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sa 710 for CA Intermediate | CA IPCC audit

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Swati Ghosh asked over 1 year ago

please provide question answer of SA710 CA Intermediate | CA IPCC audit.

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2 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 megha answered over 1 year ago

Hello, **`Questions with answers related with SA 710 - Comparative Information - Corresponding Figures and Comparative`** **************** **Question-1 Write short notes on the following: (a) Auditor's responsibilities regarding comparatives OR (b) Auditor’s responsibilities regarding comparatives: SA 710, “Comparative Information OR Write short notes on Corresponding figures.** **Answer** – Corresponding Figures and Comparative Financial Statements”, establishes standards on the auditor’s responsibilities regarding comparatives. The auditor shall determine whether the financial statements include the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified. For this purpose, the auditor shall evaluate whether: (1) The comparative information agrees with the amounts and other disclosures presented in the prior period; and (2) The accounting policies reflected in the comparative information are consistent with those applied in the current period or, if there have been changes in accounting policies, whether those changes have been properly accounted for and adequately presented and disclosed. (3) If the auditor becomes aware of a possible material misstatement in the comparative information while performing the current period audit, the auditor shall perform such additional audit procedures as are necessary in the circumstances to obtain sufficient appropriate audit evidence to determine whether a material misstatement exists. If the auditor had audited the prior period’s financial statements, the auditor shall also follow the relevant requirements of SA 560 (Revised). (4) As required by SA 580 (Revised), the auditor shall request written representations for all periods referred to in the auditor’s opinion. The auditor shall also obtain a specific written representation regarding any prior period item that is separately disclosed in the current year’s statement of profit and loss. **************************************** **Question-2 The audit report of P Ltd. for the year 2012-13 contained a qualification regarding non- provision of doubtful debts. As the statutory auditor of the company for the year 2013-14, how would you report, if:** **(i) The company does not make provision for doubtful debts in 2013-14? (ii) The company makes adequate provision for doubtful debts in 2013-14?** **Answer** Auditor’s responsibilities in cases where audit report for an earlier year is qualified is given in SA 710 “Comparative Information–Corresponding Figures and Comparative Financial Statements”. As per SA 710, When the auditor’s report on the prior period, as previously issued, included a qualified opinion, a disclaimer of opinion, or an adverse opinion and the matter which gave rise to the modified opinion is resolved and properly accounted for or disclosed in the financial statements in accordance with the applicable financial reporting framework, the auditor’s opinion on the current period need not refer to the previous modification. SA 710 further states that if the auditor’s report on the prior period, as previously issued, included a qualified opinion and the matter which gave rise to the modification is unresolved, the auditor shall modify the auditor’s opinion on the current period’s financial statements. In the Basis for Modification paragraph in the auditor’s report, the auditor shall either: (i) Refer to both the current period’s figures and the corresponding figures in the description of the matter giving rise to the modification when the effects or possible effects of the matter on the current period’s figures are material; or (ii)In other cases, explain that the audit opinion has been modified because of the effects or possible effects of the unresolved matter on the comparability of the current period’s figures and the corresponding figures. **In the instant Case, if P Ltd. does not make provision for doubtful debts the auditor will have to modify his report for both current and previous year’s figures as mentioned above. If however, the provision is made, the auditor need not refer to the earlier year’s modification.** ********************** **QUE. 3. What are the auditor’s procedures in respect of examination of corresponding figures.** **Answer**: Auditor’s Procedures in respect of examination of corresponding figures: 1. SA 710 “Comparative Information – Corresponding Figure and Comparative Financial Information deals with the auditor’s responsibilities regarding comparative information in an audit of financial statements. 2. The term Corresponding Figures refers to Comparative information where amounts and other disclosures for the prior period, are included as an integral part of current period F.S., and are intended to be read only in relation to the amounts and other disclosures relating to the current period. 3. To examine the corresponding figures, auditor is required to perform the following procedures: (a) Determine whether F.S. include Comparative information required by FRF, & Whether such information is classified appropriately. (b) Evaluate the following: • Whether the comparative information agrees with the amounts and other disclosures presented in the prior period; and • Whether the accounting policies reflected in the comparative information are consistent with those applied in the current period. • Whether, changes in accounting policies, if any, have been properly accounted for and adequately presented and disclosed. (c) In case, auditor has doubt over existence of Possible Material Misstatement, then auditor is required to perform additional audit procedures to obtain sufficient appropriate audit evidence to determine existence of material misstatement. (d) Obtain Written Representation from management to re-affirm that the Written Representation it previously made with respect to the prior period remain appropriate. Thanks Regards

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Open uri20170510 32134 1c996lj?1494421732 Anil answered over 1 year ago

For purposes of the SAs, the following terms have the meanings attributed below: (a) Comparative information – The amounts and disclosures included in the financial statements in respect of one or more prior periods in accordance with the applicable financial reporting framework. (b) Corresponding figures – Comparative information where amounts and other disclosures for the prior period are included as an integral part of the current period financial statements, and are intended to be read only in relation to the amounts and other disclosures relating to the current period (referred to as “current period figures”). The level of detail presented in the corresponding amounts and disclosures is dictated primarily by its relevance to the current period figures. (c) Comparative financial statements – Comparative information where amounts and other disclosures for the prior period are included for comparison with the financial statements of the current period but, if audited, are referred to in the auditor’s opinion. The level of information included in those comparative financial statements is comparable with that of the financial statements of the current period. For purposes of this SA, references to “prior period” should be read as “prior periods” when the comparative information includes amounts and disclosures for more than one period.

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