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Abacus Has Just Been Audited by New Auditors and They

Question 3

Multiple Choice

Abacus has just been audited by new auditors and they have found that management have incorrectly calculated the amortisation of goodwill for several years. The previous auditors have failed to detect the error. The error is such that if corrected, the accumulated profits will be turned into an accumulated loss. The directors have refused to correct the error on the grounds that the previous auditors accepted the calculations. ?
What action should the auditor take?


A) The auditor should issue an unmodified audit report with an Emphasis of Matter Paragraph.
B) The auditor should issue a modified audit report with an adverse audit opinion.
C) The auditor should issue a modified audit report with an 'except for' paragraph.
D) The auditor should immediately resign and inform the shareholders.

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