During the audit of QRS Ltd. for the year ended 31 March 2025, the auditor observed that management had changed the method of depreciation from…

CA Intermediate · Auditing and Ethics · RTP · May 2026
During the audit of QRS Ltd. for the year ended 31 March 2025, the auditor observed that management had changed the method of depreciation from Written Down Value Method to Straight Line Method. The change was applied in the current year and disclosed in the notes to accounts. The auditor also reviewed whether the financial statements appropriately summarised the transactions and events recorded and evaluated the judgments made by management in selecting and applying accounting policies consistently. In the above case, which of the following represents the auditor's responsibility while evaluating the financial statements?
(A) To select the most appropriate accounting policies for the entity.
(B) To prepare and present the financial statements in accordance with applicable statutory requirements.
(C) To change the accounting policies where they do not reflect true and fair view.
(D) To ensure that accounting policies selected by management are evaluated for appropriateness and consistent application and that relevant information is properly disclosed.

Suggested Answer and Working Notes:

Correct Answer: Option (D)

To ensure that accounting policies selected by management are evaluated for appropriateness and consistent application and that relevant information is properly disclosed.

Topics: Audit of Items of Financial Statements

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