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

CA Tanvi is engaged to report on pro forma financial information included in the prospectus of Greenfield Power Ltd. She concludes a modified opinion is appropriate, but the company refuses to make the changes she suggests, and law does not preclude publishing a prospectus with a modified opinion. What does SAE 3420, as modified for India, say about the option of withholding the report?

SAE 3420 deletes the option of withholding the report because the practice is not in vogue in India. After discussing the matter with the responsible party without agreement, the practitioner can withdraw from the engagement or consider seeking legal advice, but should not give an unmodified opinion contrary to her conclusion.

  1. AShe should withhold the report, as in ISAE 3420
  2. BThe option of withholding the report has been deleted in India because the practice is not in vogue; she may withdraw or consider legal advice where the situation in the modified paragraph arisesCorrect
  3. CShe must issue an unmodified opinion to protect the client's issue timetable
  4. DShe must resign from the practice of all other engagements for the company

Explanation

The material modifications to ISAE 3420 delete the option for the practitioner to withhold the report, since this practice is not in vogue in India. The remaining courses are discussing with the responsible party, withdrawing from the engagement or considering legal advice. Issuing an unmodified opinion would contradict her conclusion.

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