ACCA AA · Chapter 13 · Question 11 of 12
Management of Jarvey Co has prepared financial statements on a going concern basis, but the auditor concludes that the company will cease trading shortly after the year end and that the going concern basis is inappropriate. What opinion should be given?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Adverse opinion
Explanation
If the financial statements have been prepared on a going concern basis when this is inappropriate, ISA 570 requires an adverse opinion, regardless of any disclosure. The use of the wrong basis affects the measurement of most items and so is pervasive. A disclaimer is for an inability to obtain evidence rather than a known misstatement.
More Misstatements and the auditor's report MCQs
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