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Learning outcome: After attempting this activity, students will be able to understand the concept of “Auditor’s Opinion”.


Audit of financial statements is independent of the business issuing these. It is Management’s responsibility to prepare the financial statements, whereas expressing opinion as to their fairness is the Auditor’s responsibility; Audit Report is issued along with financial statements to persons outside the business. It is important to note that the auditor’s report simply expresses the auditor’s opinion on truth and fairness of financial statements as absolutely correct. An auditor’s report is a formal statement that includes the reporting auditor’s opinion formed after careful examination of books of accounts and related documents.



We have audited the balance sheet, of Haider Corporation Limited as on June 30, 2019 and other related financial statements including statement of changes in equity, statement of comprehensive income, cash flow statement and notes to the accounts. We state that we obtained all the necessary information and explanations required for the purpose of audit.

It is moral obligation of the company to maintain an internal control system in conformity with the accounting standards and in accordance with the Companies Ordinance, 1984. It is our moral duty to express our opinion on the basis of our audit.

A): We conducted our Audit according to the Auditing standards followed in Pakistan, which bounds us to obtain reasonable assurance of whether the financial statements are free from any material misstatements. The audit requires us to examine, on a test basis, evidence that supports the amounts and disclosure of the above mentioned financial statements. The audit also requires us to evaluate the overall presentation, accounting policies and significant estimates made by the management. It is our belief that we made our opinion on reasonable basis and after due verification, we report that:

Company has incurred a net loss of Rs. 18.58 million during the current year with an accumulated loss of 307.28 million, where the paid up capital of the company is Rs. 160 million as on June 30, 2019. Further, the current liabilities of the company have exceeded Rs. 280.84 million by its current assets. However, the company has not accounted for the cost of fund which has been decided by the honorable High Court in para (B) given below. This situation is a clear sign of material uncertainty and thus leads to a doubt about ability of the company to continue as a going concern.

B): Short term borrowings obtained from ABC Islamic bank limited amounts to Rs. 411.80 on October 2009 against which the company filed a suit that the bank has charged illegal profits. ABC bank filed a counter suit for recovery of Rs. 444.52 million along with cost and costs of fund before the Honorable Lahore High Court. This suit has been adjudicated on 14 June, 2019 against the company. The profits on these loans which amount to Rs. 184.56 million have already been accounted for; however, provision for cost of funds has not yet been accounted for.

Except for the matters stated above regarding the financial statements of Haider Corporation Limited, in our opinion the books of account have been kept in accordance with the Companies Ordinance, 1984. In our view, the balance sheet and profit and loss account are in conformity with the Companies Ordinance, 1984 and there is consistency in the accounting policies. Further, the expenditures occurred, investments made and business conducted during the year was, in accordance to the objects of the company’s business. To the best of our information, the financial statements are inconformity with the approved accounting standards as applicable in Pakistan so required, and  the matters stated in paras A and B above, the loss and the company’s affairs as on June 30, 2019 do not give true and fair view.



Above given is the auditors’ opinion on the financial statements of a company. You are advised to comment which type of auditor opinion is it? On what basis, justify?


Important Instructions:

  • Post your GDB comments (answer) against GDB # 01 rather than against lessons’ MDB.
  • Your discussion must be based on logical reasoning and to the point. Avoid irrelevant discussion and unnecessary information
  • Do not copy or exchange your answer with other students.  Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
  • Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
  • Obnoxious or ignoble answer should be strictly avoided.
  • Questions/queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB.

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GDB solution ?thora e time rah gia hun ty

solution needed

In my point of view this is an Adverse Opinion

Because the misstatements are pervasive when that misstatement materially affect others items or transactions in financial statements and lead to users who use the financial statements make an incorrect decision.

this is the qualified opinion

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FIN621•••\\\•••GDB :- Solution Spring 2019

The auditor opinion is adverse opinion because the financial statements are inconformity with the accounting standards as applicable in Pakistan. The company also not gives the true and the fair view about the loss and the company’s affairs.

The company use the wrong tools to mislead the auditor and the financial statements are incomplete and not have the proper evidence and record


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