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Auditing Assignment | Audit Opinion and Rationale

   

Added on  2020-05-16

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Running head: QUESTION 3: AUDIT OPINION AND RATIONALE 1Question 3: Audit Opinion and RationaleNameInstitution

QUESTION 3: AUDIT OPINION AND RATIONALE 2QUESTION 3: AUDIT OPINION AND RATIONALE(c): There are three types of audit opinion that an auditor can give to a firm based on theparticular scenario. These include; qualified opinion, adverse opinion or disclaimer of opinion. Adisclaimer of opinion is issued where the auditor, being unable to obtain the adequate appropriateevidence of audit on which to anchor the opinion. Therefore, the auditor makes a conclusion thatthat the feasible effects on financial statements of the undetected misstatement, might, if any, beboth pervasive and material. This means, therefore, that the auditor, cannot offer a qualified oradverse opinion on the firm and hence has to settle on the disclaimer of opinion (Vichitsarawong& Pornupatham, 2015). The second type is qualified opinion. It is arrived at whereby having acquired adequateappropriate evidence, an auditor, therefore, make concludes that individually/in aggregate, themisstatements remain material, however, not pervasive to the organization’s financial statements.The last type of opinion is adverse opinion. This type of the audit opinion is the mostappropriate to be given in this case. This is because it is given whereby the auditor has obtainedthe sufficient relevant audit evidence and hence proceed to make a conclusion thatmisstatements, on aggregate/individually, remain pervasive and material to financial statements(Tsipouridou & Spathis, 2014). Therefore, this opinion fits this scenario. This is because thedirectors never requested for another valuation based on an incorrected belief that market valuesstood fairly stable over the previous five years. Thus, the company in Melbourne errored by including the balance sheet on the basis ofoutdated valuation undertaken five years ago. Therefore, the there is an adequate appropriateaudit evidence to back the position taken by the auditor in this case. This is because, definitelythis misstatement will affect other financial statement as the value of the factory given does not

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