Your Client Has Two Sets of Financial Statements

question 37

Multiple Choice

Your client has two sets of financial statements. One set is in compliance with IFRS, while the other set is in compliance with local tax legislation and will be used only with the tax returns. How do these events affect the independent auditor's report?

• A) The auditor would use an unqualified audit report for both financial statements, with an emphasis of matter paragraph that describes to readers the nature of the other set of financial statements.
• B) The auditor would use a standard unqualified auditor's report for both financial statements, labeling the auditor's report "for IFRS only" and "for tax purposes only."
• C) The auditor would use an unqualified audit report for both financial statements, with an other matter paragraph that describes to readers the nature of the other set of financial statements.
• D) The auditor would use a qualified audit report, as the client may not have two different sets of financial statements.

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Definitions:

Payor Bank

The bank that dispenses the payment on a written draft or check upon presentation.

Drawee Bank

The financial institution upon which a check is drawn or which is directed to pay the specified amount.

Collecting Bank

A financial institution involved in processing items for payment, such as checks, on behalf of a depositor.

Collecting Bank

A bank that handles the processing of payments (like checks) on behalf of the payee or a client bank.