Production at the Paint Company’s factory was halted for one day when a truck carrying dye used in the production process overturned in the Rio Bobre River causing the contamination to the water supply system in the area. The Environmental Agency is currently considering whether the release of dye was in breach of environmental legislation. The company’s insurers have not yet commented on the event. Assume that the date is now 20 December 2019, the financial statements and the audit report have just been signed and the report is to be presented to the Board of Directors on 10 January 2020. The Environmental Agency has issued a report stating that Paint Company is in breach of environmental legislation and a fine of $10.5M will now be levied on the company. The amount is material to the financial statements. Required: Explain the additional audit work the auditor should carry out in respect of this fine. The auditors are considering to modify their audit opinion. Do you agree or disagree with the adjustment to their opinion
Production at the Paint Company’s factory was halted for one day when a truck carrying dye used in the production process overturned in the Rio Bobre River causing the contamination to the water supply system in the area.
The Environmental Agency is currently considering whether the release of dye was in breach of environmental legislation. The company’s insurers have not yet commented on the event.
Assume that the date is now 20 December 2019, the financial statements and the audit report have just been signed and the report is to be presented to the Board of Directors on
10 January 2020. The Environmental Agency has issued a report stating that Paint Company is in breach of environmental legislation and a fine of $10.5M will now be levied on the company. The amount is material to the financial statements.
Required:
Explain the additional audit work the auditor should carry out in respect of this fine.
The auditors are considering to modify their audit opinion.
Do you agree or disagree with the adjustment to their opinion
Audit opinion is provided by the auditor when he audits or verifies the financial statement of the companies. When the audit work is done, the auditor is required to make a report which consists of his opinion regarding the procedures and policies followed by the company are in respect to GAAP or not or if there is any misstatement or concealment of material facts and also if there is any errors in the records. There are different kinds of opinion namely unqualified opinion, qualified opinion, adverse opinion and disclaimer opinion.
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