IndigoLearn

Forums

All Topics Accountancy Auditing Corporate & Other Laws Direct Taxation Indirect Taxation Financial Management Economics Costing Strategic Management Maths & Stats Exams Others AFM Financial Reporting CFA Level I

Labour laws applicable

Auditing

In one of the assessment questions ,question 3 of SA 250, it was given that major of labour employed was child labour and the answer is to issue qualified report .But qualified report is issued when there is material misstatements in the financial statements and how does this non compliance lead to material misstatements?

Swathi Krishna

CA Final

★ 8K+

15-May-20 11:56

353

Answers (2)

Qualified Opinion As per SA 707. The auditor shall express a qualified opinion when: (a) The auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or (b) The auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive. In the present case auditor has evidence and this is a material statement, though not pervasive because its a cognizable offence and a very serious offence, which can affect the operations of company.And its auditor's responsibility to report non-compliance of statutory regulations