Page 233 - CA Final PARAM Digital Book.

Part 1- SA 2400

QNO Audit of Quarterly Financial Statement as per Special Purpose Framework New Course – (SM23)
2400.100 TITANIUM CNO-- SRE 2400.020

Roma Limited has entered into a contract with Dorma Limited. There is a condition in the contract by
virtue of which Roma Limited is required to get its financial statements reviewed for a year on a quarterly
basis in accordance with the financial reporting provisions of the contract. Can Roma Limited get its
financial statements reviewed from a professional accountant in practice?
Answer 1. SRE 2400: Reference to SRE 2400, its full name & its applicable in the given scenario.
2. Concept:
In a review of financial statements, the practitioner expresses a conclusion designed to enhance the
degree of confidence of intended users regarding the preparation of an entity’s financial statements in
accordance with an applicable financial reporting framework. Such financial statements may have been
prepared using a general purpose framework or special purpose framework.

3. Case Discussion: Discuss Case
4. Conclusion: Financial statements are prepared under a special purpose framework as per contract
requirements. A professional accountant in practice can review these statements. The accountant may
issue a review report in accordance with SRE 2400.

QNO Additional Procedures New Course – (SM23)
2400.200 TITANIUM CNO-- SRE 2400.020
You are conducting a review of the financial statements of a company. It is gathered upon inquiry that

there is a possibility of material misstatements in financial statements. Discuss, how you would proceed
further in the matter under SRE 2400.
Answer If the practitioner becomes aware of matters that causes the practitioner to believe the financial statements
may be materially misstated, the practitioner shall design and perform additional procedures sufficient to
enable the practitioner to: -

(a) Conclude that the matter(s) is not likely to cause the financial statements as a whole to be materially
misstated or
(b) Determine that the matter(s) causes the financial statements as a whole to be materially misstated.

Additional procedures focus on obtaining sufficient appropriate evidence to enable the practitioner to form
a conclusion on matters that the practitioner believes may cause the financial statements to be materially
misstated. The procedures may be:

• Additional inquiry or analytical procedures, for example, being performed in greater detail or being
focused on the affected items (i.e. amounts or disclosures concerning the affected accounts or
transactions as reflected in the financial statements); or

• Other types of procedures, for example, substantive test of details or external confirmations.

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