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

CA Ravi issues an SAE 3402 assurance report for Nimbus Data Services. A prospective customer, not a current user entity, asks for a copy to evaluate Nimbus's own business strategy. Ravi's report already states that the criteria are relevant only to those who understand how the system is used for financial reporting by user entities. What additional step is consistent with SAE 3402?

Ravi may add wording restricting distribution of the report to intended users and restricting its use by others or for other purposes. SAE 3402 permits this in addition to the statement that the criteria are relevant only to those who understand the system's use in financial reporting.

  1. AAdd wording restricting distribution to intended users and use for other purposes, since this is permittedCorrect
  2. BRemove the statement about understanding of users, as reports must be general purpose
  3. CConvert the report into a statutory audit report under the Companies Act
  4. DRefuse any restriction since restricted wording is prohibited in assurance reports

Explanation

SAE 3402 says the criteria are relevant only to those who understand how the system is used for financial reporting by user entities, and this is stated in the report. The service auditor may also consider it appropriate to include wording restricting distribution to intended users, use by others or use for other purposes. Option B and D contradict this.

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