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CS Professional · Compliance Management, Audit and Due Diligence · Audit Engagement

Before signing the report on Yamuna Energy Ltd, auditor Iyer & Co. wants the Annual Report. Under the illustrative engagement letter in SA 210, which request is correctly made to management for SA 720 (Revised) purposes?

Management is asked to provide a draft of the Annual Report containing the audited financial statements, so the auditor can read it and communicate any material inconsistencies with the financial statements before issuing the auditor's report. Timing before issuance is the key point.

  1. AProvide the final printed Annual Report after the auditor's report is signed
  2. BProvide a Draft of the Annual Report containing the audited financial statements so that the auditor can read it and communicate material inconsistencies before issuing the reportCorrect
  3. CProvide only the Directors' Report, since other information is excluded
  4. DProvide a Draft of the Annual Report after the AGM to check later inconsistencies

Explanation

The letter asks management for a draft of the annual report containing the audited financial statements so the auditor can read it and communicate material inconsistencies, if any, before issuing the auditor's report. Receiving it after signing or after the AGM defeats this purpose.

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