Question

[14]. An auditor concludes prior to the release date of the report that a material inconsistency exists in the other information in an annual report to shareholders. The report contains audited financial statements. If the auditor concludes that the financial statements do not require revision, but management refuses to revise or eliminate the material inconsistency, the auditor may

1. Revise the auditor's report to include a separate other-matter paragraph describing the material inconsistency.
2. Express a qualified opinion after discussing the matter with the client's directors.
3. Consider the matter closed because the other information is not in the audited statements.
4. Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate other-matter paragraph.

[15]. If management declines to present required supplementary information, the auditor should express a(n)

1. Adverse opinion.
2. Qualified opinion with an additional paragraph.
3. Unmodified opinion without an additional paragraph.
4. Unmodified opinion with an other-matter paragraph.    [16].The client's financial reporting includes supplementary financial information outside the basic financial statements but required by the Financial Accounting Standards Board (FASB). Which of the following statements is correct regarding the auditor's responsibility for this supplementary financial information?

1. The auditor should perform limited procedures.
2. The auditor should apply tests of details of transactions.
3. The auditor is not required to report omissions.
4. The auditor should read the supplementary financial information.

Answer 1

14.The Standard on auditing requires an auditor to readand consider the other information to ascertain the
whether it is material inconsistency between the other information and the financial statements

if there is a material inconsistency between the other information and the auditor’s knowledge obtained in the audit.
The material inconsistency identified by the auditor may indicate that there is a material misstatement of the financial statements or of the other information, either of them will effect the financial statements and the auditor’s report so  Such material misstatements may also inappropriately influence the economic decisions of the users for
which the auditor’s report is prepared.
As per Standard on auditing  would also assist the auditor in complying with relevant ethical requirements and to avoid association with information that the auditor believes contains a materially false or misleading statement.
In some cases, the applicable financial reporting framework may require specific disclosures but permit them to be located outside of the financial statements. As such disclosures are required by the applicable financial reporting framework, they form part of the financial statements.

15.. if managment refuses to give supplimentory information auditor need to discuss with managment ask them to provide the suppmentory information if they stil not going to provide this case is limitation on scope we can either disclamier opninonor qulaified opninon based on materiality. so here we can go for Qualifed opnion with an additional paragraph.

16.when managment is providing information in supplmentory information included information beyond financial information auditor need to apply limited procedures and report in other matter paragraph.which is correct when it is required by any statute.

so in our case is similar to that so auditor here can perform limited procedures and report the same in other matter paragraph