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

Meridian Textiles Ltd. prepares one set of financial statements under Ind AS for statutory purposes and another set under IFRS for its foreign parent. It has engaged CA Arvind to report on both sets, and he has concluded that both frameworks are acceptable in the circumstances. What may CA Arvind do in his report on the Ind AS financial statements?

CA Arvind may include an Other Matter paragraph referring to the fact that the entity has prepared another set of financial statements under another general purpose framework and that he has issued a report on that set. This is allowed because he has found both frameworks acceptable.

  1. AInclude an Other Matter paragraph stating that another set of financial statements has been prepared under another general purpose framework and that he has issued a report on themCorrect
  2. BInclude an Emphasis of Matter paragraph stating that the IFRS statements are the primary statements of the entity
  3. CRefuse to report on the Ind AS statements until the IFRS statements are withdrawn
  4. DIssue a single combined report that gives one opinion covering both sets of statements

Explanation

Under SA 706 (Revised), where an entity prepares two sets of financial statements under different general purpose frameworks and the auditor has found both frameworks acceptable, the auditor may add an Other Matter paragraph. It should refer to the other set and to the report issued on it. An Emphasis of Matter paragraph is meant for matters already presented or disclosed in the financial statements, so it is wrong here. Nothing requires withdrawal of the IFRS set or a combined opinion.

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