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CS Professional · Compliance Management, Audit and Due Diligence · Forming an Opinion and Reporting

Ganga Pharma Ltd's financial statements show a note that says 'Accounting policies are as usual' without describing them. Under SA 700 (Revised), which specific evaluation is the auditor failing to be satisfied on?

The auditor cannot be satisfied that the financial statements adequately disclose the significant accounting policies selected and applied. A note merely saying policies are as usual does not describe them, so the evaluation required by the standard on policy disclosure is not met.

  1. AWhether the accounting estimates made by management are reasonable
  2. BWhether the financial statements adequately disclose the significant accounting policies selected and appliedCorrect
  3. CWhether the terminology used for the title of each financial statement is appropriate
  4. DWhether the financial statements are comparable with those of competitors

Explanation

Paragraph 13(a) requires the auditor to evaluate whether the financial statements adequately disclose the significant accounting policies selected and applied. A vague note that does not describe the policies fails that test. Estimates and terminology are separate evaluations and are not the issue here.

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