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CMA Intermediate · Corporate Accounting and Auditing · Audit Report and Reporting under CARO

The financial statements of Indus Steels Ltd are prepared under two applicable frameworks: the Accounting Standards prescribed under section 133 of the Companies Act, 2013 and IFRSs. They comply with the Accounting Standards but fail to comply with IFRSs in a material respect. Which reporting is correct as per SA 700 (Revised)?

The auditor gives an unmodified opinion for the framework complied with, here the Accounting Standards under section 133, and a modified opinion under SA 705 (Revised) for IFRSs. Each applicable framework is assessed separately, and an Emphasis of Matter cannot substitute for the modification.

  1. AA single adverse opinion on both frameworks
  2. BAn unmodified opinion for the Accounting Standards framework and a modified opinion in accordance with SA 705 (Revised) for IFRSsCorrect
  3. CAn unmodified opinion on both frameworks with an Emphasis of Matter paragraph on IFRSs
  4. DA disclaimer of opinion on the Accounting Standards framework and an unmodified opinion on IFRSs

Explanation

Each framework is considered separately when both are applicable. Where the statements comply with one framework but not the other, an unmodified opinion can be given for the compliant framework and a modified opinion under SA 705 (Revised) for the other. An EOM cannot cure a material non-compliance, so the third option is wrong.

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