While undertaking a review of the half-yearly financial report of Benji Ltd, a company listed on the Australian Securities Exchange, you as assurance provider become aware of a lack of adequate disclosure that is material and pervasive to the financial report and results in it being misleading.If management refuses to correct the financial report presentations, you should:
A)express only limited assurance on the financial report presentations.
B)disclose this departure from accounting standards in a separate paragraph of the report.
C)issue an adverse opinion.
D)issue an 'except for' opinion.

Question

Quizplus · Accepted Answer

An adverse opinion should be issued if the lack of disclosure is material and pervasive and the management refuses to correct it. This opinion clearly states that the financial report is materially misleading and not in compliance with accounting standards. It would also alert stakeholders to the issue and prompt management to take corrective action. Options A and B are not appropriate in this case because the lack of disclosure is material and pervasive, and limited assurance or a separate paragraph would not adequately address the issue. Option D is not appropriate because an 'except for' opinion implies that the rest of the financial report is fairly presented, which is not the case here.

While Undertaking a Review of the Half-Yearly Financial Report of Benji