CA Inter P5 · Chapter 7 · Question 7 of 12
The auditor of Sahil Mills Ltd. concludes that the company has decided to cease operations, yet the financial statements have been prepared on a going concern basis. Under SA 570, the auditor shall:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Express an adverse opinion
Explanation
SA 570 provides that if the financial statements have been prepared using the going concern basis but, in the auditor's judgment, management's use of that basis is inappropriate, the auditor shall express an adverse opinion. The effect is both material and pervasive since every item is measured on an inappropriate basis.
More Completion and Review MCQs
- Q9During the audit of Zubin Agencies Ltd., the auditor concludes there is sufficient doubt about the integrity of management that its…
- Q10Under SA 450, the auditor shall accumulate misstatements identified during the audit, other than those that are:
- Q11Materiality for Kavya Sweets Ltd. is Rs. 50 lakh. Uncorrected misstatements, all overstating profit, are: factual Rs. 18 lakh, judgmental…
- Q12Under SA 520, analytical procedures performed near the end of the audit are designed to:
- Q1Kanak Traders Ltd. closes its accounts on 31 March. In May, before the financial statements are approved, a major customer is declared…