State with details TWO circumstances under which an auditor may issue a qualified opinion. (3 marks)
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- Misstatements in the financial statements where the effect is only material but not pervasive. The misstatement may be done to.
- Selection of accounting policies used in the preparation of the financial statements.
- The application of the accounting policies in the preparation of the financial statements.
- Presentation and disclosure of information in the financial statements.
- Inability to obtain sufficient appropriate audit evidence. This may be due to
- Circumstances beyond the control of both management and the auditors, for example timing of the appointment of the auditors which makes it impossible for them to attend stock –taking
- Management imposed scope limitations. For example prohibiting the auditor from carrying out circularisation of debtors.
- Auditors own inability to perform necessary audit procedures to obtain the evidence due to time constraints as cost of doing it. (Any 2 points)