Skip to content

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

Himalaya Motors Ltd, an Indian company, prepares financial statements under the Accounting Standards prescribed under section 133 of the Companies Act, 2013 and also states they are prepared under IFRSs, so both frameworks are applicable. The auditor finds the statements comply with the Accounting Standards but fail to comply with IFRSs. What is the correct approach under SA 700 (Revised)?

The auditor considers each framework separately, giving an unmodified opinion on compliance with the Accounting Standards prescribed under section 133 and a modified opinion on IFRSs in accordance with SA 705 (Revised), because the statements fail to comply with IFRSs.

  1. AGive a single adverse opinion covering both frameworks
  2. BGive an unmodified opinion on the Accounting Standards framework and a modified opinion on IFRSs in accordance with SA 705 (Revised)Correct
  3. CIgnore IFRSs since the Indian framework is complied with
  4. DGive a modified opinion on the Accounting Standards framework and an unmodified one on IFRSs

Explanation

Each framework is considered separately when forming the opinion. Where the statements comply with one framework but not the other, an unmodified opinion can be given on the compliant framework and a modified opinion on the other, as per SA 705 (Revised). Ignoring IFRSs is wrong because both are applicable frameworks.

Did you get it right without looking?

One question tells you little. A timed set on Forming an Opinion and Reporting shows your real accuracy, how long you take and where you lose marks.

Practise Forming an Opinion and ReportingFree diagnostic mock

More Forming an Opinion and Reporting questions