CA Inter P5 · Chapter 7 · Question 9 of 12
During the audit of Zubin Agencies Ltd., the auditor concludes there is sufficient doubt about the integrity of management that its written representation on its responsibility for preparing the financial statements is not reliable. Under SA 580, the auditor shall:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Disclaim an opinion on the financial statements
Explanation
SA 580 requires the auditor to disclaim an opinion under SA 705 if the auditor concludes that there is sufficient doubt about management's integrity such that the representations about management's fundamental responsibilities are not reliable, or if management does not provide those representations. The effect is considered pervasive.
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