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CA Final · Advanced Auditing, Assurance and Professional Ethics · Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance

Veda Textiles Ltd, a listed company, has engaged CA Meera to provide limited assurance on selected BRSR Core indicators. Management proposes that Meera also design and operate the company's internal data-collection system for energy and water metrics, saying this will improve reliability. Which conclusion is correct for Meera?

Meera should decline to design and operate the data-collection system. Doing so would make her assess information produced by her own work, creating a self-review threat that safeguards such as disclosure or separate teams cannot reduce, and this applies equally to limited assurance engagements.

  1. AShe may accept, because the assurance is only limited and not reasonable assurance
  2. BShe should decline designing and operating the system, as it creates a self-review threat to independence that cannot be reduced to an acceptable levelCorrect
  3. CShe may accept if she discloses the arrangement in the assurance report
  4. DShe may accept if a separate team within her firm performs the design work

Explanation

Designing and operating the client's reporting system and then assuring the information it produces means the assurer reviews her own work. This is a self-review threat and, for management responsibilities, it is not reduced by disclosure or by using a separate team. The level of assurance does not alter independence requirements.

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