Question 5

Recently you completed the audit of your client ABC LLC Muscat. The client is a conglomerate in the financial sector in Oman. It was challenging for you and your team to collect all the required evidence to unearth material misstatement because of the size of the firm. You have audited the financial statement of ABC LLC comprising of Income statement, Balance sheet including the notes, statement of changes in equity and cash flow statement including the summary of significant accounting policies and other explanation.

Following additional information is also derived based on your evaluation.

1. Based on the audit evidence obtained, the auditor has been concluded that there is no material misstatement exist in companies financial statement.

2. The auditor has followed the relevant ethical requirement for performing the audit as per ISA.

3. Last year the company lost two of its cargo ships while transiting goods from US to Oman which made a huge financial loss for the company. Company has disclosed this in the financial statement in one of the notes. In auditors judgement, the matter is so much important for users to understand the financial statement.

4. Those charged with responsibility of oversight differs from those charged with preparation of financial statement in clients business.

5. Last years financial statements were audited by some other auditor.

6. The auditor finds that changes in accounting policies by the client makes significant increase in the profit of the company. In the professional judgement of auditor, this is most significant to be highlighted in his report.

7. Auditor found that the company is under net loss for many quarters and this made erosion of companies net worth for the second year now. Based on professional judgement of the auditor, the company may not be able to continue its operation in the coming years.

Based on the available information, you are required to prepare an audit report in a proper format with the following heading/paragraph with detailed explanation.

1. Opinion Paragraph(2 Marks)

2. Basis of opinion Paragraph(2 Marks)

3. Key audit matters if applicable(2 Marks)

4. Other matters if any.(1 Marks)

5. Responsibilities of management and TCWG for the financial matters.(1 Marks)

6. Going concern paragraph if any.(2 Marks)