SA Express

If one assumes the withdrawn 2011 AFS did not fairly present; the question arose in my mind as to what would we as the auditors have to do to ensure that the AFS fairly presented. The Board of SAX assumed incorrectly that the only way to correct the withdrawn AFS was to provide for all the adjustments. These thoughts are fundamentally flawed on on one significant front. There was no way to ensure that SAX had provided Nkonki with all the adjustments. SAX went back to 2009, why stop at 2009 surely if there were errors in 2009, the probability of errors in 2008 and backwards was great. Therefore, simply based on completeness of the adjustments any opinion on the amended 2011 AFS could not have been clean. So here is the “RUB” to the anomaly: the AFS in 2009/2010 were clean and so was in essence 2011. However, one cannot make adjustments to the 2011 AFS that are not complete or cannot be proven to be complete and then suggest fair presentation has taken place. Based on the this significant flaw it is very easy to see how one can have two/ three AFS that fairly present and then have a disclaimer on any amended AFS – SAX were making incomplete adjustments to the AFS. This is set out very clearly in points 1, 2 , 3 and 9 and most important of all pint 7.

In addition, it appears that the IRBA are implying that a disclaimer of opinion is an opinion that makes a positive statement like all the others. I glean this from the fact that they raise the anomaly in the first place.  They seem to forget that a disclaimer of opinion is a statement that the auditor cannot arrive at on opinion. It is as if the auditor is saying – the evidence as provide by the client is so inconclusive that no opinion can be made. It is completely different from any positive opinion that an auditor can make. 

Therefore, to suggest that a disclaimer cannot be made after three AFS that had clean reports is ludicrous to say the least. All Nkonki were saying was:

2009: Clean + 2010: Clean + 2011: Clean +- Adjustments (No Evidence) = Amended 2011 (Disclaimer – no evidence).

The disclaimer simply asserts that the adjustments could be correct but there was no evidence at the time Nkonki did the audit to prove them. They may be correct but all Nkonki were saying is we did not have sufficient evidence to prove (70%) of the adjustments. There was sufficient evidence to prove (30%).

What IRBA wanted was as follows:

2009: Clean + 2010: Clean + 2011: Clean +- Adjustments (Evidence) = Amended 2011 (Clean –evidence provided).

It is easy to see why the IRBA envisaged a clean amended report. They assert there was enough evidence where Nkonki asserted there was not. If there was evidence Nkonki would have issued a clean amended report, but based on two fronts: Completeness and Insufficient evidence this could not happen. IRBA have failed to understand the above discussion.