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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reporting on other assignments

Marlow & Partners has completed a review of Sable Foods Ltd under ISRE 2400 (Revised). The practitioner concludes that the financial statements contain a material misstatement from an unrecorded provision. The misstatement is material but not pervasive, and management refuses to adjust. Which conclusion should be expressed?

A qualified conclusion is appropriate. The misstatement is material but not pervasive and management will not correct it, so the practitioner states that, except for the effect of the matter, nothing else has come to attention. An adverse conclusion would require pervasiveness, and a disclaimer relates to limitations on evidence.

  1. AAn unmodified conclusion with an emphasis of matter paragraph
  2. BA qualified conclusionCorrect
  3. CAn adverse conclusion
  4. DA disclaimer of conclusion

Explanation

When the practitioner concludes that the statements are materially misstated but the effect is not pervasive, a qualified conclusion is expressed, using 'except for' wording. An adverse conclusion is reserved for pervasive misstatement. A disclaimer applies to inability to obtain evidence, not to a known misstatement. An emphasis paragraph cannot cure a material misstatement.

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