2.  "An Opinion expressed by the auditor is neither an assurance as to the future viability of the enterprise nor the efficiency or effectiveness with which management has conducted the affairs of the enterprise." Explain.
                                                                                                                            (Marks : 4 Marks)
                                                                                                                      (Time Allowed : 7 minutes)


Ans.: Auditor's responsibility to express an opinion:
  • SA 200 "Overall Objectives of the Independent Auditor and Conduct of Audit in accordance with SAs" states that in conducting an audit of financial statements, the auditor is required to express an opinion that whether the F.S. are prepared, in all material respects, in accordance with an applicable FRF.
  • The opinion expressed by the auditor is common to all audits of financial statements.
  • For this purpose of expressing opinion he is required to obtain reasonable assurance about whether the F.S. as a whole are free from material misstatement, whether due to fraud or error
  • The term reasonable assurance has been defined as higher level of assurance but not absolute.
  • The auditor's opinion, therefore, does not assure, the future viability of the entity nor the efficiency or effectiveness with which management has conducted the affairs of the entity.