CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services
Sunrise Textiles Pvt Ltd asks CA Meera to help prepare its management accounts (a balance sheet and a Statement of Profit and Loss) from the trial balance and records the company supplies. The accounts are for the company's internal use only. Meera is not asked to give any assurance. Which description of her engagement and report is correct under SRS 4410 (Revised)?
This is a compilation engagement under SRS 4410 (Revised). The practitioner helps management prepare the financial statements without giving assurance. The report states that the information was not verified and that no audit opinion or review conclusion is expressed, because a compilation is not an assurance engagement.
- AShe performs a compilation engagement and her report states that she has not verified the accuracy or completeness of the information, so no audit opinion or review conclusion is expressedCorrect
- BShe performs a limited assurance engagement and must express a review conclusion on the management accounts
- CShe performs an audit and must verify the accuracy and completeness of every ledger balance
- DShe performs an agreed-upon procedures engagement and must report factual findings on each procedure
Explanation
SRS 4410 (Revised) covers assisting management to prepare and present historical financial information without obtaining any assurance on it. The illustrative report says a compilation is not an assurance engagement, so the practitioner need not verify the information and expresses no audit opinion or review conclusion. A review conclusion would be wrong because no assurance is given.
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