Page 30 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
(CNO-SA240.440) Exceptional Circumstances in which auditor is unable to continue the engagement
1. Fraud or suspected fraud.: The auditor must assess the professional and legal obligations in the event of a
misstatement caused by fraud or suspected fraud, leading to exceptional circumstances
2. Fraud Reporting: This includes determining whether there is a requirement to report the issue to the
individuals who appointed the auditor or, in some cases, to regulatory authorities.
3A. Withdrawal Evaluation: The auditor should evaluate whether it is appropriate to withdraw from the
engagement, if withdrawal is legally permitted.
3B. Explaining reasons for withdrawal: If withdrawal occurs, the auditor should discuss this with the relevant
management level and those responsible for governance, explaining the reasons for the withdrawal.
3C. Report withdrawal: The auditor must determine whether there is a professional or legal obligation to report
the withdrawal and the reasons behind it to the individuals who appointed the auditor or, in some cases, to
regulatory authorities.

(CNO-SA240.460) Management Representations
(Shortcut: PRADa
Responsibility of fraud PDC: Obtain written confirmation from management and, if applicable, those charged
with governance, acknowledging their responsibility for designing, implementing, and maintaining internal
control measures to prevent and detect fraud.
Results of Risk-Assessment procedures: Request written disclosure from management regarding the results of
their assessment of the risk that the financial statements may be materially misstated due to fraud.
Fraud Allegations: Request written disclosure from management regarding any knowledge they have of
allegations or suspected fraud affecting the entity's financial statements, which have been communicated by
employees, former employees,
analysts, regulators, or any other parties.
Fraud-Disclosure: Obtain written confirmation from management that they have disclosed any knowledge of
fraud or suspected fraud related to the entity, involving management, employees with significant roles in internal
control, or other individuals whose fraudulent activities could have a material impact on the financial statements.

(CNO-SA240.480) Communications to Management and with Those Charged with Governance
1A. Communication to Management: If an auditor identifies a fraud or receives information hinting at
potential fraud, they must promptly (timely) communicate these findings to the appropriate management level.
2A. TCWG Not Part of Management: If those charged with governance aren't involved in managing the entity,
the auditor must communicate any identified or suspected fraud involving management, employees with
significant roles in internal control, or others whose fraudulent actions could lead to a material misstatement in
the financial statements.
2B. Communicate to TCWG (Management Fraud): If the auditor suspects fraud involving management, they
must communicate these suspicions to those charged with governance. They should discuss the nature, timing,
and extent of audit procedures necessary to complete the audit.
2C. Communicate to TCWG (Other Frauds): The auditor must communicate any other fraud-related matters
that they consider relevant to the responsibilities of those charged with governance. These matters should be
communicated in a timely manner.

(CNO-SA240.500) Communications to Regulatory and Enforcement Authorities
1A. Responsibility When an auditor identifies or suspects fraud, they must decide if they have a duty to report
this to an external party.
2A. Criteria - Confidentiality vs Legal Obligations: The auditor's professional duty to maintain client
confidentiality may prevent reporting. However, legal responsibilities can override this duty in certain

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