Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit is MYR 350,000 in the directors' report compared with MYR 500,000 in the Statement of Comprehensive Income. Based on your discussion with the management, you find out that the difference is due to an adjustment to inventory that had not been reflected in the draft financial statements, After reviewing the inventory adjustment, you have made the necessary adjustments. However, the directors refuse to amend the financial statements to reflect the adjustment. Required: Discuss the type of audit opinion and draft an auditor's report to accompany the above situation.
Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit is MYR 350,000 in the directors' report compared with MYR 500,000 in the Statement of Comprehensive Income. Based on your discussion with the management, you find out that the difference is due to an adjustment to inventory that had not been reflected in the draft financial statements, After reviewing the inventory adjustment, you have made the necessary adjustments. However, the directors refuse to amend the financial statements to reflect the adjustment. Required: Discuss the type of audit opinion and draft an auditor's report to accompany the above situation.
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter14: Activities Required In Completing A Quality Audit
Section: Chapter Questions
Problem 90RSCQ
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Transcribed Image Text:necessary adjustments. However, the directors refuse to amend the financial statements to
draft financial statements. After reviewing the inventory adjustment, you have made the
that the difference is due to an adjustment to inventory that had not been reflected in the
of Comprehensive Income. Based on your discussion with the management, you find out
s MYR 350,000 in the directors' report compared with MYR 500,000 in the Statement
Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for
the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit
reflect the adjustment.
Required:
Discuss the type of audit opinion and draft an auditor's report to accompany the above
situation.
Transcribed Image Text:REVIEW QUESTIONS
I What are the basic elements in a standard auditor's report on financial statemento
2 List three types of qualificd audit reports and briefly explain the circumstances in
which each is appropriate.
lead to the issuance of a qualified report.
- Distinguish between a standard unqualified auditor's report and a modified unqualified
auditor's report.
S What is the purpose of adding an emphasis of matter paragraph to an audit repor
Discuss the circumstances that may cause the auditor to include an emphasis of matter
paragraph in the audit report.
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