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CA Final · Advanced Auditing, Assurance and Professional Ethics · Prospective Financial Information and Other Assurance Services

Arjun Realty Ltd proposes to include pro forma financial information in its prospectus. CA Deepa reports under SAE 3420 and concludes that a modified opinion on the compilation is appropriate. Management refuses to make the needed changes. What does the Indian SAE 3420 position allow for her as regards the practice of withholding the report?

She cannot choose to withhold the report, because the Indian SAE 3420 deleted that option. The practice of withholding the report is not in vogue in India, so the carve-out found in ISAE 3420 for this situation has been removed, and she must deal with the matter by other available means.

  1. AShe may withhold the report, as under ISAE 3420
  2. BThe option of withholding the report has been deleted in the Indian SAE, so she cannot choose it since that practice is not in vogue in IndiaCorrect
  3. CShe must withhold the report in all cases
  4. DShe must replace the modified opinion with an unmodified opinion

Explanation

ISAE 3420 lets the practitioner withhold the report or withdraw when law precludes publication with a modified opinion and management will not change. In India the practice of withholding the report is not in vogue, so SAE 3420 deleted that option, including in related application paragraphs. Hence the first option is wrong, and issuing an unmodified opinion would be improper.

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