CA Final · Advanced Auditing, Assurance and Professional Ethics · General Auditing Principles and Auditors Responsibilities

After signing the audit report of Hari Engineering Ltd, a fixed asset valuation judgment made by CA Isha is criticised by a regulator, as information emerging a year later showed a higher value. At the time of the report, Isha had applied auditing and accounting principles competently on the facts then known. How should her professional judgment be evaluated under SA 200?

Professional judgment is evaluated by whether it reflects competent application of auditing and accounting principles and is appropriate and consistent with facts and circumstances known to the auditor up to the date of the auditor's report. Later emerging information does not make a sound judgment deficient in hindsight.

1. AIt is judged by hindsight using all facts that emerged after the report
2. BIt is judged by whether the client's management agrees with the valuation
3. CIt is judged by whether the final outcome matched her estimate
4. DIt is judged by whether it reflects competent application of auditing and accounting principles and is appropriate in light of facts known up to the date of the auditor's reportCorrect