a. Material and Pervasive Effects on Financial Statements:
A matter is deemed material if it impacts the financial or economic decisions of the users of financial statements. According to ISA 705, pervasive effects are those that:
i. Are not limited to specific elements, accounts, or items within the financial statements;
ii. Are confined to specific elements but represent a substantial portion of the financial statements; or
iii. Are fundamental to users’ understanding of the financial statements.

When an issue is both material and pervasive, it significantly impacts a substantial portion of the financial statements, requiring the auditor to modify their opinion.

b. Reaching the Audit Opinion:
The auditor, in forming an opinion, evaluates whether:
i. Sufficient and appropriate audit evidence has been obtained to confirm the financial statements are free from material misstatements;
ii. Uncorrected misstatements, whether individually or aggregated, are material;
iii. The financial statements provide a true and fair view;
iv. The financial statements comply with the applicable financial reporting framework, ensuring:
– Adequate description of the financial reporting framework;
– Proper disclosure of significant accounting policies;
– Consistency and appropriateness of accounting policies with the framework;
– Reasonableness of accounting estimates;
– Relevance, reliability, comparability, and understandability of information;
– Adequate disclosures;
– Use of appropriate terminology within the financial statements.

c. Basis for Qualified Opinion:
“Tophem Bank Plc’s investment in Accra Insurance Ltd, a foreign associate acquired during the year and accounted for by the equity method, is carried at ₦575 million in the Statement of Financial Position as of December 31, 2016. Tophem Bank Plc’s share of Accra Insurance’s net income is included in Tophem Bank Plc’s income for the year. However, we were unable to obtain sufficient appropriate audit evidence regarding the carrying amount of Tophem Bank Plc’s investment in Accra Insurance Limited as of December 31, 2016, and Tophem Bank Plc’s share of Accra Insurance’s net income, due to denial of access to management, auditors, and financial information of Accra Insurance Limited. Consequently, we could not determine if adjustments to these amounts were necessary.”

d. Qualified Opinion:
“In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the accompanying financial statements give a true and fair view of the financial position of Tophem Bank Plc as of December 31, 2016, and its financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards, the Companies and Allied Matters Act Cap C20 LFN 2004, the Banks and Other Financial Institutions Act CAP B3 LFN 2004, the Financial Reporting Council of Nigeria Act, 2011, and other relevant Central Bank of Nigeria guidelines and circulars.”