An auditor of New Nepal Ltd. audited and signed the accompanying financial statement of the company as of July 15, 2010 (Corresponding to 31stAshad, 2067). Date of the signature of the audit report was August 16, 2010. Give your opinion with
Audit of financial statement is normally carried out for a full financial year. Financial year as per the prevailing law is first of Shrawan to the end of Ashad month as per Nepali calendar. Date of the audit report should be after the date of financial year end and after completion of audit functions. However, in above mentioned case, date of financial statements is July 15,2010, which is 1 day short of actual financial year end i.e. July 16,2010 (corresponding to 32 Ashad 2067). This may happen in following situations:
a) An assurance assignment was for audit of financial statements of that date.
b) Company ended its operation from that date.
c) Company is merged to another company from that date.
d) Company went in to liquidation from that date.
e) Auditor signed wrong dated financial statement.
Therefore, the auditor should check out the relevant date of financial statements under audit before signing the report.