Thursday 31 March 2016

Cima F1 Exam Question No 45

Question No 45:

An external audit of VH’s financial statements has discovered that a customer who, at 31 March 2014, owed VH $250,000 was declared bankrupt on 8 April 2014. VH has not provided for the bad debt in its financial statements for the year ended 31 March 2014. This is regarded as material but not pervasive.
Assuming that the auditors find everything else satisfactory, which ONE of the following is the appropriate audit report for the auditors of VH to issue?

A.
The external audit report should be a modified report, with a qualified “except for” opinion.
B.
The external audit report should be an unmodified report with an emphasis of matter paragraph relating to the bad debt.
C.
The external audit report should be a modified report, with a disclaimer of opinion.
D.
The external audit report should be a modified report, with an adverse opinion.

Answer: A

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