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CS Professional · Compliance Management, Audit and Due Diligence · Audit Engagement

Ganga Foods Ltd's auditor, Rao & Associates, has signed the report but the financial statements are not yet issued. Management learns of a fact that may affect the financial statements. Another partner says the auditor's report mentions that the company should tell the auditor about facts only up to the date of the report. Applying the illustrative management responsibilities in SA 210, which is correct?

Management is responsible for informing the auditor of facts that may affect the financial statements and that it becomes aware of between the date of the auditor's report and the date the financial statements are issued. The duty does not end at signing and does not depend on a Board direction.

  1. AManagement is responsible for informing the auditor of such facts arising between the date of the auditor's report and the date the financial statements are issuedCorrect
  2. BManagement need not inform the auditor once the report is signed
  3. CManagement should inform the auditor only if the Board directs it to
  4. DOnly the auditor is responsible for discovering such facts, through subsequent procedures

Explanation

The terms list a management responsibility of informing the auditor of facts that may affect the financial statements, of which management may become aware during the period from the date of the report to the date the financial statements are issued. The partner's claim that the duty ends at the report date is wrong. The duty is not conditional on a Board direction.

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