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ACCA Strategic Professional · Advanced Audit and Assurance (International) · The assurance of sustainability

During a limited assurance engagement on Marlow plc's sustainability report, the practitioner finds that water consumption data for one site is materially overstated. Management refuses to correct it. The rest of the report is fairly stated. Which conclusion is most appropriate?

The practitioner should issue a qualified conclusion. The water data misstatement is material, but the remainder of the report is fairly stated, so the effect is not pervasive. A disclaimer is for inability to obtain evidence, and an emphasis paragraph cannot cure a known material misstatement.

  1. AIssue an unmodified conclusion with an emphasis of matter paragraph
  2. BWithdraw all references to the engagement in the report
  3. CIssue a qualified conclusion, because the misstatement is material but not pervasiveCorrect
  4. DIssue a disclaimer of conclusion, because management refused to adjust

Explanation

A material misstatement that is confined to one area and not pervasive leads to a qualified ('except for') conclusion. A disclaimer applies where evidence cannot be obtained, not where a misstatement is known. Emphasis of matter cannot replace modification for a material misstatement.

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