CA Rohan is the engagement partner for the audit of Horizon Ltd.'s complete set of financial statements for the year ended March 31, 2025. During…
CA Final · Advanced Auditing, Assurance and Professional Ethics · PYQS · January 2026
CA Rohan is the engagement partner for the audit of Horizon Ltd.'s complete set of financial statements for the year ended March 31, 2025. During the audit, he identified a material misstatement concerning the valuation of a specific class of inventory. As a result, CA Rohan concluded that it was necessary to express a qualified opinion on the complete set of financial statements. Subsequently, Horizon Ltd. prepared summary financial statements derived from these audited financial statements and requested CA Rohan to issue a report on them. After performing the required procedures, CA Rohan is satisfied that the summary financial statements are consistent, in all material respects, with the audited financial statements, in accordance with the applied criteria. (i) Based on the requirements of relevant SA, advise CA Rohan on the specific additional disclosures he must include in auditor's report on the summary financial statements, considering the qualified opinion on the audited financial statements. (ii) In the above case, if the auditor's report on the audited financial statements contains an adverse report, then which additional elements are required to be disclosed in the auditor's report on the summary financial statement?
Suggested Answer and Working Notes:
(i) As per SA 810 "Engagements to Report on Summary Financial Statements", if the auditor is satisfied that the summary financial statements are consistent, in all material respects, with or are a fair summary of the audited financial statements, in accordance with the applied criteria, the auditor's report on the summary financial statements shall State that the auditor's report on the audited financial statements includes a qualified opinion.Describe the basis for the qualified opinion on the audited financial statements and the effect thereof, if any, on the summary financial statements (ii) If the auditor's report on the audited financial statements contains an adverse opinion, the auditor's report on the summary financial statements shall, in addition to the elements: State that the auditor's report on the audited financial statements contains an adverse opinion or disclaimer of opinion;Describe the basis for that adverse opinion; andState that, as a result of the adverse opinion on the audited financial statements, it is inappropriate to express an opinion on the summary financial statements.
Topics: Standard on Auditing (SA), Due Diligence, Investigation & Forensic Audit
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