CA Inter P5 · Chapter 8 · Question 6 of 13
The auditor of Om Ventures Ltd. is unable to obtain sufficient appropriate audit evidence regarding receivables, inventories and investments, which together represent most of the company's total assets. The possible effects could be material and pervasive. The auditor should:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Disclaim an opinion
Explanation
SA 705 requires a disclaimer of opinion when the auditor is unable to obtain sufficient appropriate evidence and concludes that the possible effects of undetected misstatements could be both material and pervasive. An adverse opinion is given only where the auditor has obtained evidence that misstatements exist and are material and pervasive.
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