MCQ of the day- While auditing the complete set of consolidated financial statements of Tulips Ltd.

MCQ of the day-

While auditing the complete set of consolidated financial statements of Tulips Ltd., a listed
company, using a fair presentation framework, M/s Pintu& Co., a Chartered Accountant firm,
discovered that the consolidated financial statements are materially misstated due to the non-
consolidation of a subsidiary. The material misstatement is deemed to be pervasive to the
consolidated financial statements. The effects of the misstatement on the consolidated financial
statements have not been determined because it was not practicable to do so. Thus, M/s Pintu&
Co. decided to provide an adverse opinion for the same and further determined that, there are no
key audit matters other than the matter to be described in the Basis for Adverse Opinion section.
Comment whether M/s Pintu& Co. needs to report under SA 701 ‘Communicating Key Audit
Matters in the Independent Auditor’s Report’?

a) M/s Pintu& Co. have the option to follow SA 701, thus, need not to report any key audit
matters.

B) SA 701 is mandatory in the case of audit of listed entities, however, as there are no key audit
matters other than the matter to be described in the Basis for Adverse Opinion section, no
‘Key Audit Matters’ para needs to be stated under audit report.

C) SA 701 is mandatory in the case of audit of listed entities, however, as there are no key audit
matters other than the matter to be described in the Basis for Adverse Opinion section, M/s
Pintu& Co. shall state, under ‘Key Audit Matters’ para, that ‘except for the matter described in
the Basis for Adverse Opinion section, we have determined that there are no other key audit matter to communicate in our report

D) MS Pintu & Co is under compulsion to follow SA 701 as the audit is of listed company and shall report.