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

Kaveri Textiles Ltd, an Indian company, prepares its financial statements under the Accounting Standards prescribed under section 133 of the Companies Act, 2013. How should the auditor identify the applicable financial reporting framework in the opinion paragraph?

The auditor identifies the framework by naming it, for example 'in accordance with the Accounting Standards prescribed under section 133 of the Companies Act, 2013'. This tells report users the context in which the opinion is given, so vague or missing references are not acceptable.

  1. ABy stating that the statements are in accordance with the Accounting Standards prescribed under section 133 of the Companies Act, 2013Correct
  2. BBy stating only that the statements are in accordance with generally accepted practices followed by the company
  3. CBy omitting any reference to a framework, because the Companies Act applies automatically
  4. DBy stating that the statements are in accordance with the auditor's own judgment of fairness

Explanation

SA 700 (Revised) explains that where the framework includes standards and legal requirements, it is identified in terms such as 'in accordance with the Accounting Standards prescribed under section 133 of the Companies Act, 2013'. The framework identification tells users the context of the opinion. Vague or omitted references do not meet this.

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