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CA Final · Advanced Auditing, Assurance and Professional Ethics · Due Diligence, Investigation & Forensic Accounting

A chartered accountant is appointed to conduct a forensic investigation into suspected misappropriation of cash at a branch of Bharat Textiles Ltd. The management asks the CA to also express an opinion that the branch financial statements give a true and fair view. Which is the most appropriate response of the CA?

The CA should explain that a forensic investigation has a specific purpose and is not an audit, so it does not yield a true and fair opinion. Such an opinion needs a separate audit engagement performed under the Standards on Auditing with the required scope and evidence.

  1. AAccept, since an investigation automatically provides assurance on true and fair view
  2. BExplain that the investigation engagement is for a specific purpose and does not result in an audit opinion on true and fair view, which needs a separate audit engagement under the SAsCorrect
  3. CIssue the opinion but limit it to the branch cash balance only
  4. DRefuse the investigation engagement altogether because of the request

Explanation

An investigation is carried out for a specific objective, such as establishing fraud facts, and follows the terms of engagement agreed with the client. It is not an audit under the SAs. A true and fair opinion requires an audit engagement with its own scope and procedures, so the CA should clarify scope rather than blur the two.

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