Q27 Cooper (b)

Wording

 Acq of new sub – too vague, Hopper may have purchased a no of other sub, so auditor needs to
provide adequate description of the event and refer to specific name of sub
 In the note – should identify which note in the F/S auditor refers to, improve understandability
and usefulness of content of audit report to users of F/S
 We do not feel – not professional, change to we believe
 Relevant std – not clearly explained/no specific standard – should be IFRS 3 Business
combination

Quantification of misstatement

 Amount of contingent element not quantified, should provide figure and more description on
the financial effects of the misstatement in the F/S to assets, liabilities and etc.

Basis of modified opinion and absence of Opinion para.

 Assume adverse opinion is appropriate, title should be Basis for Adverse Opinion
 Opinion paragraph titled Adverse opinion should be written above Basis for adverse opinion
para.

Usage of EOM paragraph

 Usage of EOM para is not appropriate

 Function of EOM : _______________________________________________
 FTC, it is noted that the acctg treatment by client on contingent consideration is not
appropriate.
 The issue also does not appear to be fundamental to the F/S
 Hence, this forfeit the usage of EOM para
 Explanation on misstatement on contingent consideration/goodwill should fully disclosed in the
Basis for Qualified/Adverse Opinion para, where appropriate.

Audit opinion

From the para, the auditor uses the word “may materially affect goodwill balance in the F/S”. This shows
that auditor is not certain whether the misstatement is material/not

Therefore, if the misstatement is not material, it will not give an impact to the audit opinion ie. audit
opinion will remain unmodified

However, if the misstatement is material, the pervasiveness of the issue should be determined.

If it is material but not pervasive, the AO will be modified on ground of FSCMM and a QE4 opinion will
be issued
It is unlikely that the issue will be material and pervasive as it not considered to be affecting a
substantial portion of the F/S . However, if it is a material and pervasive issue, an Adverse opinion would
be appropriate.