In reviewing of subsequent events, you learned of heavy damage to the client’s warehouse due to a fire occurred after year-end. The loss will partly be reimbursed by insurance. The newspaper described the event in detail. The client made adjustment to related inventories and buildings to reflect the loss. Assume im a auditor, and I am giving opinion. Since the client made adjustments to related inventories and buildings to reflect the loss after a heavy damage. However, it is a non-adjustable subsequent event, the company is not supposed to adjust the entries. Also, they haven’t claimed to make any footnotes to explain the crisis, which is inadequately disclosed, which both are accounting disagreements, since it is heavy damage, so both are supposed to be highly material, so adverse opinions should be issued. If the client did disclose the footnotes to explain the crisis, adverse opinions with explanatory opinion should be issued. Is adverse opinion with explanatory paragraph unusual in auditing?
-
In reviewing of subsequent events, you learned of heavy damage to the client’s warehouse due to a fire occurred after year-end. The loss will partly be reimbursed by insurance. The newspaper described the event in detail. The client made adjustment to related inventories and buildings to reflect the loss.
Assume im a auditor, and I am giving opinion.
Since the client made adjustments to related inventories and buildings to reflect the loss after a heavy damage. However, it is a non-adjustable subsequent event, the company is not supposed to
Is adverse opinion with explanatory paragraph unusual in auditing?
Step by step
Solved in 2 steps
