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CA Final · Advanced Auditing, Assurance and Professional Ethics · Review of Financial Information

A practitioner reviewing Sagar Foods Ltd set materiality at ₹8 lakh at planning. During the review, the practitioner learns of information which, had it been known earlier, would have led to a different materiality amount. What must the practitioner do?

The practitioner must revise materiality for the financial statements as a whole. The standard requires revision when information that comes to light during the review would have caused a different amount to be determined initially, and it does not depend on management's approval.

  1. ARetain the original materiality, since it was set at planning
  2. BRevise materiality for the financial statements as a wholeCorrect
  3. CRevise materiality only if management agrees
  4. DIgnore materiality and test all balances fully

Explanation

SRE 2400 (Revised) requires the practitioner to revise materiality for the financial statements as a whole on becoming aware of information during the review that would have led to a different amount initially. Keeping the original figure contradicts this, and management's consent is irrelevant.

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