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CA Final · Advanced Auditing, Assurance and Professional Ethics · Professional Ethics & Liabilities of Auditors

Arya & Co. and Bose & Co. are joint auditors of Titan Steels Ltd. Work was divided, but evaluating the company's information and explanations was not distributed between them. A misstatement arose in an area allotted to Bose & Co. Which conclusion is correct as per the Code of Ethics and SA 299 (Revised)?

Both auditors are jointly and severally responsible for obtaining and evaluating management's information and explanations, because no distribution was agreed. Bose & Co. remains responsible for proper execution of procedures in its allotted area, and both share responsibility for the report's compliance with statutes and standards.

  1. AArya & Co. bears no responsibility for any matter relating to the divided areas, in any circumstance
  2. BBoth are jointly and severally responsible for obtaining and evaluating management's information and explanations, since no distribution was agreed, and Bose & Co. is responsible for executing the procedures in its allocated areaCorrect
  3. CArya & Co. alone is responsible for all explanations, while Bose & Co. is responsible for statutory compliance
  4. DNeither is responsible for the audit report's compliance with the Standards on Auditing

Explanation

For divided work each joint auditor is responsible only for his allocated work, including proper execution of procedures. Obtaining and evaluating management's information and explanations is a joint responsibility unless a specific distribution is agreed, and none was agreed here. All joint auditors are also jointly and severally responsible for compliance of the audit report with statutes and SAs. Option A overstates the protection.

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