Page 36 - CA Final PARAM Digital Book.

(a) A statement that the engagement team and others in the firm as appropriate, the firm and, when
applicable, network firms have complied with relevant ethical requirements regarding
independence and
i. All relationships and other matters between the firm, network firms, and the entity that, in the
auditor’s professional judgment, may reasonably be thought to bear on independence. This
shall include total fees charged during the period covered by the financial statements for audit
and non-audit services provided by the firm and network firms to the entity and components
controlled by the entity. These fees shall be allocated to categories that are appropriate to assist
those charged with governance in assessing the effect of services on the independence of the
auditor and

ii. The related safeguards that have been applied to eliminate identified threats to
independence or reduce them to an acceptable level.

Further, as per the Companies Act, 2013 requires audit committee to review and monitor auditor’s
independence. Therefore, audit committee requiring auditor to justify her independence is well within its
purview.

QNO Significant Difficulties During Audit Old Course - (M22R)
24.050 TITANIUM CNO - SA260.140
M/s Manidhari & Associates have been appointed as an auditor of JIN Limited, a multinational company
dealing in spare parts. During the course of audit, CA Manidhari is facing many problems including the
problem of not getting the desired information from the management. Accordingly, he decided to

communicate with those charged with the governance about significant difficulties encountered during
the audit. CA Manidhari seeks your guidance on matters which can be considered as significant difficulties
as per SA 260.
Answer As per SA 260, “Communication with Those Charged with Governance”, significant difficulties encountered
during the audit may include such matters as:

(i) Significant delays by management, the unavailability of entity personnel, or an unwillingness by
management to provide information necessary for the auditor to perform the auditor’s procedures.
(ii) An unreasonably brief time within which to complete the audit.
(iii) Extensive unexpected effort required to obtain sufficient appropriate audit evidence.
(iv) The unavailability of expected information.
(v) Restrictions imposed on the auditor by management.
(vi) Management’s unwillingness to make or extend its assessment of the entity’s ability to continue as a
going concern when requested.

In some circumstances, such difficulties may constitute a scope limitation that leads to a modification of the
auditor’s opinion.as per SA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report.

QNO Communication of Key Audit Matter Old Course - (N18R)
24.100 TITANIUM CNO - Unique New Course – (SM23)
CA. Vallabh Sundar is auditor of a leading private sector bank. “IT Systems and controls” is under
his consideration to be reported as “Key audit matter” in audit report of the bank due to high level of
automation and complexity of the IT architecture and its impact on the financial reporting system.
At what time he should communicate such identified “Key audit matter”? What are relevant
considerations in this regard and their usefulness?
OR

SA 260 requires the auditor to communicate with those charged with governance on a timely basis. The
appropriate timing for communications about key audit matters will vary with the Circumstances of the
engagement. However, the auditor may communicate preliminary views about key audit matters when
discussing the planned scope and timing of the audit and may further discuss such matters when
communicating about audit findings. Doing so may help to alleviate the practical challenges of attempting
to have a robust two-way dialogue about key audit matters at the time the financial statements are being

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