Question

You are auditing Osakis Electronics Ltd, a subsidiary of a Japanese company, and will issue an audit report covering the balance sheets as of 31 December 2008 and 2007, and the income statements and cash flow statements for the two years then ended. The company's ordinary shares are traded on the Australia and Tokyo stock exchanges. Each of the following is an independent audit reporting situation.

Required:

1 Osakis does not disclose segment information, because Japanese accounting standards do

not require it. Indicate the effect on your audit report, which will be widely used in Australia.

Answer 1

An auditor can qualify his report by giving either a qualified opinion, adverse opinion, or disclaimer of opinion depending on the severity of the underlying problem.

The Standards on Auditing gives guidance about the reporting requirements of an auditor regarding their report on the true and fair view of the accounts of an organisation.
The standards on Auditing talks about modification of the report in case of any departure from the general accounting principles.

In the given case as an auditor we need to see how pervasive the effect of non reporting of segment in financial report is to the overall financial statement. If this departure pervasively affects the other parts of financial overall then we need to give an adverse opinion and if the effects is not so pervasive to the overall financial statement then we need to give a qualified opinion.

for any query please comment and

DO GIVE POSITIVE RATING