Page 181 - CA Final PARAM Digital Book.

QNO Draft Opinion (Disclaimer) Old Course-(N22M)
119.500 TITANIUM CNO -- Unique New Course-(SM23)
BREW Ltd., FMCG Company having its tea gardens in northeastern states of the country is exclusively
dealing in blending, processing, packing and selling of various brands of Tea. During the year under audit,
the company entered into joint venture for purchasing Tea Gardens in Sri Lanka and Kenya. M/s PM &
Associates are the statutory auditors of the company for the financial year 2021-22. During the course of
audit, the audit team was unable to obtain sufficient appropriate evidence about a single element of the
consolidated financial statement being Joint venture investment in Dharma Ltd. representing over 91% of
the group’s net assets having both material and pervasive possible effect to the consolidated financial
statements. The group’s investment in Dharma Ltd. is carried at ` 115 crore in the group’s consolidated
balance sheet.
Draft the opinion paragraph and basis of opinion paragraph to be included in the Independent Auditor’s
report.
Answer M/s PM & Associates are unable to obtain sufficient appropriate audit evidence about the financial
information of a joint venture investment that represents over 91% of the group’s net assets. The possible
effects of this inability to obtain sufficient appropriate audit evidence are both material and pervasive to the
consolidated financial statements. Therefore, the statutory auditor should issue a disclaimer of opinion.

The relevant extract of the Disclaimer of Opinion Paragraph and Basis for Disclaimer of Opinion paragraph is
as under:

Disclaimer of Opinion

We were engaged to audit the accompanying consolidated financial statements of BREW Ltd., (hereinafter
referred to as the “Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries
together referred to as “the Group), which comprise the consolidated balance sheet as at March 31, 2022,
the consolidated statement of Profit and Loss, (consolidated statement of changes in equity) and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies (hereinafter referred to as the
“Consolidated Financial Statements”).

We do not express an opinion on the accompanying consolidated financial statements of the Group. Because
of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we
have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on
these consolidated financial statements.

Basis for Disclaimer of Opinion

The Group’s investment in its joint venture Dharma Ltd. Company is carried at ` 115 crore on the Group’s
consolidated balance sheet, which represents over 91% of the Group’s net assets as at March 31, 2022. We
were not allowed access to the management and the auditors of Dharma Ltd. Company, including Dharma
Ltd.’s auditors’ audit documentation. As a result, we were unable to determine whether any adjustments
were necessary in respect of the Group’s proportional share of Dharma Ltd.’s assets that it controls jointly,
its proportional share of Dharma Ltd.’s liabilities for which it is jointly responsible, its proportional share of
Dharma Ltd.’s income and expenses for the year, (and the elements making up the consolidated statement
of changes in equity) and the consolidated cash flow statement.

QNO Shareholders Vs TCWG, Q vs E New Course – (SM23)
119.700 TITANIUM CNO -- Unique
Compare and explain the following:
(i) Reporting to Shareholders vs. Reporting to those Charged with Governance
(ii) Audit Qualification vs. Emphasis of Matter
Answer (i) Reporting to Shareholders vs. Reporting to those Charged with Governance:

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