CA Final · Advanced Auditing, Assurance and Professional Ethics · Reporting
Narmada Foods Ltd. omitted the disclosure of directors' remuneration required by the applicable financial reporting framework. The auditor has issued a qualified opinion only for this non-disclosure. The Annual Report, which is other information, does not address directors' remuneration in any manner, and no other part of it is affected by the matter. Under SA 720 (Revised), what is the auditor's conclusion about the statement on other information?
The qualification may have no impact on the statement about other information. SA 720 (Revised) says that where the modified matter is neither included nor addressed in the other information and affects no part of it, such as non-disclosure of directors' remuneration, there may be no implications for that reporting.
- AThe qualification may have no implications for the statement required about other information, as the matter is not included in or addressed by the other information and affects no part of itCorrect
- BThe auditor must automatically state that the other information is materially misstated
- CThe auditor must withdraw the qualification and issue an unmodified opinion
- DThe auditor must issue a disclaimer of opinion on the financial statements
Explanation
SA 720 (Revised) requires the auditor to consider the implications of a qualified opinion for the other-information statement. It gives non-disclosure of directors' remuneration as an example that may have no implications when the other information does not address the matter and is not affected by it. A disclaimer would arise only in rare cases of doubt about management integrity.
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