ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit-related and assurance services
During a limited assurance engagement on Delmar Energy's ESG report, the practitioner finds management's climate targets are described as 'on track' but the supporting data is inconsistent with internal records. Management refuses to amend the statement, which the practitioner considers material but not pervasive. What is the most appropriate modification to the conclusion?
A qualified conclusion is appropriate, because the misstatement is material but not pervasive and management will not correct it. An emphasis paragraph cannot replace modification, an adverse conclusion requires pervasiveness, and a disclaimer applies when evidence cannot be obtained rather than when a misstatement is identified.
- AA qualified conclusion, stating that except for the matter described the report is not materially misstatedCorrect
- BAn unmodified conclusion with an emphasis of matter paragraph only
- CAn adverse conclusion, because management refused to amend
- DA disclaimer of conclusion, because the data is inconsistent
Explanation
A material but not pervasive misstatement leads to a qualified conclusion ('except for'). An emphasis paragraph cannot substitute for a modification where there is a material misstatement. Adverse requires pervasiveness, and a disclaimer relates to inability to obtain evidence, not a known misstatement.
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