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CA Final · Advanced Auditing, Assurance and Professional Ethics · Reporting

While auditing Kaveri Pharma Ltd., the auditor gives a qualified opinion because the financial statements omit the directors' remuneration disclosure required by the applicable framework. The annual report's other information does not mention directors' remuneration and nothing in it is affected by the omission. Under SA 720 (Revised), what is the correct conclusion about the statement the auditor must make on other information?

The qualified opinion may have no implications for the other information statement. Because the matter, non-disclosure of directors' remuneration, is not included or addressed in the other information and does not affect any part of it, the auditor need not report a misstatement merely because of the qualification.

  1. AThe auditor must state that other information is materially misstated because of the qualification
  2. BThe auditor must give a disclaimer of opinion on the financial statements
  3. CThe qualification may have no implications for the statement on other information, as the matter is not included or addressed in it and does not affect any part of itCorrect
  4. DThe auditor must withdraw from the engagement since the other information cannot be read

Explanation

The auditor must consider the implications of the qualification for the other information statement. Since the omitted remuneration disclosure is not addressed in the other information and affects no part of it, the qualification may have no impact on that statement. Stating a misstatement automatically, disclaiming, or withdrawing is unsupported.

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