Page 258 - CA Inter Audit PARAM

CA Ravi Taori
• Responsibility of Auditor
• However, the auditor should satisfy himself that such verification was done by the
management wherever possible and by examining the relevant working papers. The
auditor should also examine whether the method of verification was reasonable in
the circumstances relating to each asset. The reasonableness of the frequency of
verification should also be examined by the auditor in the circumstances of each case.
• The auditor should test check the book records of Plant, Property & Equipment with
the physical verification reports. He should examine whether discrepancies noticed
on physical verification have been properly dealt with.

QNO Title Deeds Not in Possession Old Course – (M22E)
CARO. Bhaskar CNO - CARO.070
07.50
D Ltd. is a company engaged in publishing business magazines. CA P is the statutory auditor of the
company. The company takes property in the barter deal from its real estate customers against publication
of their advertisements. The properties obtained during the year through such barter deals have been
considered in the books of accounts on the basis of possession letter only and have been included in PPE
in the financial statements. Considering this matter of such importance that is fundamental to the users
understanding, CA P has decided to communicate the same in his report. CA P seeks your guidance in
reporting this matter in his audit report
Answer Emphasis of Matter Paragraphs in the Auditor’s Report: If the auditor considers it necessary to draw users’
attention to a matter presented or disclosed in the financial statements that, in the auditor’s judgement, is
of such importance that it is fundamental to users’ understanding of the financial statements, the auditor
shall include an Emphasis of Matter paragraph in the auditor’s report provided:
(i) The auditor would not be required to modify the opinion in accordance with SA 705 as a result of the
matter; and
(ii) When SA 701 applies, the matter has not been determined to be a key audit matter to be
communicated in the auditor’s report.
In the given case as the properties obtained during the year through barter deals and included in the PPE in
the books of accounts on the basis of possession letter only, hence there is a need to add Emphasis on Matter
Paragraph in the Auditor’s Report.

The draft of the same is as under:
Emphasis of Matter – Effect of Properties obtained through barter deals by the company

We draw attention to Note (Y) of the financial statements, which describes the effects of the properties
obtained through barter by the company. Our opinion is not modified in respect of this matter.

Alternative Solution:
In the given case as the properties obtained during the year through barter deals and included in the PPE in
the books of accounts on the basis of possession letter only, hence there is a need to report the same under
Clause i(c) of Paragraph 3 Companies (Auditor's Report) Order,2020.

Matters to be included in auditor's report - The auditor's report on the accounts of a company to which this
Order applies shall include a statement on the following matter, namely:
(i) (c) whether the title deeds of all the immovable properties (other than properties where
the company is the lessee and the lease agreements are duly executed in favour of the
lessee) disclosed in the financial statements are held in the name of the company,
if not, provide the details thereof in the format below:
Description Gross Held in Whether Period held– Reason for
of property carrying name of promoter, indicate not being
value director or range, where held in name
their relative appropriate of company*
or employee *also

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