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CMA Intermediate · Corporate Accounting and Auditing · Audit Engagement, Audit Program, Audit Documentation and Audit Evidence

An audit firm completed the audit of Nilgiri Power Ltd and signed its report on 15 May 2027. Under the Chartered Accountants Act, 1949 provisions reflected in SA 230 as adopted in India, what is the minimum period for which the engagement documentation must be retained, and why does it differ from ISA 230?

The minimum retention period is seven years. SA 230 adopts this because the Chartered Accountants Act, 1949 and its regulations prescribe seven years for retaining working papers, whereas the international standard ISA 230 prescribes only five years.

  1. AFive years, the same as ISA 230
  2. BSeven years, because the Chartered Accountants Act, 1949 and its regulations prescribe seven years for working papers, against five in ISA 230Correct
  3. CThree years, because the audit is of a company
  4. DTen years, because the company is listed

Explanation

The material modifications note states that ISA 230 prescribes five years while SA 230 prescribes seven years, because the Chartered Accountants Act, 1949 and regulations made under it prescribe a minimum of seven years for working papers. The five-year option reflects ISA, not the Indian standard.

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