ExpertACCA · Question 08 · Review and Reporting
SECTION A - CASE 2: GREENHARVEST CO-OP
SCENARIO:
You are the audit senior for GreenHarvest Co-op, a large agricultural cooperative, for the year ended 31 March 20X5. The audit is nearing completion. During the review phase, you note the following:
- A major customer, representing 15% of receivables, went into liquidation on 15 April 20X5.
- GreenHarvest is facing a lawsuit from a supplier regarding contaminated fertilizer, which the legal counsel advises has a 30% chance of success.
- The directors have refused to disclose a key executive's remuneration, which is required by local legislation, though the amount is immaterial to the financial statements as a whole.
QUESTION:
What is the impact on the auditor's report of the directors' refusal to disclose the key executive's remuneration?
SECTION A - CASE 2: GREENHARVEST CO-OP
SCENARIO:
You are the audit senior for GreenHarvest Co-op, a large agricultural cooperative, for the year ended 31 March 20X5. The audit is nearing completion. During the review phase, you note the following:
- A major customer, representing 15% of receivables, went into liquidation on 15 April 20X5.
- GreenHarvest is facing a lawsuit from a supplier regarding contaminated fertilizer, which the legal counsel advises has a 30% chance of success.
- The directors have refused to disclose a key executive's remuneration, which is required by local legislation, though the amount is immaterial to the financial statements as a whole.
QUESTION:
What is the impact on the auditor's report of the directors' refusal to disclose the key executive's remuneration?
Answer options:
Unmodified opinion, because the amount is immaterial to the financial statements as a whole.
Qualified opinion ('except for') due to a material misstatement.
Adverse opinion, because the non-disclosure affects the entire financial statements.
Disclaimer of opinion, due to an inability to obtain sufficient appropriate audit evidence.
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