Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reporting on other assignments

While compiling the financial statements of Delmar Ltd under ISRS 4410 (Revised), the practitioner notices that management's records include a large inventory balance that appears to be stated well above cost, contrary to the applicable framework. Management refuses to correct it. What is the most appropriate action by the practitioner?

The practitioner should ask management to correct or disclose the problem and, if management refuses, withdraw where possible. A compilation report carries no opinion, so it cannot be qualified, and the practitioner must not remain associated with information known to be misleading.

  1. AIssue a compilation report with a qualified opinion on inventory
  2. BPerform an audit of inventory to quantify the misstatement and then complete the engagement
  3. CComplete the compilation unchanged, since the practitioner is not responsible for the accuracy of the information
  4. DPropose that management correct or disclose the matter, and if it does not, withdraw from the engagement where possibleCorrect

Explanation

Under ISRS 4410 (Revised), if the information is misleading or inappropriate, the practitioner must propose appropriate corrections and, if management refuses, consider withdrawing. Compilation reports contain no opinion, so a qualification is not available. Simply proceeding ignores the duty not to be associated with misleading information, and auditing inventory goes beyond the engagement.

Did you get it right without looking?

One question tells you little. A timed set on Reporting on other assignments shows your real accuracy, how long you take and where you lose marks.

Practise Reporting on other assignmentsFree diagnostic mock

More Reporting on other assignments questions