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

Rao & Co. accepted a review of Yamuna Retail Ltd's annual financial statements. After the review was substantially completed, management refused to give access to certain records, imposing a scope limitation. Law does not require Rao & Co. to continue. Which action is consistent with SRE 2400 (Revised)?

Since the review is substantially complete, the practitioner may complete it to the extent possible, disclaim a conclusion, and explain the management-imposed scope limitation in the report paragraph describing the basis for disclaiming a conclusion. Withdrawal is not the only route, and an unmodified or adverse conclusion would be wrong.

  1. AWithdrawal is impossible once fieldwork is substantially complete
  2. BThe practitioner may decide to complete the review to the extent possible, disclaim a conclusion and explain the scope limitation in the basis paragraph of the reportCorrect
  3. CThe practitioner must issue an unmodified conclusion because most work is done
  4. DThe practitioner must give an adverse conclusion

Explanation

The standard notes that practicality of withdrawal depends on the stage of completion. If substantially completed, the practitioner may complete the review as far as possible, disclaim a conclusion and explain the limitation in the basis paragraph. Option C is wrong as unmodified conclusion is unsupported. Option D confuses a scope limitation with a known misstatement.

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