Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Laws and regulations

Brandt & Co audits Solano Ltd. Solano's finance director tells the audit manager that a small, clearly inconsequential tax filing error occurred in a prior year and was already corrected with the tax authority. Under ISA 250 (Revised), how should the auditor treat this matter?

The auditor can treat the matter as clearly inconsequential. ISA 250 (Revised) does not require communication of clearly inconsequential non-compliance, judged by nature and size, and this error is small and already corrected. Modifying the opinion, reporting to a regulator or withdrawing would be disproportionate responses.

  1. ATreat it as clearly inconsequential, so no further audit work or communication to those charged with governance is normally needed beyond the auditor's judgmentCorrect
  2. BQualify the audit opinion because any non-compliance requires a modified report
  3. CReport it to the regulator within 24 hours
  4. DWithdraw from the engagement because management lacks integrity

Explanation

ISA 250 (Revised) states that the auditor need not communicate matters that are clearly inconsequential, with the assessment made by reference to the matter's nature, size and context. The error is small and already corrected. Modification of the opinion, regulatory reporting or withdrawal would be disproportionate.

Did you get it right without looking?

One question tells you little. A timed set on Laws and regulations shows your real accuracy, how long you take and where you lose marks.

Practise Laws and regulationsFree diagnostic mock

More Laws and regulations questions