Mohini Ltd. paid their arrears of undisputed statutory dues just a day before the date of the audit report. After this, now the auditor believes…

CA Final · Advanced Auditing, Assurance and Professional Ethics · RTP · May 2025
Mohini Ltd. paid their arrears of undisputed statutory dues just a day before the date of the audit report. After this, now the auditor believes that only disputed dues need to be reported under the CARO, 2020 as undisputed dues are paid before the date of the audit report. Which of the following is the most appropriate course of action for the auditor in this situation?
(A) The auditor is required to report the disputed statutory dues only in accordance with clause (viii)(b) of Para 3 of CARO, 2020, as there is no requirement to report undisputed statutory dues if they are paid on or before the date of the audit report.
(B) The auditor is required to report both disputed and undisputed statutory dues in accordance with clause (vii)(a) & (b) of Para 3 of the CARO, 2020.
(C) The auditor should consult with legal counsel to determine the specific reporting requirements for disputed and undisputed statutory dues under CARO, 2020.
(D) The auditor should discuss the matter with management and obtain their agreement to report both disputed and undisputed statutory dues in the CARO, 2020 report.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

The auditor is required to report both disputed and undisputed statutory dues in accordance with clause (vii)(a) & (b) of Para 3 of the CARO, 2020.

Topics: Professional Ethics & Liabilities of Auditors, Standard on Auditing (SA), Reporting

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