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CA Ravi Taori
(CNO GA.340) Reporting
When the Parent’s Auditor is also the Auditor of all its Components
1. Compliance with Accounting Standards and Deviations: The auditor must check if the accounting
standards have been followed in preparing the consolidated financial statements. If there are any departures or
deviations from these standards, the auditor should address them in accordance with SA 705.
2. Opinion on True and Fair View: The auditor is responsible for providing an opinion on whether the
consolidated financial statements accurately reflect the Group's financial status as of the balance sheet date.
This opinion also extends to assessing whether the consolidated profit and loss statement presents a true and fair
view of the Group's financial performance for the audited period.
If the consolidated financial statements include a cash flow statement, the auditor should also express an opinion
on the accuracy of the cash flows presented in it.
When the Parent’s Auditor is not the Auditor of all its Components
SA 600 Division of Responsibility: In consolidated financial statements, if the parent's auditor is not the auditor
for all components, the requirements of SA 600 must be considered, indicating divided responsibility between
the auditors of the parent and its subsidiaries. Reference to the fact that part of the audit was made by other
auditors is an indication of the divided responsibility, not a qualification of the opinion.
SA 706 Other Matter Paragraph: As per SA 706, if necessary, the auditor's report should make reference to the
audit of other auditors, but this is not to be construed as a qualification of the opinion. The auditor's report
should clearly disclose the magnitude of the portion audited by other auditors, either by stating aggregate rupee
amounts or percentages of total assets, revenues, and cash flows not audited by the parent's auditor. Total assets,
revenues, and cash flows not audited by the parent's auditor should be presented before giving effect to
permanent and current period consolidation adjustments.
When the Component(s) Auditor Reports on Financial Statements under an Accounting Framework
Different than that of the Parent
The parent and its foreign components may use different accounting frameworks (such as local GAAP, US
GAAP, or IFRS) for preparing financial statements. Local auditors may be unfamiliar with the parent's GAAP,
leading to inconsistencies.
Option 1 Conversion by Parent: The parent's management performs a conversion of the components' audited
financial statements from the local framework to the parent's framework for consolidated financial statements.
This ensures alignment with the parent's accounting standards. The conversion adjustments are audited by the
principal auditor to ensure that the financial information of the components is suitable and appropriate for
consolidation purposes.

Option 2 Conversion by Component: Components may prepare financial statements using the parent's
accounting policies, as outlined in the group accounting manual. This manual contains all accounting policies
and disclosure requirements consistent with the financial reporting framework for the group's consolidated
statements. The principal/parent auditors must perform procedures to ensure that the group accounting policies
comply with the GAAP applicable to the parent's financial statements. This ensures that the information is
directly usable and relevant for the preparation of consolidated statements, eliminating the need for additional
auditing of differences.
The principal auditor can decide whether or not to rely on the components' audit report and may reference it in
the auditor's report on the consolidated financial statements, streamlining the consolidation process.
When the Component(s) Auditor Reports under an Auditing Framework Different than that of the Parent
Auditing Standards in India: Normally, audits of financial statements, including consolidated financial
statements, are performed under auditing standards generally accepted in India (“Indian GAAS”).

Consistency in Auditing Framework: In order to maintain consistency of the auditing framework and to
enable the parent auditor to rely and refer to the other auditor’s audit report, the components’ financial
statements should be audited under a framework corresponding to Indian GAAS.

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