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

CA Anil is reporting on pro forma financial information in the prospectus of Sagar Infra Ltd under SAE 3420. He concludes that a modified opinion is appropriate, but management refuses to make the necessary changes. A colleague suggests he can simply withhold the report, as in ISAE 3420. What is correct in the Indian standard?

The Indian SAE 3420 deletes the option of withholding the report, because that practice is not in vogue in India. So the practitioner cannot rely on withholding the report when management refuses changes, and an unmodified opinion is not required merely because management objects.

  1. AHe may withhold the report, since the Indian standard retains this option
  2. BThe option of withholding the report has been deleted in the Indian SAE 3420 because the practice is not in vogue in IndiaCorrect
  3. CHe must issue an unmodified opinion once management objects
  4. DHe must issue a disclaimer without discussing it with management

Explanation

SAE 3420 departs from ISAE 3420 by deleting the option of withholding the report, because that practice is not in vogue in India. The deletion appears in paragraph 32 and in A40 and A44. Option A is wrong because it keeps an option the Indian standard removed.

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