CA Final · Advanced Auditing, Assurance and Professional Ethics · Prospective Financial Information and Other Assurance Services
CA Tanvi is engaged under SAE 3420 to report on pro forma financial information in the prospectus of Himalaya Foods Ltd. She concludes that the pro forma information is not compiled, in all material respects, on the applicable criteria, so a modified opinion is appropriate. Management refuses to make the necessary changes. The law does not allow a prospectus containing a modified opinion to be published. Which course is consistent with the Indian version of the standard?
She should discuss the matter with management and, if they will not make the changes, withdraw from the engagement or consider seeking legal advice. SAE 3420 deleted the ISAE option of withholding the report, because withholding reports is not in vogue in India.
- AWithhold the report, as in ISAE 3420
- BIssue an unmodified opinion to allow publication
- CDiscuss the matter with management and, if no change is made, withdraw from the engagement or consider seeking legal advice; withholding the report is not an option in the Indian standardCorrect
- DDelete the pro forma information herself and sign the report
Explanation
The Indian material modifications note that the option of withholding the report was deleted from paragraph 32 and paragraphs A40 and A44 because withholding is not in vogue in India. The practitioner discusses the matter with the responsible party and, failing agreement, withdraws or considers legal advice. Withholding is the ISAE option and is wrong here.
Did you get it right without looking?
One question tells you little. A timed set on Prospective Financial Information and Other Assurance Services shows your real accuracy, how long you take and where you lose marks.
More Prospective Financial Information and Other Assurance Services questions
- CA Manoj is finalising his report on the examination of a projection prepared by Dhanvi Foods Ltd for a lender. Fieldwork procedures were co…
- CA Ishita is the service auditor of Nimbus Payroll Services, which processes payroll for many user entities. She has finished her work on a …
- Vihaan Logistics Ltd. outsources payroll processing to Paytrack Services, which engages CA Ishaan to issue a SAE 3402 report on controls at …
- CA Vikram is reporting under SAE 3402 on Orbit Data Services, a hosting provider. Orbit's management asks him to include in the scope the co…
- Zenith Polymers Ltd has asked CA Meera to examine a profit forecast that it will include in an information memorandum. While drafting the re…
- While examining a five-year projection of Zenith Pharma Ltd, CA Arjun finds that management's assumptions do not provide a reasonable basis …