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CA Final · Advanced Auditing, Assurance and Professional Ethics · Review of Financial Information

Iyer & Co. was appointed under a statute to review the financial statements of Tapi Municipal Corporation for a specific period and is prohibited by law from withdrawing before completion. Management imposes a scope limitation. What may the practitioner consider including in the report?

The practitioner may consider including an Other Matter paragraph in the report explaining why it is not possible to withdraw from the engagement. This arises where law or the terms of appointment for a specific period prohibit withdrawal, as with a public sector entity.

  1. AAn Other Matter paragraph explaining why withdrawal is not possibleCorrect
  2. BA statement that the entity is a going concern
  3. CA paragraph removing the scope limitation from the report
  4. DNo explanation, because reports never mention withdrawal

Explanation

SRE 2400 (Revised) recognises that withdrawal may not be possible where law requires the practitioner to continue, for example for a public sector entity or an appointment for a specific period. It adds that the practitioner may consider it necessary to include an Other Matter paragraph explaining why withdrawal is not possible. The other options are not supported by the text.

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