Advise how AKM and Associates will proceed in its assurance report, with matter relating to inconsistency in application of accounting policies in…

(a) 8 (1) As per SAE 3400, “The Examination of Prospective Financial Information", it is the duty of a professional accountant to see that prospective financial information is based on a consistent basis with historical financial statements using appropriate accounting principles. Thus, AKM & Associates should consider whether: (a) the presentation of prospective financial information is informative and not misleading (b) the accounting policies are clearly disclosed in the notes to the prospective financial information; (c) The assumptions are adequately disclosed in the notes to the prospective financial information. It needs to be clear whether the assumptions represent management's best-estimates or are hypothetical and, when assumptions are made in areas that are material and are subject to a higher degree of uncertainty, this uncertainty and the resulting sensitivity of results needs to be adequately disclosed. (d) the date as of which the prospective financial information was prepared is disclosed. Management needs to confirm that the assumptions are appropriate as of this date, even though the underlying information may have been accumulated over a period of time. (e) the basis of establishing points in a range is clearly indicated and the range is not selected in a biased or misleading manner when results shown in the prospective financial information are expressed in terms of a range and (f) if there is any change in the accounting policy of the entity from that disclosed in the most recent historical financial statements, whether reason for the change and the effect of such change on the prospective financial information has been adequately disclosed. Note: Any 4 points are sufficient. In the given case, REL limited has provided for depreciation on fixed assets to be acquired in accordance with provisions of Income-tax Act, 1961 and valued the stock of finished goods at selling price which are not consistent with historical financial statements. In addition, no disclosure has been made in this respect in the project report. In such a case, when presentation and disclosure are not adequate, a qualified or adverse opinion should be given or withdrawal from engagement should be made as appropriate by AKM & Associates. (II) Apart from the above, AKM & Associates signed the given project report without generating the UDIN which is not correct. Contention of AKM & Associates that UDIN is required for facts and figures of past period only and not for the events and actions that have not yet occurred is not tenable. (III) As per Chapter XIV, Unique Document Identification Number (UDIN) Guidelines, a member of the Institute in practice shall generate Unique Document Identification Number (UDIN) for all kinds of the certification, GST and Tax Audit Reports and other Audit, Assurance and Attestation functions undertaken/signed by him mandatorily. Further, as per Clause (1) of Part-II of Second Schedule to the Chartered Accountants Act, 1949 a member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he contravenes any of the provisions of this Act or the regulations made there under or any guidelines issued by the Council. The consequences for not generating UDIN are that concerned Chartered Accountant who had signed the assurance report shall be held liable for professional misconduct under Clause (1) of Part-II of the Second Schedule to the Chartered Accountants Act, 1949.