Bludger Ltd's Auditors Were Appointed After the End of the Financial

question 3

Essay

Bludger Ltd's auditors were appointed after the end of the financial year and discovered that the company had also changed banks shortly after the year end. The directors refused permission for the auditors to contact the previous bankers for confirmation of the year end bank balance without giving any good reason. The total of net current assets was £1.2m of which the bank balance amounted to £123,000 overdrawn.
Which of the following options should the auditors take when considering their audit report?

Not modified
Modified
‘Except for’ – limitation of audit scope
Except for – material disagreement
Disclaimer – pervasive limitation of audit scope
Adverse opinion – pervasive disagreement

---

Definitions:

Self-Control Problems

Refers to the difficulty people have in sticking with earlier plans and avoiding suboptimal decisions when finally confronted with a particular decision-making situation. A manifestation of time inconsistency and potentially avoidable by using precommitments.

Time Inconsistency

The tendency of people to change their plans about future actions due to a preference for immediate gratification over future reward.

Cognitive Bias

A systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.

Behavioral Economics

An area within economics analyzing how various psychological, emotional, cognitive, cultural, and social elements affect the decision-making processes in economics of both individuals and organizations.