(b) Implications for the auditor’s report and further actions
In general up to 1 mark for each well explained point and action point recommended:
Military research
– Expenses are material (must include relevant calculation)
– Management imposed limitation on scope
– Auditor should request that management removes the limitation
– Communication of potential impact to those charged with governance
– Impact on continuation of audit engagement
– If limitation is not removed, audit opinion will be modified
– Matter is material but, currently, not pervasive; qualified opinion
– Basis for qualified opinion paragraph
Fire
– No modification of the audit opinion necessary
– The major catastrophe will have a significant impact on results and make their interpretation difficult
– Disclosures by management are of fundamental importance to users
– Emphasis of matter paragraph required
– EOM paragraph should describe the matter and where disclosures can be found in the financial
statements and that opinion not modified in respect of this matter
Maximum marks 10