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

Marlow & Co completes a limited assurance engagement on Zephyr plc's sustainability report. Management has refused to correct an identified misstatement: it reported a 12% reduction in emissions, but the evidence supports only 4%. The error is material but confined to this single key metric, and the rest of the report is free of material misstatement. What is the most appropriate conclusion?

A qualified conclusion is appropriate. The misstatement of the emissions reduction is material but confined to one metric, so it is not pervasive. An unmodified conclusion with emphasis would not address it, a disclaimer applies to inability to obtain evidence, and an adverse conclusion requires pervasive misstatement.

  1. AA qualified conclusion, because the material misstatement is not pervasiveCorrect
  2. BAn unmodified conclusion with an emphasis of matter paragraph
  3. CA disclaimer of conclusion, because the misstatement is material
  4. DAn adverse conclusion, because management refused to adjust

Explanation

A material but not pervasive misstatement leads to a qualified ('except for') conclusion. An emphasis paragraph cannot cure a known material misstatement. A disclaimer relates to inability to obtain evidence, not to a misstatement, and an adverse conclusion is for pervasive effects.

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