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The auditor completed the audit of financial statements with an unquified opinion. The client company wanted...

The auditor completed the audit of financial statements with an unquified opinion. The client company wanted to make a voluntary disclosure of some supplemental information to the financial statements in the 10-K, and the auditor agreed. However, the auditor found a highly material misstatement in the supplemental information. The client refused to correct the error.

Can the auditor still issue a report on the supplemental information? Explain. If yes, what should be the auditor's opinion on the supplemental information, and how should the auditor report it?

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Answer #1

10-K has filed annually that in once in a year to SEC. 10-K is having all details in the depth of the company it contains all the details one wants to know about a company which will help him in an analysis of company future growth and to makes a decision of investing wisely. Company voluntarily disclose all the details which a investors needs to know while taking decision.  

Giving material misstatement in 10-K, investor gets false details regarding company which violates the purpose of 10-K. In the given case, as client refuse to correct the material misstatement given in 10-K. Auditor must qualified his audit report on the grounds of material misstatement in 10-K. Further, auditor must disclose the fact in his audit report.

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