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Disclaimer of opinion -- audit report

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

16 February 2013

Friends

Can issuing a disclaimer of opinion by auditor be treated as a qualification ?

Regards,

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8 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 16 February 2013

for treating a particular opinion as qualified first teh auditor shud be able to verify the transaction and then if he thinks the qualified opinion shud be givven then he can do so.

in case of disclaimer, the auditore does not gets the opportunity to verify the transactions as there is no audit evidence available. So in sush case he gives an disclaimer of opinion.

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CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 16 February 2013

Originally posted by : Dipjyoti Majumdar
	Friends Can issuing a disclaimer of opinion by auditor be treated as a qualification ? Regards,

Qualification means there is expression of -ve opinion & in case of disclaimer there is no opinion hence it does not amount to qualification in my opinion.

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(Guest)

HI Dipjyoti,

I will give you a an example for this

Say a Company A where in depreciation was not provided as per AS6 and other applicable regulations, it amounts to qualification

Say a Small Company where trading business will be done and no accounts were maintained on an overall 100%, then you can give disclaimer of opinion.

Abhisek Rungta (PRACTISING CHARTERED ACCOUNTANT) (234 Points)
Replied 18 February 2013

Agreed with Giridhar & Srikanth.

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 18 February 2013

Disclaimer of opinion is given by the auditor in case where the company/firm is liable to tax audit, but he has not been provided adequate information for making the opinion because of any reasons such as books of accounts has been seized by Income tax department or accounts has been destroyed in fire or some other reasons.

So qualification and disclaimer of opinion is completely different thing.

CA Anjali Kuttikar (Chartered Accountant) (127 Points)
Replied 18 February 2013

Qualification and disclaimer is not the same thing. Qualification is where the auditor opines that, the financial statements give a true and fair view subject to certain reservations as pointed out by the auditor. Whereas disclaimer is where the auditor opines that he cannot express any opinion. Most of the times an auditor issues a qualified opinion but a disclaimer is issued in exceptional cases where the affairs of a business are in total shambles.Below is the extract of the relevant SA

SA 700 (AAS 28)
THE AUDITOR’S REPORT ON FINANCIAL STATEMENTS

A qualified opinion should be expressed when the auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management is not so material and
pervasive as to require an adverse opinion, or limitation on scope is not so material and pervasive as to require a disclaimer of opinion. A qualified opinion should be expressed as being ‘subject to’ or ‘except for’ the effects of the matter to which the qualification relates.

A disclaimer of opinion should be expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and is, accordingly, unable to express an opinion on the financial statements.

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Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 20 February 2013

Friends,

Thank You very much for your valued inputs.

So, disclaimer is not a qualification. But it puts the Management in a very poor light in front of the shareholders and other Regulatory authorities and public. The Assessing Officer will make a best judgement assessment in case of a discalimer but possibly not for a qualified accounts.

Regards,