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The auditor of Bigmouth, a listed company, has completed his detailed field work and review of the statutory financial statements, including the directors' report, for the year ended 31 March 20X1. Before signing his audit report he reviews the draft Chairman's Statement which the directors intend to include in the published financial statements. In the auditor's opinion, the Chairman's Statement contains a narrative review of the results for the year which is inconsistent with the audited financial statements and in other respects materially misleading. The directors have refused to amend the contents of the Chairman's Statement where the auditor considers necessary. What action should the auditor take in these circumstances? A. The auditor should include an other matter paragraph in his report in respect of the inconsistency between the narrative review in the Chairman's statement and the financial statements. B. None - no action is required. C. The auditor should modify his opinion on the financial statements on the grounds of a material misstatement with the directors. D. The auditor should modify his opinion on the financial statements on the grounds of the inconsistency between the Chairman's Statement and the audited financial statements and the misleading nature of the narrative review. |