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

Priya & Associates have almost completed the review of Sundaram Engineering Ltd's statements when management refuses access to certain records, imposing a scope limitation. The firm was appointed by law to review the statements for a specified period and is prohibited from withdrawing before completion of the review. Which action is consistent with SRE 2400 (Revised)?

The firm should complete the review to the extent possible, disclaim a conclusion and explain the scope limitation in the basis paragraph. Because it is legally prohibited from withdrawing, it may also include an Other Matter paragraph explaining why withdrawal from the engagement was not possible.

  1. AWithdraw immediately regardless of the legal prohibition
  2. BIssue an unmodified conclusion since the review is substantially complete
  3. CDisclaim a conclusion only after obtaining the records through a court order
  4. DComplete the review to the extent possible, disclaim a conclusion explaining the scope limitation, and consider an Other Matter paragraph explaining why withdrawal was not possibleCorrect

Explanation

The text says that when the review is substantially complete the practitioner may complete it to the extent possible, disclaim a conclusion and explain the limitation in the basis paragraph. Where law prohibits withdrawal, the practitioner may also consider an Other Matter paragraph explaining why withdrawal was not possible. Withdrawing despite prohibition or giving an unmodified conclusion is inconsistent with this.

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