Explain the effect of misstatement on the auditor report

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Question -

a) Under what circumstances would a disclaimer of opinion be issued by an auditor.

b) You have completed the audit of MyJones Ltd, a large retailer, with a number of department stores as well as an online store, for the year ended 30 June 2020. You experienced a number of difficulties during the audit, including significant disagreements over the valuation of inventory. The audit partner had suggested that the inventory value was overstated by $25 million, a figure which was twice the level of materiality set for the audit.

As a result of discussions with the audit committee, the CEO has agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner. The audit partner is now considering the effect of this misstatement on the auditor's report.

Required - Explain the effect of the misstatement on the auditor's report for MyJones Limited for the year ended 30 June 2020.

Reference no: EM132829223

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