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CA Intermediate · Auditing and Ethics · Completion and Review

After the audit report of Godavari Agro Ltd is signed and the financial statements are issued, the auditor learns of a fact that existed at the report date and, had it been known, might have caused a modified report. Management has not yet been informed. What should the auditor do first under SA 560?

The auditor should first discuss the matter with management and, where appropriate, those charged with governance, and determine whether the financial statements require amendment. SA 560 sets this as the initial step on facts discovered after the report date, before deciding any further action such as a revised report.

  1. AWithdraw the report without informing anyone
  2. BDiscuss the matter with management and, where appropriate, those charged with governance, and determine whether the financial statements need amendmentCorrect
  3. CIssue a new report immediately with an adverse opinion
  4. DTake no action because the report has already been issued

Explanation

SA 560 requires the auditor, on learning of facts after the report date, to discuss the matter with management and, where appropriate, those charged with governance, and to decide whether amendment is needed. Unilateral withdrawal or an immediate adverse report skips this process, and doing nothing ignores the requirement.

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