09-10-2003, 12:00 PM
Hi Raza!
I think i am in a position to add some fundamental information about qualifying an audit report in your knowledge base.
First some housekeeping work. You asked me about the definition of "illegal activity". First of all believe me i have not invented this phrase and second this is a very common undisputed word. Every elementary student of commerce should know that illegal activity is activity that is either not allowed by law or is against the law. So your question was redundant (superfluous or in accountants' language unbillable - therefore a waste of time).
Now i would like you to refer to Audit Practice Manual of ICAP and go to chapter 6 Summary of some ISA and on page 343 you will find the exact situations where different type of opinions are expressed. I believe this is covered under Auditing Standard 13 relating to Audit Report.
Unfortunately, Raza, you are displaying a fundamental lack of understandting of this part of auditing fuction. You ask me to give you an example of a qualified report where activity is within the law. <font color=red>The example is scope limitation which the auditor does not consider matterial in expressing an opinion on fairness of F/S</font id=red>
This you can find on page 343 of Auditing Practice Manual of ICAP.
Example Auditor is prohibited from physical count of inventories at the year end date, this will be a qualified report where no law is broken. And the auditor will use "Except for" qualification.
Then you made a very childish remark and i quote
"lets take an example, if auditors qualify his report that "proper books of accounts have not been maintained by the company""
<font color=red>You must be seriously jocking!!!</font id=red> A qualified report with these words should belong to accountants' museum (if there is such a thing)
This part cannot be in an audit report which is qualified, but in an audit report which is expressing an adverse opinion. Two different animals with very different characteristics. I will love to know if an adverse opinion is ever expressed by an auditor in Pakistan!!!
Third you refer to directors using company funds for personal use rather than business use. Can you quote me the section of Comapnies Ordinance which prohibits directors from taking out money for their personal use. Thesr are called shareholders' loans. Ofcourse, such withdrawls have tax consequences for the directors (national interest or inclusion in income(if balance is outstanding for two consecutive balance sheets dates in North America, i don't know the exact implications in Pakistan). So if an auditor qualifies the report and state that funds were used by directors for personal use tell me which law is broken? <font color=red>Please quote the section of the law?</font id=red>
Now i throw the ace question your way. You know that SECP is a regulatory body and it operates within a mandate given by Federal laws. My question is are you aware of the mandate of SECP? If you are not i would request that you study that part of the law before we procceed further.
I am ready for the next round whenever you are. My akhara has long hours of business!!!!
For Guybrush! I appreciate you enjoying the debate but how about paying some dues and participating in it. As they say, the mind gets sharper the more you use it!!!
Take care fellows
<img src=icon_smile_cool.gif border=0 align=middle><img src=icon_smile_cool.gif border=0 align=middle><img src=icon_smile_cool.gif border=0 align=middle>
<img src=icon_smile_cool.gif border=0 align=middle>
Edited by - Pervez on Sep 10 2003 071431 AM
I think i am in a position to add some fundamental information about qualifying an audit report in your knowledge base.
First some housekeeping work. You asked me about the definition of "illegal activity". First of all believe me i have not invented this phrase and second this is a very common undisputed word. Every elementary student of commerce should know that illegal activity is activity that is either not allowed by law or is against the law. So your question was redundant (superfluous or in accountants' language unbillable - therefore a waste of time).
Now i would like you to refer to Audit Practice Manual of ICAP and go to chapter 6 Summary of some ISA and on page 343 you will find the exact situations where different type of opinions are expressed. I believe this is covered under Auditing Standard 13 relating to Audit Report.
Unfortunately, Raza, you are displaying a fundamental lack of understandting of this part of auditing fuction. You ask me to give you an example of a qualified report where activity is within the law. <font color=red>The example is scope limitation which the auditor does not consider matterial in expressing an opinion on fairness of F/S</font id=red>
This you can find on page 343 of Auditing Practice Manual of ICAP.
Example Auditor is prohibited from physical count of inventories at the year end date, this will be a qualified report where no law is broken. And the auditor will use "Except for" qualification.
Then you made a very childish remark and i quote
"lets take an example, if auditors qualify his report that "proper books of accounts have not been maintained by the company""
<font color=red>You must be seriously jocking!!!</font id=red> A qualified report with these words should belong to accountants' museum (if there is such a thing)
This part cannot be in an audit report which is qualified, but in an audit report which is expressing an adverse opinion. Two different animals with very different characteristics. I will love to know if an adverse opinion is ever expressed by an auditor in Pakistan!!!
Third you refer to directors using company funds for personal use rather than business use. Can you quote me the section of Comapnies Ordinance which prohibits directors from taking out money for their personal use. Thesr are called shareholders' loans. Ofcourse, such withdrawls have tax consequences for the directors (national interest or inclusion in income(if balance is outstanding for two consecutive balance sheets dates in North America, i don't know the exact implications in Pakistan). So if an auditor qualifies the report and state that funds were used by directors for personal use tell me which law is broken? <font color=red>Please quote the section of the law?</font id=red>
Now i throw the ace question your way. You know that SECP is a regulatory body and it operates within a mandate given by Federal laws. My question is are you aware of the mandate of SECP? If you are not i would request that you study that part of the law before we procceed further.
I am ready for the next round whenever you are. My akhara has long hours of business!!!!
For Guybrush! I appreciate you enjoying the debate but how about paying some dues and participating in it. As they say, the mind gets sharper the more you use it!!!
Take care fellows
<img src=icon_smile_cool.gif border=0 align=middle><img src=icon_smile_cool.gif border=0 align=middle><img src=icon_smile_cool.gif border=0 align=middle>
<img src=icon_smile_cool.gif border=0 align=middle>
Edited by - Pervez on Sep 10 2003 071431 AM