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CA Final · Advanced Auditing, Assurance and Professional Ethics · Completion and Review

The auditor of Sagar Logistics Ltd wants to apply SA 580 to a public sector-linked subsidiary and asks whether the standard applies differently because of public sector status. Based on the official text, what is the correct position?

The standard applies to all entities equally irrespective of form, nature and size. The specific public sector reference was deleted, but its spirit was retained, so additional written representations may still be needed where management responsibilities of a particular entity give rise to them.

  1. ASA 580 excludes public sector entities from its scope entirely
  2. BThe specific reference to public sector entities in ISA 580 was deleted because the Standards apply equally to all entities irrespective of form, nature and size, though the need for additional representations because of management responsibilities may still ariseCorrect
  3. CSA 580 requires public sector entities to give additional representations in every case
  4. DSA 580 applies only to listed entities, so no representations are needed

Explanation

The material modifications note says the ISA reference on public sector entities was deleted, since the Standards apply equally to all entities regardless of form, nature and size. The spirit of the deleted paragraph was retained: certain entities may need additional representations because of management's responsibilities. The other options misstate scope.

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