- 1 Marks
AAA – L3 – SA – Q1.10 – Audit Opinion
Question
If a client has a loan from another group company at zero rate of interest and discloses it in a note to the financial statements, what is the correct audit opinion?
A It depends whether the item is material
B Qualified opinion, ‘except for’
C Qualified opinion, ‘adverse’
D Unqualified
Answer
D
Explanation:
The financial statements (including the disclosures in the notes) do give a true and fair view, as the zero-interest loan is properly disclosed. Therefore, the audit opinion is unqualified, making D the correct answer. Materiality (A) is irrelevant if disclosure is adequate, and there is no basis for a qualified (B) or adverse (C) opinion.
- Tags: Audit opinion, Financial Statement Disclosure, Going Concern, ICAG
- Level: Level 3
- Topic: Reporting
- Uploader: Salamat Hamid