Page 222 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
(CNO 3420.100) Engagement Acceptance
Before agreeing to accept an engagement to report on whether pro forma financial information included in a
prospectus has been compiled, in all material respects, on the basis of the applicable criteria, the practitioner
shall consider matters stated below.
1. Determine Practitioner Capabilities and competence: Determine that the practitioner has the capabilities
and competence to perform the engagement.
2A. Suitability of applicable criteria: On the basis of a preliminary knowledge of the engagement circumstances
and discussion with the responsible party, determine that the applicable criteria are suitable.
2B. Avoiding Misleading Information: Ensure that it is unlikely that the pro forma financial information will
be misleading for the purpose for which it is intended.
3A. Consideration of Modified Opinions: Where the sources from which the unadjusted financial information
and any acquiree or divestee financial information have been extracted have been audited or reviewed and a
modified audit opinion or review conclusion has been expressed, or the report contains an Emphasis of Matter
paragraph, consider whether or not the relevant law or regulation permits the use of, or reference in the
practitioner’s report to, the modified audit opinion or review conclusion or the report containing the Emphasis
of Matter paragraph with respect to such sources.
3B. Not audited or reviewed: If the entity’s historical financial information has never been audited or reviewed,
consider whether the practitioner can obtain a sufficient understanding of the entity and its accounting and
financial reporting practices to perform the engagement.
If the event or transaction includes an acquisition and the acquiree’s historical financial information has never
been audited or reviewed, consider whether the practitioner can obtain a sufficient understanding of the acquiree
and its accounting and financial reporting practices to perform the engagement and
Agreement of the Responsible Party: Obtain the agreement of the responsible party that it acknowledges and
understands its responsibility for
4A. Compiling Pro Forma Financial Information: Compiling the pro forma financial information on the
basis of the applicable criteria and providing the practitioner with access to all information (including, when
needed for purposes of the engagement, information of the acquiree(s) in a business combination).
4B. Disclosure of applicable Criteria: Adequately disclosing and describing the applicable criteria to the
intended users if these are not publicly available.
5A. Providing Access to Information: Providing the practitioner with: Access to all information, such as
records, documentation, and other material, relevant to evaluating whether the pro forma financial information
has been compiled, in all material respects, on the basis of the applicable criteria.
5B. Additional Information: Providing additional information that the practitioner may request from the
responsible party for the purpose of the engagement and access to those within the entity and the entity’s advisors
from whom the practitioner determines it necessary to obtain evidence.
5C. Access to Acquiree’s Individuals: When needed for purposes of the engagement, providing access to
appropriate individuals within the acquiree(s) in a business combination.
Note:
“Applicable Criteria”: “Applicable criteria” are criteria used by the responsible party when compiling the pro
forma financial information.
Criteria by Law or Recognised organisation: Criteria may be established by an authorized or recognized
standard-setting organization or by law or regulation.
Criteria by responsible party: Where established criteria do not exist, they will be developed by the responsible
party.

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