What is meant by the expression ‘expectation gap’?

A. The gap between how the directors of a company perform their duties and how the shareholders expect them to perform
B. The gap between how the directors of a company perform their duties and how the general public expects them to perform
C. The gap between the public perception of the role of company auditors and their statutory role and responsibilities
D. The gap between the auditors’ own perception of their duties and how they are set out in the Companies Act

Which of the following statements is not correct about materiality?

A. Materiality is a relative concept
B. Materiality judgments involve both quantitative and qualitative judgments
C. Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an informed decision maker who will rely on the financial statements
D. At the planning state, the auditor considers materiality at the financial statement level
only

The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue___________?

A. unqualified opinion
B. unqualified opinion with reference to notes to the accounts
C. qualified opinion
D. disclaimer of opinion

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