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

The financial statements of Kaveri Exports Ltd, an Indian company, are prepared under both the Accounting Standards prescribed under section 133 of the Companies Act, 2013 and IFRSs. They comply with the Accounting Standards but fail to comply materially with IFRSs. According to SA 700 (Revised), what should the auditor do?

The auditor considers each framework separately. Since the statements comply with the Accounting Standards under section 133 but not with IFRSs, the auditor gives an unmodified opinion on the former and a modified opinion under SA 705 (Revised) on IFRSs.

  1. AGive an unmodified opinion on compliance with the Accounting Standards and a modified opinion in accordance with SA 705 (Revised) regarding IFRSsCorrect
  2. BGive a single adverse opinion covering both frameworks
  3. CGive an unmodified opinion on both frameworks and add an Emphasis of Matter paragraph on IFRSs
  4. DGive an unmodified opinion on IFRSs and a modified opinion on the Accounting Standards

Explanation

Where statements are prepared under two frameworks, each is considered separately. If they comply with one 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 Emphasis of Matter cannot substitute for a required modified opinion, and the compliance position is reversed in the last option.

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