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

Rao & Associates are reviewing the financial statements of Narmada Steels Ltd. After the review is substantially complete, management refuses to give access to certain records, imposing a scope limitation. Withdrawal is legally prohibited because the firm is appointed to review the statements for that specific period. Which action is consistent with SRE 2400 (Revised)?

The practitioner may complete the review to the extent possible, disclaim a conclusion and explain the management-imposed scope limitation in the basis paragraph. Since withdrawal is legally prohibited for the appointed period, an Other Matter paragraph may also explain why withdrawal was not possible.

  1. AWithdraw immediately regardless of the legal prohibition
  2. BComplete the review to the extent possible, disclaim a conclusion, explain the scope limitation in the basis paragraph, and consider an Other Matter paragraph explaining why withdrawal was not possibleCorrect
  3. CIssue a qualified conclusion ignoring the missing records
  4. DIssue an unmodified conclusion with a note that records were not shown

Explanation

Where 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 before completion for the appointed period, the practitioner may also include an Other Matter paragraph explaining why withdrawal was not possible. Immediate withdrawal ignores the legal prohibition.

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