provision in relation to redundancy costs... and so the recognition criteria of IAS 37 have not been met. We disagree with the directors as we feel that an estimate can be made... We feel that this is a material misstatement as the profit for the year is overstated.
In our opinion, the financial statements do not show a true and fair view of the financial position of the company as of 31 March 2009…
Emphasis of matter paragraph
The directors have decided not to disclose the Earnings per share for 2009... Our opinion is not qualified in respect of this matter.
RESPONSE – REDUNDANCY PROVISION
We are not going to consider the whole wording, merely the choice of opinion. A more complete response is given in the model answer, which can be accessed via the ACCA website.
The first question to ask is whether there is a misstatement. The answer to this is clearly ‘yes’ as the report concludes that the directors have failed to make a provision when they should have. This contravenes the relevant accounting framework (IAS 37,Provisions, Contingent Liabilities and Contingent Assets). The report also clearly states that this is considered to be material to the financial statements.
Next we have to consider whether the auditor has been able to gather sufficient appropriate evidence. Once again the answer is ‘yes;’ the auditor has been able to reach a considered conclusion on the matter.
At this point we have established that there is a material misstatement. Therefore, we will have to modify our opinion. However, the final version of the modification depends upon whether the matter is pervasive or not.
There is no indication in the audit report that the auditor considers the matter pervasive. It should also be considered that redundancy provisions will only affect two areas of the financial statements: current liabilities and wages/salary costs. Does misstatement here render the remainder of the financial statements unreliable? This is an unlikely conclusion.
It therefore appears unlikely that an adverse opinion is necessary in the circumstances. A qualified (‘except for’) opinion would appear more appropriate. |
发表于 2016-4-20 12:38
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