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CMA Intermediate · Corporate Accounting and Auditing · Audit Report and Reporting under CARO

Financial statements of Ganga Ltd comply with Ind AS and also disclose the extent of compliance with another financial reporting framework. The disclosure is not misleading, but the auditor judges it fundamental to users' understanding of the financial statements. Which treatment is correct under SA 700 (Revised)?

The auditor adds an Emphasis of Matter paragraph under SA 706 (Revised) drawing attention to the disclosure. A modified opinion applies only if the disclosure about the other framework is misleading, which is not the case here.

  1. AAdd an Emphasis of Matter paragraph under SA 706 (Revised) drawing attention to the disclosureCorrect
  2. BExpress a modified opinion under SA 705 (Revised)
  3. CIgnore the disclosure because it concerns another framework
  4. DDisclaim an opinion because two frameworks are referred to

Explanation

If the disclosure on compliance with the other framework is misleading, a modified opinion is expressed. Here it is not misleading, but it is fundamental to understanding, so an Emphasis of Matter paragraph is added. The modified-opinion option applies only to the misleading case.

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