CA Praveen is appointed by KSN Ltd. for the year 2023-24. While verifying payroll data of the company, it has come to his notice that provisions of…

CA Final · Advanced Auditing, Assurance and Professional Ethics · RTP · May 2025
CA Praveen is appointed by KSN Ltd. for the year 2023-24. While verifying payroll data of the company, it has come to his notice that provisions of law preventing employment of child labour are not being adhered to and company is employing child labour. The company also exports part of its turnover and matter has gone unnoticed in compliance audits carried out by agencies of overseas buyers. With respect to the auditor's observation relating to the matter of child labour, which is the most appropriate course of action for him to proceed in this matter?
(A) CA Praveen should ignore the matter as it will not affect financial statements.
(B) CA Praveen must report the matter to the concerned government department.
(C) CA Praveen should obtain further information to evaluate the possible effect on financial statements. Besides, he should evaluate implications of non-compliance for audit risk assessment.
(D) CA Praveen should express a modified opinion in the audit report.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

CA Praveen should obtain further information to evaluate the possible effect on financial statements. Besides, he should evaluate implications of non-compliance for audit risk assessment.

Topics: Standard on Auditing (SA), Reporting

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