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

Sundaram & Co, Chartered Accountants, audit Kaveri Textiles Ltd. The company prepares one set of financial statements under Ind AS for statutory purposes and a second set under IFRS for its foreign lender, and has engaged the firm to report on both. The firm has determined that both frameworks are acceptable in the circumstances. What may the auditor include in the report on the Ind AS financial statements?

The auditor may include an Other Matter paragraph noting that the entity has prepared another set of financial statements under a different general purpose framework and that the auditor has reported on them. This is permitted by SA 706 (Revised) once both frameworks are found acceptable; no modification of opinion is needed.

  1. AAn Other Matter paragraph stating that another set of financial statements has been prepared under another general purpose framework and that the auditor has issued a report on thoseCorrect
  2. BAn Emphasis of Matter paragraph stating that the IFRS statements are the primary statements of the company
  3. CA qualified opinion because two sets of financial statements exist for the same period
  4. DA disclaimer of opinion on the Ind AS financial statements until the IFRS report is issued

Explanation

Under SA 706 (Revised), when an entity prepares two sets of financial statements under different general purpose frameworks and the auditor has found the frameworks acceptable, the auditor may include an Other Matter paragraph referring to the other set and the report issued on it. Preparing two sets is not itself a ground for qualification or disclaimer, and an Emphasis of Matter paragraph is meant for matters already presented in the financial statements.

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