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

Mehta & Rao, Chartered Accountants, are engaged to review the annual financial statements of Kaveri Plastics Pvt Ltd under SRE 2400 (Revised). While planning analytical procedures, the practitioner finds that the accounting records needed for them are suspected to be substantially inaccurate or incomplete. What is the most appropriate conclusion?

The practitioner may have cause to doubt that the information needed for the review will be available or reliable, because records required for analytical procedures are suspected to be substantially inaccurate or incomplete. This doubt must be considered before proceeding, rather than ignoring it or issuing a clean conclusion.

  1. AThe practitioner may have cause to doubt that the information needed to perform the review will be available or reliable, and should consider this before proceedingCorrect
  2. BThe practitioner should continue the review unchanged because analytical procedures are optional in a review
  3. CThe practitioner should convert the engagement into a full statutory audit without discussion with management
  4. DThe practitioner should issue a clean conclusion and mention the record weakness only in the engagement letter

Explanation

SRE 2400 (Revised) gives, as an example of cause to doubt that the information needed will be available or reliable, a situation where records needed for analytical procedures are suspected to be substantially inaccurate or incomplete. The practitioner must therefore address this doubt. Continuing as normal or issuing a clean conclusion ignores the doubt, and converting to an audit unilaterally is not what the text prescribes.

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