AAAP7 INT
Syllabus D. Audit of Historical Financial Information D5. Group Audits

D5f. Modified Audit Reports 6 / 8

Syllabus D5f)

In respect of the consolidation process identify and explain the relevant audit risks and audit procedures necessary to obtain sufficient appropriate evidence

So what if the subsidiary report is qualified - is the group too??

It basically depends if the group auditor thinks it is material or not

If so - then the group accounts are qualified too

If not - then no effect

Examples:

  • Group auditor can't get full access to sub

    • Disclaimer of Opinion in component

    • Except for paragraph in group

  • Subs inventory is incorrectly valued

    It is material to the group also

    • Qualified "except for" in component

    • Qualified "except for" in group

  • Going concern doubts over the sub

    It is material to the group also

    • Emphasis of matter paragraph in component

    • Emphasis of matter paragraph in group

  • Going concern doubts over the sub

    It is NOT material to the group though

    • Emphasis of matter paragraph in component

    • No modification in group