Page 240 - CA Inter Audit PARAM

CA Ravi Taori
QNO Qualified opinion. Old Course — (P16M/N16R/M17M/N17R)
705.07 Bhaskar CNO - SA705.020 New Course –(J25M)
State the circumstances which could lead to any of the following in an Auditor’s Report: Qualified

opinion.
Answer ➢ Qualified Opinion:
The auditor shall express a qualified opinion when-
• The auditor, having obtained sufficient appropriate audit evidence, concludes that
misstatements, individually or in the aggregate, are material, but not pervasive, to
the financial statements; or
• The auditor is unable to obtain sufficient appropriate audit evidence on which to
base the opinion, but the auditor concludes that the possible effects on the financial
statements of undetected misstatements, if any, could be material but not
pervasive.

QNO Adverse Opinion Old Course — (P16M/N16R/N17R/M17M/N20E)
705.09 Bhaskar CNO - SA705.020 New Course – (J25M)
State the circumstances which could lead to any of the following in an Auditor’s Report:
Adverse opinion
OR
Define the term er in the context of misstatements. What are the effects of pervasive misstatements on
the financial statements of an enterprise?
Answer Pervasive Misstatement:

Definition of Pervasive: A term used, in the context of misstatements, to describe the effects on the financial
statements of misstatements or the possible effects on the financial statements of misstatements, if any,
that are undetected due to an inability to obtain sufficient appropriate audit evidence.

Pervasive effects on the financial statements are those that, in the auditor’s judgment:
(c) Are not confined to specific elements, accounts or items of the financial statements;
(ii) If so confined, represent or could represent a substantial proportion of the financial statements; or
(iii) In relation to disclosures, are fundamental to users’ understanding of the financial statements.

QNO Disclaimer of opinion Old Course — (P16M/N16R/N17R/M17M/N18E)
705.11 Bhaskar CNO - SA705.020 New Course – (J25M)
Disclaimer of opinion
Answer ➢ Disclaimer of Opinion:
The auditor shall disclaim an opinion when the auditor is unable to obtain sufficient
appropriate audit evidence on which to base the opinion, and the auditor concludes that the
possible effects on the financial statements of undetected misstatements, if any, could be
both material and pervasive.
The auditor shall disclaim an opinion when, in extremely rare circumstances involving
multiple uncertainties, the auditor concludes that, notwithstanding having obtained
sufficient appropriate audit evidence regarding each of the individual uncertainties, it is not
possible to form an opinion on the financial statements due to the potential interaction of
the uncertainties and their possible cumulative effect on the financial statements.

QNO Adverse vs qualified opinion #Unique Old Course — (SM20/SM21)
705.18 New Course – (SM25)

Distinguish between an adverse opinion and a qualified opinion. Also draft an opinion paragraph for both

types of opinion.
Answer An auditor shall express an adverse opinion, when the auditor having obtained sufficient and appropriate
audit evidence, concludes that misstatements, individually or in aggregate are both material and pervasive.
Whereas, when the auditor, having obtained sufficient and appropriate audit evidence, concludes that
misstatements are material but not pervasive, shall express a qualified opinion.
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