ExpertACCA · Question 15 · Review and reporting
CASE 3: AQUAGRID UTILITIES PLC
AquaGrid Utilities PLC is a listed public water utility company. The audit for the year ended 31 March 2026 is nearing completion. In April 2026, a major water main burst, causing significant flooding and resulting in a pending lawsuit against AquaGrid. Furthermore, the company is struggling to meet its debt covenants due to a regulatory cap on water tariffs. The audit partner is reviewing the draft financial statements and considering the implications for the auditor's report.
During the audit, the team identified several uncorrected misstatements that are immaterial both individually and in aggregate. According to ISA 260, what is the auditor's responsibility regarding these uncorrected misstatements?
CASE 3: AQUAGRID UTILITIES PLC
AquaGrid Utilities PLC is a listed public water utility company. The audit for the year ended 31 March 2026 is nearing completion. In April 2026, a major water main burst, causing significant flooding and resulting in a pending lawsuit against AquaGrid. Furthermore, the company is struggling to meet its debt covenants due to a regulatory cap on water tariffs. The audit partner is reviewing the draft financial statements and considering the implications for the auditor's report.
During the audit, the team identified several uncorrected misstatements that are immaterial both individually and in aggregate. According to ISA 260, what is the auditor's responsibility regarding these uncorrected misstatements?
Answer options:
Ignore them, as they are immaterial and do not affect the audit opinion.
Modify the audit opinion if management refuses to correct them.
Communicate them to those charged with governance and request that they be corrected.
Report them directly to the shareholders at the Annual General Meeting.
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