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CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services

Mehta & Associates are compiling special purpose financial statements for Anand Polymers Ltd, intended only for management's own purposes. The finance head requests that the compilation report be circulated to the company's bankers along with the statements. Based on the illustrative compilation report in SRS 4410 (Revised), what is the appropriate response?

The firm should decline. In the illustrative report for statements prepared for management's own purposes, distribution and use are restricted: the report is intended solely for management's use and should not be distributed to other parties such as bankers.

  1. AAgree, because the report is a public document once signed by the firm's partner
  2. BDecline the unrestricted circulation, since the illustrative report is intended solely for management and should not be distributed to other partiesCorrect
  3. CAgree, provided the bankers confirm the information provided by management
  4. DAgree, provided the report is changed to express limited assurance

Explanation

In the illustration for statements intended for management use only, the report states it is intended solely for management's use and should not be distributed to other parties. Circulating it to bankers conflicts with that restriction. Converting to limited assurance is not possible, as compilation provides no assurance.

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