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

Kestrel Co's integrated report includes a statement that its stakeholder engagement process 'fully captures the concerns of all stakeholders'. Assurance provider Doran & Co finds that two significant stakeholder groups, local communities and employees' unions, were never consulted. Management refuses to amend the statement. The matter is material but not pervasive. What is the most appropriate form of conclusion?

A qualified conclusion is appropriate. The statement about stakeholder engagement is materially misstated, but the effect is not pervasive, so an except-for conclusion applies. An adverse conclusion needs pervasiveness, a disclaimer relates to inability to obtain evidence, and an emphasis paragraph cannot fix a material misstatement.

  1. AAn unmodified conclusion with an emphasis of matter paragraph
  2. BA qualified conclusion, because the statement is materially misstated but not pervasivelyCorrect
  3. CAn adverse conclusion, because any misstatement of narrative information is pervasive
  4. DA disclaimer of conclusion because management refused to amend

Explanation

The statement is a material misstatement of the subject matter information, but is not pervasive, so a qualified ('except for') conclusion is appropriate. An adverse conclusion requires pervasive misstatement. A disclaimer arises from a scope limitation, not from disagreement with management, and emphasis of matter cannot substitute for modification of a materially misstated item.

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