MCQ for the day -

Advik Ltd is an unlisted public company. The company acquired few companies in the last 3-4
years which have been assessed as its subsidiaries/ associates/ joint ventures (hereinafter jointly
called as ‘components’). The company prepares its condensed consolidated financial statements
every quarter to review the performance of the group. In the past years, the company used to get
the financials of its components reviewed/ audited on a quarterly basis. AJ & Co LLP is the
statutory auditor of parent company and KSH & Associates is the statutory auditor of all the
components. Quarterly condensed consolidated financial statements of the group are reviewed by
the statutory auditors as per the terms of the engagement letter. AJ & Co LLP has communicated
to Advik Ltd that in line with the requirements of the Companies Act 2013, it would also be
required to undertake audit/ limited review of all the components which would be consolidated
with those of Advik Ltd and for which KSH & Associates are the statutory auditors currently.
Management is not agreeing with the same as they don’t want to change KSH & Associates as
auditors of the components and the requirement mentioned by AJ & Co LLP would lead to
duplication of work of auditors as well as the management. Please advise.


a) In an audit/review of consolidated financial statements (whether condensed or complete),
the principal auditor is required to perform various procedures in accordance with SA 600,
Using the work of another auditor and hence the requirement of auditor is valid.

B) In an audit/review of consolidated financial statements (whether condensed or complete),
the principal auditor is required to perform various procedures in accordance with the
requirements of the Companies Accounts and Audit Rules 2014 and hence the requirement of
auditor is valid.

C)In an audit/review of consolidated financial statements (whether condensed or complete),
the principal auditor is not required to re-perform audit/ limited review of the components
and hence the requirement of auditor is not correct.

D) Management and the auditor need to decide this mutually as this is based on the contractual
arrangement between them.