CA Meenal is approached by River Pvt. Ltd. to conduct the audit for F.Y. 2024-25. During the pre-engagement discussions, the management informs her…

CA Intermediate · Auditing and Ethics · MTP · September 2025
CA Meenal is approached by River Pvt. Ltd. to conduct the audit for F.Y. 2024-25. During the pre-engagement discussions, the management informs her that the scope of audit should exclude verification of inventory, as its already being reviewed by their internal audit team. Management also expects CA Meenal to rely on their reports. She agrees verbally to the engagement and begins planning, but no formal audit engagement letter is issued or signed. Choose the most appropriate option.
(A) The auditor may proceed with the audit as its scope is discussed verbally.
(B) Auditor can accept internal audit verification as a substitute for her own work.
(C) The auditor shall not accept audit where management imposes limitation on scope before the audit.
(D) The audit report can be issued with a disclaimer if issues arise later.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

The auditor shall not accept audit where management imposes limitation on scope before the audit.

Topics: Audit Report

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