At the conclusion of the audit team of 100 Ltd, a junior member was requested to make sure that the audit working papers
were all properly filed and finalised. What struck him was just how much information/ evidence had been gathered on the
audit. Having seen all of the evidence together, he really felt that the audit team was in a strong position to certify the
financial statements as correct, rather than just stating in the audit report that ‘in our opinion, the financial statements
present fairly in all material respects…’
He asked you, as his senior, why, having done all this work, the financial statements had not been certified as correct.
(Source: Adapted from Graded Questions on Auditing 2024)
You are required to:
Explain in detail to your junior, why the financial statements cannot be ‘certified as correct’. Include in your
answer an explanation of the limitations of internal control, and the limitations of an audit.