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Question

The client has changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?

A
Unqualified opinion
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B
Qualified opinion
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C
Disclaimer of opinion
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D
Adverse opinion
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Solution

The correct option is A Unqualified opinion
The effect of such change is expected to materialize in the future and not in the current financial year.
Hence, if the effect is immaterial in the current financial year, he shall not give a qualified report based on future expectations.
It is a change in accounting policy the matter has been disclosed in the financial statements already; it does not call for a qualified report.

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