Page 193 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
3. Effect on Conclusion & Reporting: The practitioner must consider the impact of management’s assessment
on his conclusion regarding the financial statements. The practitioner must also consider how this assessment
affects his report.
4. External Party Reporting: The practitioner should determine if there's a duty to report the occurrence or
suspicion of fraud or illegal acts to an external party.
Going concern:
1. Covered in Review: A review of financial statements includes consideration of the entity’s ability to continue
as a going concern.
2. EC-SD: If events or conditions arise that cast doubt on the entity’s ability to continue (EC-SD), the practitioner
shall take the following actions:
3. Management's future plans: Inquire about management's future plans affecting the entity’s continuance and
the feasibility of those plans. Also, seek management's belief on the outcome of these plans in relation to the
entity's going concern status.
4. Evaluate Management's Responses: Assess the results of the inquiries to determine if:
• The financial statements can continue to be presented on a going concern basis, or
• There's a material misstatement or misleading representation regarding the entity’s ability to continue.
• Reflect on management's responses in light of all pertinent information obtained during the review.
Use of work performed by others:
Other practitioners or experts: In a review, the practitioner might need to utilize work done by other
practitioners or experts outside the accounting or assurance domain.
Sufficient work: If relying on another's work, the practitioner should ensure the work is sufficient for the
review's objectives.
Group Financial Statements: When reviewing a group of entities' financial statements, the review procedures
aim to meet the objectives of this Standard, contextualized for the group's consolidated statements.
(v) Additional Procedures
Possible Material Misstatement:
- Additional procedures are required under this SRE if the practitioner becomes aware of a matter that causes
them to believe the financial statements may be materially misstated.
- The practitioner’s response in undertaking additional procedures varies depending on the circumstances.
- It's a matter for the practitioner’s professional judgment.

Purpose of Additional Procedures
- These procedures should 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.

Types of Procedures
- The procedures may include:
• Additional inquiry or analytical procedures, for example, being performed in greater detail or focusing on the
affected items (amounts or disclosures concerning the affected accounts or transactions in the financial
statements).
• Other types of procedures, for example, substantive test of details or external confirmations.
Example explaining when additional procedures may be necessary in Review
1. Overdue accounts receivable: During inquiry and analytical procedures, a significant amount of overdue
accounts receivable was identified without any allowance for potential bad debts. This raised concerns about
potential material misstatements in the accounts receivable balance.

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