Question 3 - Part c

In this lesson

1. 0:00 Understanding audit opinions and Part C requirements
2. 1:16 Assessing the audit problem: scope limitation analysis
3. 2:11 Evaluating the proposed unmodified opinion
4. 3:01 Determining materiality of the going concern issue
5. 4:35 Assessing pervasiveness and impact on financial statements
6. 5:49 Selecting the appropriate audit opinion: disclaimer
7. 6:39 Structuring the basis of disclaimer section

About this lesson

This is a core exam skill worth five marks, with significant professional marks available for sound judgement and evaluation. The scenario involves an audit assistant who has proposed an unmodified opinion with a material uncertainty relating to going concern, but the auditor lacks sufficient evidence about the cash flow assumptions and the planned sale of Happy Travels. You'll work through a structured approach: identify the problem (scope limitation versus misstatement), assess materiality, determine whether the issue is pervasive, and arrive at the correct opinion. The key insight is recognising that insufficient evidence about cash flow assumptions is actually insufficient evidence about the going concern assumption itself—which is fundamental to the entire financial statements. The correct opinion here is a disclaimer of opinion, because the matter is both material and pervasive. You'll also learn why the proposed material uncertainty relating to going concern section is inappropriate in this context—it can only be used with an unmodified opinion, not a modified one. The video demonstrates how to structure your answer to capture all five marks plus professional marks for clear reasoning and appropriate evaluation of the audit assistant's proposal.

Duration: 8m