Question

Question No 5: Draft an Auditor’s report to the shareholders of Omega Info Tech LLC, MUSCAT for the year 2019, incorporating any five qualifications from your point of view with example.300 words

Answer 1

INDEPENDENT AUDITOR’S REPORT To the Shareholders of Omega Info Tech llc company

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Omega Info Tech llc company, which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

Qualified Opinion (extract) In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the financial statements give a true and fair view

Basis for Qualified Opinion

1. We were unable to obtain sufficient appropriate evidence about the carrying amount of inventories because we were unable to attend the count of physical inventories at 31 December 20X1. Consequently, we were unable to determine whether any adjustments to this amount was necessary.

2. The Company's property, plant and equipment is carried in the statement of financial position at $70000. Management has not depreciated which constitutes a departure from IFRSs. The Company's records indicate that had management depreciated $10000, the company would have recognised depreciation of $10000 in the statement of profit or loss. The carrying amount $70000 in the statement of financial position would have been reduced by the same amount $10000

3. company has reported Inventories on its Balance Sheet at Cost instead of stating at lower of Cost or Net Realizable Value as per the relevant Accounting Standard pertaining to Valuation of Inventories. As per the records shared by Omega Infoo Tech llc if such Inventories were recorded at lower of Cost or Net realisable value would have resulted in Omega Infoo Tech llc gross profit falling by $20000 and Income Tax Expenses reduced by $2000 and Net Profit down by $18000 respectively.

4. Omega Infoo Tech llc reported revenues of $450,000, out of which $60,000 were cash sales. Auditors were unable to factually satisfy themselves about the cash sales recorded by the company due to inadequate systems of Internal Control and recording of such Cash Sales. As such it is impossible to certify that the recorded revenues are free from material error relating to the Overstatement of Revenues

5. Included in debtors shown on the balance sheet is an amount of $ 200,000    due from a debtor, Alpha trading which has ceased trading. The company has no security for this debt.On the basis that no security has been obtained and no cash has been received on the debt, in our opinion the company should make a full provision for impairment , reducing profit before taxation for the year $ 200,000 and net assets at 31st December 20X1 by that amount

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Audit of the Financial Statement

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion

The engagement partner on the audit resulting in this independent auditor’s report is

[name].

[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate for the particular jurisdiction]

[Auditor Address]

Date