Page 139 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

1. Unable to Obtain Sufficient Evidence: If the auditor is unable to obtain sufficient appropriate audit evidence,
the auditor shall determine the implications as follows:
2. Material but Not Pervasive Effects: If the auditor concludes that the possible effects on the financial
statements of undetected misstatements, if any, could be material but not pervasive, the auditor shall qualify the
opinion; or
3. Material and Pervasive Effects: If the auditor concludes that the possible effects on the financial statements
of undetected misstatements, if any, could be both material and pervasive so that a qualification of the opinion
would be inadequate to communicate the gravity of the situation, the auditor shall:
3A. Withdrawal or Disclaimer: Withdraw from the audit, where practicable and possible under applicable law
or regulation; or If withdrawal from the audit before issuing the auditor’s report is not practicable or possible,
disclaim an opinion on the financial statements.
If the auditor decides to withdraw
Communicate to TCWG: When the auditor decides to withdraw before withdrawing, the auditor shall
communicate to those charged with governance.
Communication of Misstatements: any matters regarding misstatements identified during the audit that would
have given rise to a modification of the opinion.

(CNO - SA 705.080) SEBI Directive & ICAI Announcement on resignation:
Directive: The Securities and Exchange Board of India issued a directive, specifically circular no.
CIR/CFD/CMD1/114/2019 dated October 18, 2019, providing guidelines on the resignation of auditors.
Restriction: The directive and the listing agreement do not permit auditors to withdraw from an engagement
without issuing an audit or review report.
If the auditor proposes to resign:
45-Day Rule: If the auditor proposes to resign within 45 days from the end of any quarter, they must issue the
audit/limited review report for that specific quarter before resigning.
Post-45-Day Rule: If the auditor proposes to resign after 45 days from the end of any quarter, they must issue
the audit/limited review report for both the quarter in question and the subsequent quarter before resigning.
Full-Year Report: If the limited review report has been issued for all three quarters, the auditor must issue the
audit report for the entire year before resigning.
ICAI announcement on the Resignation of Auditor:
Directive: ICAI disallows "professional pre-occupation" as a resignation reason for auditors in unlisted
companies.
Mandate: Auditors must specify clear reasons in their resignation letters.

(CNO - SA 705.100) Other Considerations Relating to an Adverse Opinion or Disclaimer of Opinion
Adverse or Disclaimer: When the auditor considers it necessary to express an adverse opinion or disclaim an
opinion on the financial statements as a whole,
No Unmodified Opinion: the auditor’s report shall not also include an unmodified opinion with respect to the
same financial reporting framework on a single financial statement or one or more specific elements, accounts
or items of a financial statement.
Reason: To include such an unmodified opinion in the same report in these circumstances would contradict the
auditor’s adverse opinion or disclaimer of opinion on the financial statements as a whole.

(CNO - SA 705.120) Form and Content of the Auditor’s Report When the Opinion is Modified
Impact on Auditor’s Opinion section.
1. Heading: When the auditor modifies the audit opinion, the auditor shall use the heading “Qualified Opinion,”
“Adverse Opinion,” or “Disclaimer of Opinion,” as appropriate, for the Opinion section.

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