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ACCA Strategic Professional · Advanced Audit and Assurance (International) · The audit of performance information (pre-determined objectives) in the public sector

During the audit of an education ministry's performance report, the auditor finds that the indicators in the annual report differ from those in the approved strategic plan and budget: three indicators were dropped and two new ones added after year-end, with no disclosure. Which is the most appropriate response?

The auditor should treat undisclosed changes to indicators as a consistency problem against the approved plan, evaluate whether it is material, and modify the conclusion if it is. Management choosing indicators does not remove the need for consistency and disclosure, and withdrawal is not the automatic response.

  1. AAccept the changes as management is responsible for choosing indicators
  2. BTreat the matter as a possible non-compliance with the requirement that reported indicators be consistent with those planned, assess its effect, and consider a modified conclusion if the change is material and undisclosedCorrect
  3. CIgnore the matter as only financial statements are subject to consistency requirements
  4. DWithdraw from the engagement immediately

Explanation

Public sector performance reporting requires reported objectives and indicators to be consistent with the approved plan. Undisclosed post-year-end changes impair the suitability and consistency of the criteria and may suggest selective reporting. The auditor evaluates materiality and reports accordingly, not by accepting or withdrawing automatically.

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