Your audit client has not written inventory down to net realisable value in accordance with approved accounting standards.The write-down would reduce current assets by 8 per cent and net profit before income tax by 12 per cent.What type of auditor's report should you issue?
A)An unmodified opinion with an Emphasis of Matter paragraph.
B)A disclaimer of opinion.
C)An adverse opinion.
D)A qualified opinion.

Question

Quizplus · Accepted Answer

A qualified opinion is issued when the auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion. In this case, not writing inventory down to net realisable value is a material misstatement, but it may not affect the financial statements as a whole to the extent that an adverse opinion is warranted.

Your Audit Client Has Not Written Inventory Down to Net