Your client has two sets of financial statements. One set is in compliance with IFRS, while the other set is in compliance with local tax legislation and will be used only with the tax returns. How do these events affect the independent auditor's report?
A) The auditor would use an unqualified audit report for both financial statements, with an emphasis of matter paragraph that describes to readers the nature of the other set of financial statements.
B) The auditor would use a standard unqualified auditor's report for both financial statements, labeling the auditor's report "for IFRS only" and "for tax purposes only."
C) The auditor would use an unqualified audit report for both financial statements, with an other matter paragraph that describes to readers the nature of the other set of financial statements.
D) The auditor would use a qualified audit report, as the client may not have two different sets of financial statements.

Question

Quizplus · Accepted Answer

The auditor can issue an unqualified audit report for both sets of financial statements but would need to include an other matter paragraph to draw attention to the alternative set of financial statements prepared for tax purposes. This would provide clarity for readers of the financial statements and would ensure that the auditor's opinion is not affected by the alternative set of financial statements prepared for tax purposes.

Your Client Has Two Sets of Financial Statements