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1、-Audit Opinion审计观点总结-第 3 页From the information provided, what audit opinion (type of audit report) would you recommend in each case? Fully justify your answer. 1) Grumpy has successfully undertaken the audit using substantive procedures but has one major disagreement with the client. Grumpy is annoy
2、ed that his client has, over the past three years, ignored his formal written recommendations regarding internal control improvements. Grumpy has spent over a week each year working on control improvements trying to value add to the audit process. Grumpy feels he may need to take a firmer stand with
3、 the client on this issue. Unqualified opinion. The control system is the choice of the client. The auditor cannot issue a qualified opinion because client does not following management letter recommendations. 2) The new management of Dwarf Limited has not allowed the auditors access to the Director
4、s minutes after the 30 June 2011, stating that the auditors have access to minutes up to the balance date and so they should have enough information to express an unqualified audit report. Dopey suspects the client does not wish to disclose a threat to the business by a new aggressive competitor who
5、 is heavily discounting products of a similar nature. This information has been widely speculated in the press but has not been independently substantiated. Qualified opinion The clients refusal to allow the auditors to view the directors minutes after balance date is a scope limitation. After balan
6、ce date events are a part of the audit of the current year. 3) Happy has a client who refuses to change accompanying (附属) information that is not consistent with the audited financial statements. Apart from this problem, Happy is satisfied with the rest of the clients financial information presentat
7、ion. Unqualified opinion with other matterAn unqualified opinion with other matter should be expressed when accompanying information is inconsistent with the audited financial statements. 4) Century Limited is preparing a legal defence in consultation with its legal firm in response to a major litig
8、ation. The customer suing Century limited are arguing that their production line shut down for a week because a faulty product supplied by Century Limited damaged their automated production facility. Century Limited argue that the claim has no basis and there is thus no need to disclose the litigati
9、on. Qualified opinionThe matter should be disclosed so this is a disagreement with management. The report would be qualified. (注意: if the matter of litigation was adequately disclosed, an unqualified opinion with emphasis of a matter should be issued due to significant uncertainty)5) XYZ sells solar
10、 panels specialising in large industrial sized panels. Due to rapid technological innovation the future of XYZ Ltd is in question because a competitor is planning to sell industrial solar panels at a price which is below the cost price of XYZs solar panels. This is a going-concern uncertainty and ma
11、y result in one of the following audit opinions: (1) If there is adequate disclosure of the going-concern uncertainty, express an unqualified opinion and add an emphasis of a matter. (2) If there is inadequate disclosure, express a qualified opinion. (3) If it is highly probable that the entity will
12、 not continue as a going concern express an adverse opinion.6) An audit client has been making losses over the past few years. After interpreting key financial ratios, your audit team has substantial doubt about the clients ability to continue as a going concern for a reasonable period of time. The
13、client has adequately disclosed its financial difficulties in a note to its financial report, which do not include any adjustments that might result from the outcome of this uncertainty. You concluded that there would be no circumstances to force the company to declare bankruptcy. Unqualified opinio
14、n with emphasis of a matterThe auditor concludes that there would be no circumstances to force the company to declare bankruptcy and there is adequate disclosure of the going-concern uncertainty.7) The audit of Flex ltd was extremely difficult this year as the client did not keep the appropriate boo
15、ks and records. The accounting department was badly understaffed, so transactions were not promptly entered and reconciliations not performed. A casual accountant was employed to help sort out the mess but was unable even to reconcile the bank account at year end. You are not satisfied that all tran
16、sactions that occurred during the year are reflected in the financial report. Disclaimer opinion The client did not keep the appropriate books and records and the auditor cannot obtain sufficient and appropriate evidences. So this is scope limitation. The auditors are not satisfied all transitions a
17、nd so the case is pervasive. 8) You have received the draft annual report for Freebee Ltd. On reading the “year in review” you note the chairman states that revenues increased by 150%. On checking the accuracy of this information you note that revenues have actually fallen by 10%. Unqualified opinion with other matterAn unqualified opinion with other matter should be expressed when accompanying information is inconsistent with the audited financial statements. The information in “Year in review”