Unqualified audit report should not be overrated 2010-03-11
I REFER to the biased article on the unqualified report of 4 March about the Auditor-General’s unqualified report on the finances of the Cape Winelands District Council, which according to Gawie Marais, Executive Director: Financial Management Services “proves that the standard of the financial management is notably excellent”.
It should be made clear to readers that an unqualified audit report refers to the fact that the financial statements have no material errors (as guided by accounting standards) and disclose the financial results fairly. It can then be assumed that controls are operating as intended.
To use an unqualified report, that should be the norm and not the exception, to advertise that “financial management is notably excellent” is biased and would directly raise the reporting and reputational risk for any auditor. It would require 100% substantive testing and testing all controls in the financial environment but also operational environment impacting on financial results.
This would require an auditor to re-perform and test every single transaction, which is impossible!
The Auditor-General’s audit opinion is expressed on the financial results, not financial management.
As an auditor I am glad I do not need to audit the CWDM if members of their executive management make such wildly incorrect statements in the media.Concerned external auditor
