Page 343 - CA Inter Audit PARAM

CA Ravi Taori

compared to last year)
• A significant change in ownership. (E.g., Takeover from other business group,
pantaloons taken from Biyani to Aditya Birla Group)
• A recent change of senior management. (E.g., MD / CEO / CFO are replaced)
• Any indication that the entity misunderstands the objective and scope of the
audit. (E.g., They ask for Fraud Report / Compliance Report / Tax Report / Fixed
Asset assessment report etc)

Change from Auditors Side:
• Any revised or special terms of the audit engagement. (E.g., Separate Branch
Auditors / Use of CAAT / Use of Expert etc which are justified)
• A change in other reporting requirements. (E.g., Reporting on Internal Financial
Control)

Change in Terms of Old Course -- (P16M/
QNO Engagement- Master M17M/M17R/M18R/M18E/N19R/SM20/SM21/M22M/N22R/N22E/N23R)
210.07 Answer(Theory)
Bhaskar CNO SA210.100
“The auditor should not agree to a change of engagement where there is no reasonable justification for
doing so.” Discuss.
OR
As an auditor, how would you consider the acceptance of a change in audit engagement?
OR
An auditor who before the completion of the engagement is requested to change the engagement to one
which provides a lower level of assurance should consider the appropriateness of doing so. Discuss.
OR
An auditor who, before the completion of the engagement, is requested to change the engagement to one
which provides a lower level of assurance, should consider the appropriateness of doing so. Explain stating
the factors based on which client can request the auditor to change the engagement.
OR
CA P is appointed as an auditor of XYZ Limited for the F.Y. 2021-22. The management of XYZ Limited has
requested the auditor to change the terms of original engagement as the company has diversified its
business and few new products have been introduced by the company. Can CA P agree to the request made
by the management? Under which circumstances can the client make a request to the auditor for a change
in the terms of engagement?
Answer Acceptance of a Change in Engagement:
➢ General Reasons for Change
A request from the client for the auditor to change the engagement may result from-
a change in circumstances affecting the need for the service
(E.g., Change in Law -- IFCR)

a restriction on the scope of the engagement, whether imposed by management or caused
by circumstances.
(E.g., Visit to foreign branches restricted to cut costs or because of war)

An auditor who, before the completion of the engagement, is requested to change the
engagement to one which provides a lower level of assurance, should consider the
appropriateness of doing so.
a misunderstanding as to the nature of an audit or related service originally requested.

➢ Examine reasons
The auditor would consider carefully the reason given for the request, particularly the implications of a
restriction on the scope of the engagement, especially any legal or contractual implications.
The auditor shall not agree to a change in the terms of the audit engagement where there is no
reasonable justification for doing so.
(E.g. 3 months after appointment company plans to appoint separate branch auditor for some
branches, this is change in terms of engagement which said all branches will be audited by
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