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

After Lakshya Foods Ltd's financial statements and the auditor's report were issued, a fact emerged that existed at the report date. Management decides to amend the financial statements, and the circumstances in paragraph 12 of SA 560 do not apply. Which action by the auditor is required?

The auditor must perform procedures on the amendment, review management's steps to inform anyone holding the earlier statements, extend subsequent-events procedures to the date of the new report, and give a new report dated no earlier than approval of the amended financial statements.

  1. ACarry out procedures on the amendment, review management's steps to inform recipients of the earlier statements, extend subsequent-events procedures to the new report date and issue a new report dated no earlier than approval of the amended statementsCorrect
  2. BIssue a new report dated the same as the original report to avoid confusion
  3. COnly review the steps taken by management and issue no new report
  4. DIssue a new report but skip subsequent-events procedures because the statements were already audited

Explanation

SA 560 para 15 requires procedures on the amendment, review of management's steps to inform recipients, extension of the procedures in paragraphs 6 and 7 to the new report date, and a new report dated no earlier than approval of the amended statements. Backdating or skipping procedures contradicts this.

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