Limitation of scope v disclaimer v fundamental uncertainty

Bren1609

Limitation of scope e.g. non attendance of stock take

Disclaimer ?

Fundamental uncertainty ?

Can anyone give an example of the later two in the context of SME's

Proud1

Bren1609 wrote: »

Limitation of scope e.g. non attendance of stock take

Disclaimer ?

Fundamental uncertainty ?

Can anyone give an example of the later two in the context of SME's

Disclaimer: If the auditor was unable to verify the value of stock at the year end. ie no stock sheets, stock records. Company unable to provide records and if stock was material to the financial statements (generally about 20% of net assets or greater and/or 20% of profit in the exam questions) then the auditors are unable to express an opinion and issue a disclaimer

Fundemental Uncertainity: A law suit that is ongoing against the company at the time of the accounts are signed. Again this uncertainity would be deemed a fundemental uncertainity if its potential impact could render the financial statements meaningless based on materiality (20% rule again)

Best O Luck

The CCAinsider

Not attending a stock take because you could not be bothered or would not be paid to do so is a breach of your professional rules. not attending because you were appointed as auditor after the year end is a limitation of scope. Bulletin 2006/1

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board, except that the scope of our work was limited as explained below.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. However, with respect to stock having a carrying amount of ð X the evidence available to us was limited because we did not observe the counting of the physical stock as of 31 December 20X1, since that date was prior to our appointment as auditors of the company. Owing to the nature of the company's records, we were unable to obtain sufficient appropriate audit evidence regarding the stock quantities by using other audit procedures.
In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Qualified opinion arising from limitation in audit scope
Except for the financial effects of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to physical stock quantities, in our opinion the financial statements:
l give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company's affairs as at 31 December 20X1 and of its profit [loss] for the year then ended; and
l have been properly prepared in accordance with the Companies Acts, 1963 to 2009.
In respect solely of the limitation on our work relating to stocks:

l we have not obtained all the information and explanations that we considered necessary for the purposes of our audit; and
l we were unable to determine whether proper accounting records had been maintained.
The financial statements are in agreement with the books of account.
In our opinion the information given in the directors' report is consistent with the financial statements.
The net assets of the company, as stated in the balance sheet are more than half of the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 31 December 20X1 a financial situation which under Section 40 (1) of the Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the company.

Registered auditors

Address

Date

deathandtaxes

The CCAinsider wrote: »

Not attending a stock take because you could not be bothered or would not be paid to do so is a breach of your professional rules. not attending because you were appointed as auditor after the year end is a limitation of scope. Bulletin 2006/1

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board, except that the scope of our work was limited as explained below.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. However, with respect to stock having a carrying amount of ð X the evidence available to us was limited because we did not observe the counting of the physical stock as of 31 December 20X1, since that date was prior to our appointment as auditors of the company. Owing to the nature of the company's records, we were unable to obtain sufficient appropriate audit evidence regarding the stock quantities by using other audit procedures.
In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Qualified opinion arising from limitation in audit scope
Except for the financial effects of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to physical stock quantities, in our opinion the financial statements:
l give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company's affairs as at 31 December 20X1 and of its profit [loss] for the year then ended; and
l have been properly prepared in accordance with the Companies Acts, 1963 to 2009.
In respect solely of the limitation on our work relating to stocks:

l we have not obtained all the information and explanations that we considered necessary for the purposes of our audit; and
l we were unable to determine whether proper accounting records had been maintained.
The financial statements are in agreement with the books of account.
In our opinion the information given in the directors' report is consistent with the financial statements.
The net assets of the company, as stated in the balance sheet are more than half of the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 31 December 20X1 a financial situation which under Section 40 (1) of the Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the company.

Registered auditors

Address

Date

I'm also interested in this question. So where does a disclaimer come in?

Do you have any external links I can research?

kennyb3

deathandtaxes wrote: »

I'm also interested in this question. So where does a disclaimer come in?

Do you have any external links I can research?

APB Bulletin 2006/01 appendix 2 and 3