MCQ of the Day - SRE Series (A Different MCQ is also asked at end of Revision Video) Q.

MCQ of the Day - SRE Series (A Different MCQ is also asked at end of Revision Video)

Q. PQR & Co., a firm of Chartered Accountants, undertook the following review engagements during the year ended 31st March 2026:

I.

PQR & Co. was requested to perform a review of the annual financial statements of Alpha Limited. Before accepting the engagement, management refused to acknowledge its responsibility for the preparation and fair presentation of the financial statements and for providing the practitioner with all relevant information. The practitioner nevertheless accepted the engagement, considering that review engagements provide only limited assurance.

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II.

While performing a review of the interim financial information of Beta Limited, the engagement partner identified an unexpected deterioration in gross profit margins. Management explained that it resulted from changes in product mix. The practitioner considered the explanation plausible and concluded the review without performing any additional inquiries or analytical procedures.

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III.

During the review of the annual financial statements of Gamma Limited, management refused to provide a written representation confirming that all known instances of fraud and suspected fraud had been disclosed to the practitioner. The practitioner concluded that sufficient evidence had already been obtained through inquiries and analytical procedures and therefore issued an Unmodified Conclusion.

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IV.

The statutory auditor of Delta Limited was engaged to review the company's interim financial information. During the engagement, the practitioner performed inquiries, analytical procedures and such additional procedures as considered necessary based on matters coming to the practitioner's attention. Nothing came to the practitioner's attention that caused the practitioner to believe that the interim financial information was materially misstated. Accordingly, the practitioner expressed a Negative Assurance Conclusion.

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Which of the following is MOST APPROPRIATE?

(A) Only I, II and III indicate non-compliance with SRE 2400 and SRE 2410.

(B) Only I and III indicate non-compliance with SRE 2400 and SRE 2410.

(C) Only II and III indicate non-compliance with SRE 2400 and SRE 2410.

(D) Only I and II indicate non-compliance with SRE 2400 and SRE 2410.