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CA Final · Advanced Auditing, Assurance and Professional Ethics · Reporting

Sharma & Co. audits Veda Textiles Ltd. The audit report on the financial statements includes statutory reporting required by the Companies Act (for example, on the Companies (Auditor's Report) Order and on maintenance of books). These responsibilities are in addition to the auditor's responsibilities under the SAs and do not address the same topics as the SA-required report elements. How should Sharma & Co. present them under SA 700 (Revised)?

The statutory reporting should go in a separate section headed 'Report on Other Legal and Regulatory Requirements' or a similarly suitable title. Combining is permitted only when the topics match those of the SA-required report elements, which they do not here.

  1. AIn a separate section headed 'Report on Other Legal and Regulatory Requirements' or otherwise as appropriate to its contentCorrect
  2. BWithin the Basis for Opinion section, merged with the SA-required elements
  3. CIn an Emphasis of Matter paragraph placed after the opinion
  4. DIn a covering letter to management, outside the auditor's report

Explanation

SA 700 (Revised) requires other reporting responsibilities that go beyond the SAs to be addressed in a separate section titled 'Report on Other Legal and Regulatory Requirements' or otherwise as appropriate. Merging is allowed only where they address the same topics as the SA-required elements, which is not the case here. An Emphasis of Matter paragraph is meant to draw attention to a matter already disclosed in the financial statements, not to carry statutory reporting.

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