Nova Industries Limited, a listed company engaged in the manufacture of industrial equipment, appointed KR & Co., Chartered Accountants, as its…

CA Intermediate · Auditing and Ethics · MTP · September 2026
Nova Industries Limited, a listed company engaged in the manufacture of industrial equipment, appointed KR & Co., Chartered Accountants, as its statutory auditors for the year ended 31st March, 2026. During the audit, the Engagement Partner identified certain significant matters that required communication to those charged with governance. The auditor had concerns regarding the appropriateness of certain significant accounting estimates and financial statement disclosures adopted by the company. The audit team also faced significant difficulties in obtaining certain records from the management, which resulted in delays in completing the audit procedures. Further, certain significant matters arising during the audit had been discussed with management and were also the subject of correspondence between the auditor and management. The auditor also requested written representations from management in relation to certain matters. The Engagement Partner was of the view that these matters were relevant to the oversight of the financial reporting process by those charged with governance. Explain the significant findings from the audit that are required to be communicated by the auditor to those charged with governance under the applicable requirements.

Suggested Answer and Working Notes:

Significant findings from the audit: The auditor shall communicate with those charged with governance: (i) The auditor's views about significant qualitative aspects of the entity's accounting practices, including accounting policies, accounting estimates and financial statement disclosures. When applicable, the auditor shall explain to those charged with governance why the auditor considers a significant accounting practice, that is acceptable under the applicable financial reporting framework, not to be most appropriate to the particular circumstances of the entity. (ii) Significant difficulties, if any, encountered during the audit. (iii) Unless all of those charged with governance are involved in managing the entity: (1) Significant matters arising during the audit that were discussed, or subject to correspondence, with management. (2) Written representations the auditor is requesting. (iv) Circumstances that affect the form and content of the auditor's report, if any. (v) Any other significant matters arising during the audit that, in the auditor's professional judgment, are relevant to the oversight of the financial reporting process.

Topics: Completion and Review

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