M/s BNM & Associates, Chartered Accountants, are in the completion phase of the statutory audit of M/s FES Limited, a technology company, for…

M/s BNM & Associates, Chartered Accountants, are in the completion phase of the statutory audit of M/s FES Limited, a technology company, for the financial year ended 31 st March 2025. Before concluding the audit, there was a difference of opinion between the audit committee and the auditors as to which among the following are the areas which the auditor should take into account to determine "Key Audit Matter" as per SA 701: (I) During last quarter of the year, company's income was significantly affected by fluctuations in foreign exchange rates, with inadequate hedging arrangements. The auditors had to evaluate the impact of these transactions on financial statements. (II) It was observed that the server maintenance work of company was likely prone to external access, which was an area of high risk as assessed and reported by management's expert committee. (III) The auditor had to make important judgments in areas where the management of the company also used significant judgment. One key point was that the company depended heavily on a few major clients. While management believed that the market of the company was growing and would bring in more new clients, the auditors had to carefully consider this difference in view while reviewing the financial statements. Following discussions, a mutual understanding was reached, and the audit of FES Limited was concluded smoothly. Subsequently, BNM & Associates came to know about a tender floated by the Dwarka Municipal Corporation for computerisation of its records, requiring an earnest deposit of 85,000. BNM & Associates has one of its partners residing in Dwarka, hence he persuaded the firm to apply for the tender and paid the earnest deposit. However, another partner of the firm was of the view that such an act would lead to professional misconduct and insisted on withdrawing the tender application. The firm decided to approach an experienced CA before withdrawing the tender application and went on focusing on other assignments. BNM & Associates also commenced the statutory audit of Cash Limited, a banking company headquartered in India. During the audit, the following observations were made: (i) The staff and officers of the bank were frequently transferred from one position to another, without prior notice. (ii) Cash was test-checked daily and counted in full occasionally by another officer of the bank, apart from the cashier. (iii) Physical custody of cash was solely maintained by the senior-most officer at the branch. (iv) Unpaid cheques received through outward clearing were securely stored in the bank's lockers. After a detailed discussion and review of internal controls and practices, the firm finalised and issued the audit report for the financial year. CA M, a partner at BNM & Associates, firmly believed that one should always pursue their passion, regardless of their profession or business. Driven by this belief, he engaged in the following activities beyond his Chartered Accountancy practice: (1) Part-time employment with a Non-Profit Organisation based in Noida. (2) Involved in agricultural activities on his personally owned agriculture land located outside Bangalore. (3) Tutorship as a part-time faculty member at a private educational institute in Chennai. (4) Holding an honorary office leadership in a charitable educational organisation in Trivandrum.