Impact on auditor's report

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2015 My query is relating to Physical verification of Inventory.

Due to some unavoidable issues we were not able to verify the same, so how should this fact be disclosed in Auditor's Report?

Should we qualify or issue EOM??

Kumar

Kumar (Expert)
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12 December 2015 If there was a limitation imposed by management, limitation of scope needs to be mentioned and be referred in the audit opinion. Either if the inventory balance is not material. or management has done an effective physical verification, then you can consider whether to rely on such control by going through relevant documents of physical verification and doing other analytical audit procedures.

If mgmt has also not done any physical verification, it may impact your caro reporting if it's a company. Also based on your judgement if the value of inventory appears to be appropriate based on various analytical procedures such as monthly receipts and consumption, physical verification done at some other time including now, inquiries with management and other audit procedures, you have to check whether you are able to form an opinion on the value of inventory.
Emphasis of matter cannot be given for this issue.