Summary of the report: Qualified Opinion In our opinion, except for the effects of the adjustments on the financial statements, if any, as mentioned in the preceeding paragraph, the financial statements have been properly drawn up in accordance with IFRS and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2009 and of their financial performance and the cash flows for the financial year then ended. This is a qualified audit report. 2.The qualified audit opinion was based on two immaterial circumstances i. e.
• one of the subsidiary’s books and records were destroyed by fire, • auditors of other subsidiaries did not allow the auditor of the group to have access to their files. Therefore my opinion on this company, base on the circumstances mentioned above will not be………….. 3.
No, because there wasn’t any form of fraud (e. g. misappropriation of money, misuse of assets) were found during the audit. 4. Among other procedures the auditors performed were the following:Auditors’ judgment; assessment of risks of material misstatement of the financial statements, whether due to fraud or error; consideration of internal controls relevant to the Company’s preparation and fair presentation of the financial statements; evaluation of the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. 5. So that the audit will be performed with competency; professional care and with intergrity. 6.
Unqualified audit opinion. The company obtains the unqualified opinion if its financial position (income statement), its financial performance and cash flow fairly presented in all material aspects (no fraud occurred, no breach of accounting policies, no misuse of assets etc. ) 7.
The auditor could be dismissed by the company (client) it was auditing and it could face disciplinary actions from Independent Regulatory Board of Auditors (IRBA) & South African Insitute of Charterd Accountant (SAICA). The disciplinary action may result in termination of audit practise licence.Example being Arthur Anderson in the ENRON saga. 8. Because Companies Act of South Africa requires only (Pty) Ltd and Ltd to audit their books. Another consideration is cost versus benefit of doing audits in partnerships and sole traders, since their financial statements are not used by investors but they are only used by owners.
Therefore nobody need auditor’s independent assurance about the sole trade and partnership’s financial statements.9. An auditor must always be INDEPENDENT, therefore if an auditor can audit its employer this important requirement may be sacrificed (i. e.
e can ignore material irregularities and issue unqualified instead of qualified audit report). He can do this to save his job and his company from embarrassment from financial statements users. 10.
Yes, if the audit can be done freely it can mean that the auditors were bias with the company, that means they were doing favours for the company. That will mean two important characteristics of an auditor i. e. independency and objectivity were absent. The report can not be relied on since it may be lacking independent judgement and assurance that is expected from an independent auditor.