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CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services

CA Firm Kapoor & Co compiles a schedule of stock for Zenith Ltd to meet a regulator's prescribed format, for use only by the regulator-specified users. The management asks that the compilation report be circulated to the company's bankers as well. What is the appropriate conclusion based on the illustrative report in SRS 4410 (Revised)?

Circulation to bankers is not appropriate. In the SRS 4410 (Revised) illustration for information prepared to meet a regulator's requirements, the information is for particular users and distribution of the compilation report is restricted to those intended users.

  1. ADistribution of the report is restricted to the intended users, so wider circulation to bankers is not in line with the illustrationCorrect
  2. BThe report may be freely distributed since no assurance is given
  3. CThe report must be converted into an audit report before circulation
  4. DDistribution is restricted only for statements prepared for management, not regulatory schedules

Explanation

The illustration for regulatory compliance information states that use of the information is restricted to particular users and distribution of the report is restricted to the intended users. Lack of assurance does not remove this restriction, and the restriction applies to this regulatory illustration.

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