Solution 5.0-A.pdf - Session 5.0 Write the Independent...

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Session 5.0: Write the Independent Auditor’s Report Solution Seminar on Financial Audit Manual Page 1 EXERCISE 5.0-A Identify the type of audit opinion based on different scenarios/situations Case a P50 million is 30% of total assets or total liabilities and equity, and is above the materiality threshold of P47.335 million (in the example of 1% of total expenditures of P4.734 billion); transactions have affected expense and income accounts, and asset and liability accounts Opinion: Adverse because the misstatement is material and pervasive since asset, liability and equity accounts are affected. Sample basis for opinion paragraph: Transactions worth P50 million were not recorded in the books of accounts, which materially affected the accuracy, completeness and valuation of assets, liabilities, income and expenses. Had the transactions been recorded, the balances of specify the asset, liabilities, income and expense accounts affected would have been quantify the amounts. Case b assertions affected: accuracy and existence Opinion: Unqualified as the misstatement is not material, although above the materiality threshold of P47.335 million (assuming investments is P900 million at year-end which is only 5.62% of total non-current assets of P16.000 billion).
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