Skip to content

CA Final · Advanced Auditing, Assurance and Professional Ethics · Reporting

Kulkarni & Associates audits Anand Auto Ltd., which prepares one set of financial statements under Indian Accounting Standards and another set under IFRS for its foreign parent. The firm has determined both frameworks are acceptable in the circumstances and has been engaged to report on both sets. In its report on the Ind AS financial statements, what may the auditor do under SA 706 (Revised)?

The auditor may include an Other Matter paragraph noting that the entity has prepared another set of financial statements under another general purpose framework and that a report has been issued on them. This applies once both frameworks are found acceptable; no modification is needed.

  1. AInclude an Other Matter paragraph stating that another set of financial statements has been prepared under another general purpose framework and that a report has been issued on themCorrect
  2. BInclude a Key Audit Matter stating that the IFRS statements are unaudited
  3. CQualify the opinion because two sets of financial statements exist
  4. DInclude an Emphasis of Matter paragraph stating that the IFRS framework is more appropriate

Explanation

SA 706 (Revised) permits an Other Matter paragraph referring to the fact that the same entity has prepared another set of financial statements under another general purpose framework and that the auditor has issued a report on them, provided the frameworks are acceptable. The existence of two sets does not by itself justify a modification. The IFRS statements are audited, so describing them as unaudited would be wrong.

Did you get it right without looking?

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

Practise ReportingFree diagnostic mock

More Reporting questions