If the auditor cannot resign or this is considered

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the engagement. If the auditor cannot resign or this is considered impractical, only then would the auditor issue a disclaimer of opinion in the audit report. Disclaimer of opinion = a report issued when the auditor has not been satisfied that the overall financial statements are fairly presented Reliance on Another Auditor or a Specialist When auditors perform part of the audit, the group (parent company) auditor is required to make reference to the other (component) auditors. In Canada, the group auditor takes responsibility for the audit opinion, and only the name of the group auditor appears on the auditor’s report. During the audit engagement the auditor is responsible for ensuring that the other auditors or any specialist hired is competent, conducts high-quality fieldwork, and maintains confidentiality. Group auditor may need to visit the component auditors, review their work, and obtain extracts of working papers that are necessary to support the consolidated audit opinion. If the quality of work of the component auditor is poor, then the group auditor must try to remedy the matter, by sending staff to the remote or foreign location. If the group auditor is unable to remedy the matter, and the group auditor decides that they are unable to rely upon the work of the component auditors, a qualified or disclaimer of opinion is the most appropriate course of action. In the explanation of the qualification or in the basis for disclaimer paragraph, the auditor could mention the name of the secondary auditor in explaining the reason for the qualification (scope limitation). Auditor would not mention the specialist, since if the quality of work of the specialist is poor, the auditor could hire another specialist. If the auditor believes that a qualified or disclaimer of opinion is appropriate and the qualification arises because of inability to rely on the work of the specialist, the explanation of the qualification in the basis paragraph would mention the name of the specialist in explaining the reason for the qualification. Adverse Opinion (Rare) Adverse opinion is used only when the auditor concludes that the F/S contain material and pervasive misstatement(s); this includes lack of important disclosures that are pervasive. This means that the auditor has concluded that the F/S, taken as a whole, is materially misstated or misleading. When the amounts are material and pervasive that an adverse opinion is required, the introductory statement, management’s responsibility, and auditor’s responsibility are fully described. Basis for the changed opinion could remain the same, but the opinion paragraph would be adverse. Disclaimer of Opinion (Rare) Disclaimer of opinion is issued whenever the auditors have been unable to satisfy themself that the overall F/S are fairly presented.
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  • Fall '12
  • Smith
  • Auditor's report

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