CA Final · Advanced Auditing, Assurance and Professional Ethics · Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance
CA Tanya, an assurance practitioner, is hired to give assurance on the ESG report of Lotus Foods Ltd. During fieldwork she finds that management selectively excluded two plants with high effluent discharge from the report boundary, without disclosure. How should she respond?
Tanya should evaluate whether the undisclosed exclusion of the high-effluent plants misleads users, and if it is material and management will not correct it, modify her conclusion. Report preparation is management's responsibility, so she should not add data herself or simply accept the omission.
- AIgnore the omission, since boundary choice is management's prerogative in all cases
- BEvaluate whether the undisclosed exclusion makes the report misleading, and if material, modify her conclusion appropriatelyCorrect
- CWithdraw immediately without communicating with anyone
- DInclude the two plants' data herself in the report to correct the omission
Explanation
A practitioner must assess whether the subject matter information is free of material misstatement, including misleading omissions arising from boundary choices. If material and uncorrected, the conclusion is modified. Ignoring it is inappropriate, and the practitioner cannot prepare the report data herself because that is management's responsibility.
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