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

CA Fernandes is engaged under SAE 3420 to report on pro forma financial information in the prospectus of Bharat Cement Ltd. The practitioner concludes that a modified opinion is appropriate, but management refuses to make the necessary changes and the law does not allow the prospectus to be published with a modified opinion. Considering the Indian modification to ISAE 3420, what is the position?

In India the option of withholding the report has been deleted from SAE 3420. The practitioner should discuss the matter with the responsible party and, if it does not agree to the changes, may withdraw from the engagement or consider seeking legal advice.

  1. AThe practitioner may withhold the report, because that option is retained in the Indian standard
  2. BThe practitioner must issue an unmodified opinion to enable publication
  3. CThe option of withholding the report has been deleted in India, so the practitioner cannot rely on it and should discuss the matter with the responsible party, and may withdraw from the engagement or consider legal adviceCorrect
  4. DThe practitioner must replace the opinion with a disclaimer and report it to the Registrar

Explanation

The Indian SAE 3420 deletes the option of withholding the report because the practice is not in vogue in India. The remaining steps are to discuss with the responsible party, withdraw from the engagement, or consider seeking legal advice. Withholding is therefore not a valid action.

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