Management refuses to consolidate a major subsidiary that accounts for 80% of the group's total assets and revenues, in direct violation of IFRS. The auditor concludes the misstatement is both material and pervasive. What is the appropriate audit opinion?

Correct answer: C) Adverse opinion

Explanation

An adverse opinion is required when the auditor obtains sufficient evidence and concludes that misstatements are both material and pervasive. Leaving out 80% of the business renders the entire financial statements highly misleading, warranting an adverse opinion.