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CA Final · Advanced Auditing, Assurance and Professional Ethics · Completion and Review

Auditor of Kaveri Textiles Ltd signed the report on 10 June. On 25 June, after the financial statements were issued, the auditor learns of a fact that would have affected the report. Management decides to amend the financial statements, and no special circumstance of paragraph 12 applies. Which action is required of the auditor under SA 560?

The auditor must carry out procedures on the amendment, review management's steps to inform recipients of the earlier statements, extend subsequent-event procedures to the new report date, and give a new report dated no earlier than approval of the amended financial statements, not the original date.

  1. APerform procedures only on the amendment and keep the old report valid
  2. BCarry out procedures on the amendment, review management's steps to inform recipients of the earlier statements, extend subsequent-event procedures to the new report date, and issue a new report dated no earlier than approval of the amended statementsCorrect
  3. CWithdraw from the engagement without any further procedures
  4. DIssue a new report dated 10 June to match the original

Explanation

SA 560 requires procedures on the amendment, a review of the steps management takes to inform recipients, extension of the subsequent-event procedures to the new report date, and a new report dated no earlier than approval of the amended statements. Backdating to 10 June would contradict that requirement.

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