CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services

Verma & Associates are the statutory auditors of Zenith Ltd. They are engaged separately to perform agreed-upon procedures on the company's inventory records for a lender. The partner argues that SRS 4400 can be followed only because the firm is the statutory auditor, and that otherwise another CA firm could not undertake it. The firm is also asked by a client to compile financial statements, and its quality control partner says SQC 1 does not apply to compilation engagements. Which conclusion is correct?

Both claims are wrong. SRS 4400 uses the term auditor without implying the person must be the entity's statutory auditor, and SQC 1 covers the firm's quality control responsibilities for related services engagements, including compilation engagements under SRS 4410 (Revised).

1. ABoth statements are correct, since SRS 4400 needs the statutory auditor and SQC 1 covers only audits
2. BThe first statement is correct but the second is wrong
3. CBoth statements are wrong: the term auditor in SRS 4400 does not imply that the person must be the entity's statutory auditor, and SQC 1 deals with the firm's quality control responsibilities for related services engagements including compilationCorrect
4. DThe second statement is correct but the first is wrong