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FRC Guidance on Audit Report Modifications

The current coronavirus pandemic is likely to result in many more audit reports requiring modification than is normal. Working out the correct modification can be difficult where you have not encountered a similar scenario in the past. 

As the FRC note:

The need for a modified opinion may arise because certain audit procedures cannot be performed (for example physical inventory testing because of travel restrictions), and no other procedures can be undertaken to produce the required volume or quality of reliable audit evidence. Alternatively, management’s key judgements in areas such as asset and liability valuations, or the assumptions and cashflow estimates underpinning the use of the going concern basis of accounting, may be difficult to support in the light of wider economic and political uncertainty, or not agreed by the auditor.

The FRC have issued Guidance which covers the main modifications and includes a useful flow diagram to determine the correct report to use. 

The issues which may lead to modifications to your report are also discussed in our current CPD Course