Page 236 - CA Final PARAM Digital Book.

reporting framework. She has communicated the matter to CFO and audit committee. However, no
response was received even after waiting for a reasonable time. What are the options available to her?
Answer In such a case, options available to her in accordance with SRE 2410 are: -
(a) Whether to modify the report or
(b) The possibility of withdrawing from the engagement and
(c) The possibility of resigning from the appointment to audit the annual financial statements.

QNO Emphasis of Matter Paragraph New Course – (SM23)
2410.400 TITANIUM CNO -- SRE 2410.180

During review of quarterly results of a company of which you are auditor, it is gathered on inquiries made
that there has been a major fire in fabric processing plant of the company during the quarter. It has
resulted in massive disruption in operations of the company. Worse still, machinery and inventories of
plant were uninsured due to carelessness of concerned staff leading to substantial losses. The matter has
been disclosed in interim financial information appropriately. Discuss, how you would proceed to deal
with the same in review report?
Answer Uninsured assets in a disaster are examples of events or conditions that, individually or collectively, may cast
significant doubt about the going concern assumption. As a result of fire, there is massive disruption in
operations of the company. Besides, the company would have to bear losses as its damaged assets are
uninsured.

In accordance with SRE 2410, if, as a result of inquiries or other review procedures, a material uncertainty
relating to an event or condition comes to the auditor’s attention that may cast significant doubt on the
entity’s ability to continue as a going concern, and adequate disclosure is made in the interim financial
information, the auditor modifies review report by adding an emphasis of matter paragraph.
Therefore, Emphasis of matter paragraph should be added in review report.
Note: This standard is based on Old ways & terminology of Audit reporting.

Earlier EMP or OMP = Modified Report Qualified / Adverse / Disclaimer = Modified Report + Modified
Opinion That is why they are saying EMP as modified report. Further now a days we put separate section
"Material Uncertainty Over Going Concern" but earlier we use to put is in EMP. This is just for better
understanding and less confusion. We will have to follow answer as per SA 2410.

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