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

CA Anjali audits Orient Steel Ltd, whose financial statements and her report dated 10 June were issued to members. On 25 June she learns of a fact that existed at the balance sheet date and would have caused her to amend her report. Management says it will not amend the financial statements. According to SA 560, what is the correct approach?

The auditor should tell management and those charged with governance that she will seek to prevent future reliance on her report, and then take appropriate action. She should not ignore the matter, nor alter the date of the issued report.

  1. AIgnore the matter, as the financial statements have already been issued
  2. BNotify management and those charged with governance that she will seek to prevent future reliance on her report, and then take appropriate actionCorrect
  3. CUnilaterally change the date of the issued report to 25 June
  4. DResign from the audit immediately without informing anyone

Explanation

If management does not amend the statements where the auditor thinks they need to be, the auditor notifies management and those charged with governance that she will seek to prevent future reliance on the report, and then takes appropriate action. Ignoring the matter or altering the issued report's date does not address the problem.

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