Page 50 - CA Final PARAM Digital Book.

CA Raman while reviewing the unmodified audit report drafted by his assistant found that, a reference
has been made to the work done by the service auditor. CA Raman hence asked his assistant to remove
such reference and modify report accordingly.
Comment whether CA Raman is correct in removing the reference of the work done by service
auditor?
Part I -- Relevant Standards & Laws
▪ SA 402, Audit Considerations relating to an Entity Using a Service Organisation
Part II -- Requirements of Relevant Standards & Laws
➢ Reporting by the User Auditor:
As per SA 402, “Audit Considerations Relating to an Entity Using a Service Organization”, the user
auditor shall modify the opinion in the user auditor’s report in accordance with SA 705, “Modifications
to the Opinion in the Independent Auditor’s Report”, if the user auditor is unable to obtain sufficient
appropriate audit evidence regarding the services provided by the service organization relevant to the
audit of the user entity’s financial statements.

The user auditor shall not refer to the work of a service auditor in the user auditor’s report containing
an unmodified opinion unless required by law or regulation to do so. If such reference is required by
law or regulation, the user auditor’s report shall indicate that the reference does not diminish the user
auditor’s responsibility for the audit opinion.
Part III – Case Discussion
➢ CA Raman while reviewing the unmodified audit report drafted by his assistant found that, a reference
has been made to the work done by the service auditor.
Part IV – Conclusion
➢ Thus, in view of above, contention of CA. Raman in removing reference of the work done by service
auditor is in order as in case of unmodified audit report, user auditor cannot refer to the work done
by service auditor.

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