Auditing

The audit report is the final step in the entire audit process. a) Distinguish between an unqualified report with an emphasis of matter and a qualified report. Give two (2) circumstances when the emphasis of matter would be used in an audit report. (5 marks) b) Materiality is an essential consideration in determining the appropriate type of report for a given set of circumstances. In applying this definition, there are different levels of materiality used by an auditor to determine the decision. Discuss the levels of materiality with an example of the situation for each level. (9 marks) c) For each of the following independent situations, indicate the reason and the type of audit report you would issue, i. Your client, Amanah Bhd, has incurred substantial losses in recent years and is unable to repay the various outstanding bank loans. The company's inability to continue as a going concern is in doubt. ii. During your audit of Acrospace Enterprise, the client refuses to allow you to confirm the accounts receivable balance because they are concerned about complaints from the customers. You are unable to satisfy yourself on the accounts receivable balance with other audit procedures. iii The management of Health & Fit Bhd, a public listed company, has decided not to disclose a major related party transaction because the management believes that such information is confidential and sensitive. (6 marks)