CA Final · Advanced Auditing, Assurance and Professional Ethics · Reporting

During the audit of Himalaya Foods Ltd, the auditor identifies a material misstatement in other information (a reported production figure). Management refuses to correct it despite repeated requests. The auditor also finds that management's stance and conduct raise serious doubts about its integrity and the reliability of audit evidence in general. Which conclusion is consistent with SA 720 (Revised)?

In rare circumstances a disclaimer of opinion on the financial statements may be appropriate. The refusal to correct the material misstatement of other information casts such doubt on the integrity of management and those charged with governance that the reliability of audit evidence in general is called into question.

1. AIn rare circumstances, a disclaimer of opinion on the financial statements may be appropriate, because the refusal casts such doubt on management's integrity as to call into question the reliability of audit evidence in generalCorrect
2. BThe auditor must always issue an unmodified opinion and just add an Emphasis of Matter paragraph
3. CThe auditor must always issue an adverse opinion on the financial statements for any uncorrected other information misstatement
4. DThe auditor should ignore the refusal since other information lies outside the audit scope