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

While performing a limited assurance engagement on the water-consumption metric of Sahyadri Beverages Ltd, CA Iyer finds that plant-level meter readings were manually altered after month-end for two plants, with no explanation. The effect on the reported total is potentially material. What is the most appropriate action?

The practitioner should perform further procedures to obtain evidence about the alterations and assess the effect on the conclusion. If the material matter stays unresolved, the conclusion should be modified. Limited assurance still requires sufficient appropriate evidence, and reporting externally or withdrawing straight away is premature.

  1. AIgnore it, because limited assurance does not require evidence on data integrity
  2. BObtain further evidence on the alterations and consider the effect on the conclusion, which may be qualified or adverse if the matter remains unresolved and materialCorrect
  3. CImmediately report management to SEBI before discussing it with those charged with governance
  4. DWithdraw from all future engagements with the company without further procedures

Explanation

Even in limited assurance, the practitioner must obtain sufficient appropriate evidence to support the conclusion. Potentially material unexplained alterations call for further procedures, and if unresolved the conclusion is modified. Immediate external reporting skips the required steps, and ignoring the issue is not acceptable.

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