ALEXA Private Limited has been operating in India for the past 15 years with three group companies –

ALEXA Private Limited has been operating in India for the past 15 years with three group
companies – one subsidiary in India and the other two in Singapore and Germany. The acquisitions
of these subsidiaries were gradual, with control obtained after initial investments. The statutory
auditors have determined that all group companies are significant for the audit of consolidated
financial statements. For the year ending March 31, 2023, the audited financial statements of all
components are available, except for the German company, whose audit has been delayed and
won't be completed before the release date of the consolidated financial statements (CFS) of the
parent company. The financial statements of the German company for the consolidation audit of
CFS, what could be the possible situation?

a) Since the audit of the German company is in progress, its financial statements subject to audit
can be considered by the auditor of the parent company. Audited and signed financials can be
provided to auditors even after the release of audited CFS, as this is a matter of
documentation only.

b) If the auditor does not receive audited financial statements of the German company, he
should modify his audit report.

c) The management should provide management accounts to the auditors of CFS, and the
auditor can mention this point in the "other matters" paragraph in his audit report, which is
an acceptable approach.

d) The auditor should exclude the financial statements of the German company from the CFS.