Technical queries on modified report

1. Sharing on
Technical queries
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Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

2. Issue
Shall we express modified opinion in the audited report?
 If do so, whether express qualified or disclaimer opinion?
Materiality level : RM 14,569.00
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

3. Facts
• According to accountant, she only took over the account of the company
when the management accounts for the period ended were almost done. She
has done all she could to rectify the account that done by previous
accountants.
• During the audit, the management accounts was provided with suspense
account and trial balance did not balance after amendment. The accountant
only provided sufficient accounts after several times of amendment.
• Furthermore, the company unable to provide sufficient appropriate audit
evidence for all the purchases and expenses incurred. Even though the
payment vouchers were issued, there was no description stated.
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

4. FACTS
• The payments listed below were all made by cash and no supporting
document can be provided:
i. Purchases - RM19,177.53
ii. Office Refreshment - RM62,018.45
iii. Staff Welfare - RM16,509.86
• Total amount is RM97,705.84 (Above materiality)
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

5. FACTS
• The expenses that amounting to RM335,214.96 (above materiality)
were made by cash and cheque. No supporting document can be
provided except that the cheque payment that amounting to RM
165,297.20 are vouched to bank statement.
• The expenses included purchase of material, upkeep of office
equipment, factory, office and machine maintenance and etc.
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

6. FACTS
• Except for the expenses mentioned above, there were expenses that
individually immaterial but material in aggregate (RM38,310.46). The
payments made by cheque that amounting to RM14,106.55 were
vouched to bank statement.
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

7. Opinion/ Conclusion
• We should issue Qualified report with disclaimer
opinion.
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

8. Supporting information
• According to ISA 705 para 2, there are three types of modified opinions:
a. Qualified opinion,
b. Adverse opinion,
c. Disclaimer of opinion.
• The decision regarding which type of modified opinion is appropriate depends upon:
(a) The nature of the matter giving rise to the modification, that is, whether the financial statements are
materially misstated or, in the case of an inability to obtain sufficient appropriate audit evidence, may be
materially misstated; and
(b) The auditor’s judgment about the pervasiveness of the effects or possible effects of the matter on the
financial statements. (Ref: ISA 705, Para. A1)
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

9. exact from ISA 705, Para. A1
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

10. How they are going to deal with
IRB and RMCD
• Client was able to provide some documents after knowing of the issue.
• During the financial period ended, the GST input tax was over stated.
RMCD asked client to prepare an explanation letter and they will
authorize the letter. RMCD will not go after the issue with the presence of
the letter in future.
• Client had amended the GST input tax amount for the next financial year
ended, penalty has been imposed by RMCD.
© Copyright of KTP & THK
Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely on the contents of this publication without first
obtaining professional advice. We, KTP or THK, shall expressly disclaim all and any liability and responsibility to any person in reliance in whole or any part of this contents.

11. Thank you