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

Rao & Co. are engaged to review the financial statements of Deccan Steels Ltd. Near completion, management refuses to give access to certain records, imposing a scope limitation. The practitioner has substantially completed the review. Which action is consistent with SRE 2400 (Revised)?

Where 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. Immediate withdrawal is not the only option, and an unmodified or adverse conclusion is inappropriate.

  1. AThe practitioner must withdraw immediately, as completion is never permitted after a limitation
  2. BThe practitioner may decide to complete the review to the extent possible, disclaim a conclusion and explain the scope limitation in the basis for disclaiming a conclusion paragraphCorrect
  3. CThe practitioner should issue an unmodified conclusion because the work is substantially complete
  4. DThe practitioner should issue an adverse conclusion on the statements

Explanation

The text says the practicality of withdrawal depends on the stage of completion; if the review is substantially completed, the practitioner may complete it to the extent possible, disclaim a conclusion and explain the limitation in the basis paragraph. Option C is wrong as an unmodified conclusion is unsupported. Option D is wrong because an adverse conclusion addresses misstatement, not inability to conclude.

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