DISCUSSION AUDIT 3

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A. Comment on the draft audit report of ASB for the year ended 31 December 2011, as prepared by the audit senior.

A modified report can be issued only when the auditor has been unable to accumulate evidence required by approved auditing standards. Therefore, this modification report is used when the auditor’s scope has been restricted by the client or when circumstances exist that prevents the auditor from conducting a complete audit. It also restricted to situations in which the financial statement are not stated in accordance with approved accounting standard. The implication is that auditor is satisfied that the overall financial statements are fairly stated “except for” a specific aspect of them. The audit senior also lack of evidence to achieve the objective of completeness and existence of the non-current assets. It is because the valuer’s report did not clearly described and identified the location of the assets.

B. Identify five (5) situations when the auditors may issue an unqualified audit report with an emphasis of matter paragraph.

Five situations when the auditors may issue an unqualified audit report with an emphasis of matter paragraph : a) There is substantial doubt on the ability of a company to continue as a going concern. b) There is lack of consistent application of approved accounting standards. c) Auditor agrees with a departure from promulgated accounting principles. d) The financial statements are prepared in accordance with a special purpose framework and hence, the financial statements may not be suitable for another purpose. e) Reports involving other auditors.
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