CA. Rishi, statutory auditor of KMC Ltd., identified that there was a misstatement last year and the same is still not corrected. Although…

CA Final · Advanced Auditing, Assurance and Professional Ethics · MTP · September 2025
CA. Rishi, statutory auditor of KMC Ltd., identified that there was a misstatement last year and the same is still not corrected. Although unmodified audit report was issued last year by CA. Rishi. Guide CA. Rishi on the audit opinion considering the fact that the last year's misstatement has been identified in the current year and unmodified opinion was issued in the last year?
(A) In accordance with SA 710, CA. Rishi should give unmodified opinion, but include Other Matters paragraph in the audit report as last year's profit is being reflected in reserve and surplus.
(B) In accordance with SA 710, CA. Rishi should seek legal opinion.
(C) In accordance with SA 710, CA. Rishi should qualify current period audit report with respect to corresponding figures only.
(D) In accordance with SA 710, CA. Rishi should give unmodified opinion, but last period's modified opinion should be highlighted in Emphasis of Matter paragraph.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

In accordance with SA 710, CA. Rishi should qualify current period audit report with respect to corresponding figures only.

Topics: Standard on Auditing (SA), Reporting

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