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CA Final · Advanced Auditing, Assurance and Professional Ethics · Completion and Review

After Arjun & Associates issued its report on Kaveri Foods Ltd., the auditor learned of a fact that would have affected the report. Management decides to amend the financial statements and the circumstances in paragraph 12 of SA 560 do not apply. What must the auditor do?

The auditor extends the subsequent events procedures to the date of the new report and issues a new report on the amended statements. That report is dated no earlier than the date of approval of the amended statements, after reviewing management's steps to inform recipients.

  1. ACarry out procedures on the amendment only, and reissue the original report with its original date
  2. BExtend the subsequent events procedures to the date of the new report, and give a new report dated no earlier than approval of the amended statementsCorrect
  3. CWithdraw from the engagement and take no further steps
  4. DAsk management to inform recipients, but carry out no procedures on the amendment

Explanation

The text says the auditor carries out the procedures needed on the amendment and reviews the steps management took to inform recipients of the earlier statements. Unless the paragraph 12 circumstances apply, the auditor also extends the subsequent events procedures to the date of the new report and provides a new report. That report is dated no earlier than the approval of the amended statements. Reissuing the old report with its old date ignores this requirement.

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