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CA Intermediate · Auditing and Ethics · Ethics and Terms of Audit Engagements

Partner CA Iyer is auditing Zenith Pharma Ltd. The management requests, after six months of the audit, to change the engagement from an audit to a review engagement that provides lower assurance, because the audit is proving costly. There is no reasonable justification other than cost convenience for the change. What is the appropriate response of the auditor under SA 210?

Without a reasonable justification, the auditor should not agree to change an audit into a lower-assurance engagement such as a review. If the original audit cannot continue, the auditor should withdraw where law permits and consider any obligation to report the circumstances to those charged with governance or regulators.

  1. AAgree to the change and issue a review report while still referring to the audit work already done
  2. BNot agree to the change where there is no reasonable justification, and if unable to continue the audit, withdraw where possible and consider reporting obligationsCorrect
  3. CContinue the audit but do not communicate with anyone about the request
  4. DConvert the engagement into a review and keep the audit fee unchanged

Explanation

Under SA 210, an auditor should not agree to a change to an engagement providing a lower level of assurance without reasonable justification. If the auditor is not permitted to continue the original engagement, they should withdraw where applicable law permits and determine any obligation to report the circumstances. Silently converting the engagement or ignoring the request is not appropriate.

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