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Multiple Choice Questions

The client changed method of depreciation from straight line to written down value method This has b...........

Auditing Vouching and verification

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The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?

Unqualified opinion

Qualified opinion

Disclaimer of opinion

Adverse opinion

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Explanation:

- Unqualified Opinion (Option 1):

- The change in depreciation method is disclosed in the notes.

- It has an immaterial effect on the current financial statements.

- The future impact, though significant, is not a current concern.

- This is the correct answer.

- Qualified Opinion (Option 2):

- Issued when there are misstatements or deviations not pervasive to whole FS.

- Here, the effect is immaterial currently, so not applicable.

- Disclaimer of Opinion (Option 3):

- Chosen when the auditor can't obtain sufficient evidence.

- Not applicable as the disclosure is made and effect is known.

- Adverse Opinion (Option 4):

- Provided when financial statements are materially misstated and misleading.

- Not applicable as the current statements are not materially misstated.

By: Parvesh Mehta

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