Guidance Note on Reports or
Certificates for Special Purposes
(Revised 2016)
Readers may note that this Guidance Note supercedes
the Guidance Note on Audit Reports and Certificates
for Special Purposes, issued by the ICAI in 1984.
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi
© The Institute of Chartered Accountants of India
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form, or by any
means, electronic, mechanical, photocopying, recording, or
otherwise, without prior permission, in writing, from the publisher.
Edition : September, 2016
Committee : Auditing and Assurance Standards Board
E-mail : aasb@icai.in
Website : www.icai.org
Price : Rs. 150/-
ISBN No :
Published by : The Publication Department on behalf of the
Institute of Chartered Accountants of India,
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg, New Delhi - 110 002.
Printed by : Sahitya Bhawan Publications, Hospital
Road, Agra - 282 003
September/2016/
FOREWORD
Members of the Institute of Chartered Accountants of India (ICAI)
are often called upon to issue reports/certificates for special
purposes e.g. reports/ certificates required under the tax laws,
Government welfare schemes like MGNREGA. Sometimes, these
special purpose reports/certificates are also required from the
members by the management of the entities for their own
purposes. The Auditing and Assurance Standards Board of the
ICAI, in 1984, had issued the Guidance Note on Audit Reports
and Certificates for Special Purposes to provide guidance to the
members carrying out engagements to issue reports/certificates
for special purposes.
It is heartening that the Auditing and Assurance Standards Board
has brought out this thoroughly revised edition of the Guidance
Note on Audit Reports and Certificates for Special Purposes for
the benefit of the members. The revised Guidance Note was
initially developed by an expert group constituted by the Board for
this purpose and thereafter it was finalised with the contribution of
the Board members and the members of the Council of ICAI. I am
happy that the Guidance Note is a comprehensive and self-
contained reference document for the members.
I compliment CA. Shyam Lal Agarwal, Chairman, CA. Sanjay
Vasudeva, Vice-Chairman and other members of the Auditing and
Assurance Standards Board for bringing out this revised Guidance
Note for the benefit of the members.
I am sure that the members would find the revised Guidance Note
immensely useful.
September 26, 2016 CA. M. Devaraja Reddy
New Delhi President, ICAI
PREFACE
The Auditing and Assurance Standards Board of the Institute of
Chartered Accountants of India (ICAI) had issued the `Guidance
Note on Audit Reports and Certificates for Special Purposes' in
the year 1984 to provide guidance to the members undertaking
engagements to issue reports/certificates for special purposes.
It gives me immense pleasure to place in your hands this
thoroughly revised `Guidance Note on Reports or Certificates for
Special Purposes' brought out by the Auditing and Assurance
Standards Board. The Guidance Note has been written in an easy
to understand language and contains detailed guidance on
various issues and intricacies involved in the engagements to
issue reports/certificates for special purposes. For the benefit of
the members, the Appendices to the Guidance Note include the
glossary of terms used in the Guidance Note and the illustrative
formats of reports/certificates for special purposes.
At this juncture, I wish to place on record my gratitude to CA. Lalit
Kumar, Noida for sparing time out of his other preoccupations for
revising the Guidance Note. Further, he has taken all the pains to
address and incorporate various suggestions received from
members at large. In developing this Guidance Note, the
International Standard on Assurance Engagements (ISAE) 3000,
"Assurance Engagements Other than Audits or Reviews of
Historical Financial Information" issued by the International
Auditing and Assurance Standards Board (IAASB) has been taken
as base document and necessary changes have been made to
suit the Indian context. I would like to thank CA Harinderjit Singh,
Gurgaon for his valuable contribution.
I would also like to thank all the members of Jaipur Study Group
viz. CA. Bhupendra Mantri, CA. Ashok Singhal, CA. Vijay Kumar
Jain, CA. Vishnu Mantri, CA. Vijay Jain, CA. Vikas Gupta, CA.
Prahalad Gupta, CA. Ajay Atolia, CA. Ravi Raniwala, CA. Jugal
Agrawal, CA. Shailendra Agarwal, CA. Keshav Garg, CA. Anil
Jain, CA. Rohit Ruwatia, CA. Pramod Kumar Boob, CA. P D Baid,
CA. Dinesh Kumar Jain, CA. Sanjay Kumar Maheshwari, CA.
Mukesh Gupta, CA. Sandeep Jhanwar and CA. Abhishek Sharma
for their dedicated efforts in reviewing and finalising the Guidance
Note.
I wish to express my sincere thanks to CA. M. Devaraja Reddy,
Honourable President, ICAI and CA. Nilesh S. Vikamsey, Vice
President, ICAI for their guidance and support to the activities of
the Board.
I wish to place on record high appreciation of CA. Sanjay
Vasudeva, Vice Chairman of the Board for his whole-hearted
support. I also wish to place on record my sincere thanks to all the
Board Members and all the Council Members for their
suggestions, support and guidance in finalising this Guidance
Note as well as other pronouncements of the Board. I also wish
to thank CA. Megha Saxena, Secretary to the Board and other
officers and staff of AASB for their hard work and continued co-
operation.
I am confident that the Guidance Note would be well received by
the members and other interested readers.
September 26, 2016 CA. Shyam Lal Agarwal
Jaipur Chairman,
Auditing and Assurance Standards Board
CONTENTS
Paragraph Page
No. No.
Introduction 1-8 1
Scope 9-11 4
Objectives 12-14 5
Conduct of an Assurance Engagement in 15 6
Accordance with Guidance Note
Inability to Achieve an Objective 16 7
Ethical and Quality Control Requirements 17 7
Engagement Acceptance and 18-20 7
Continuance
Preconditions for the Assurance 21-22 8
Engagement
Limitation on Scope Prior to Acceptance 23 10
of the Engagement
Agreeing on the Terms of the 24-27 10
Engagement
Acceptance of a Change in the Terms of 28 11
the Engagement
Assurance Report Prescribed by Law or 29-33 12
Regulation
Professional Skepticism, Professional 34-36 14
Judgment and Assurance Skills and
Techniques
Planning 37-40 14
Materiality 41-50 15
Understanding the Underlying Subject 51-53 19
Matter and Other Engagement
Circumstances
Obtaining Evidence 54-57 21
Work Performed by a Practitioner's 58 23
Expert
Work Performed by Another Practitioner, 59-61 23
a Responsible Party's or Measurer's or
Evaluator's Expert or an Internal Auditor
Written Representations 62-66 24
Subsequent Events 67 25
Other Information 68 26
Description of Applicable Criteria 69-70 26
Forming the Assurance 71-74 27
Opinion/Conclusion
Preparing the Assurance Report 75-79 28
Assurance Report Content 80 30
Reference to the Practitioner's Expert in 81 38
the Assurance Report
Assurance Report Prescribed by Law or 82 38
Regulation
Unmodified and Modified Opinions/ 83-90 38
Conclusions
Other Communication Responsibilities 91 42
Documentation 92-97 42
Appendices
Appendix 1: Glossary of Terms Used in 45
the Guidance Note
Appendix 2: Illustrative Formats of 53
Reports/Certificates
Introduction
1. The purpose of this Guidance Note is to provide guidance
on engagements which require a `professional accountant in
public practice' (hitherto known as "practitioner")1 to issue reports
other than those which are issued in audits or reviews of historical
financial information2. The reports which are issued pursuant to
audits or reviews of historical financial information are dealt with in
Standards on Auditing (SAs) and Standards on Review
Engagements (SREs), respectively, issued by the Institute of
Chartered Accountants of India (ICAI).
2. In some cases, Government and other authorities under
various statutes or notifications require reports or certificates from
practitioners in support of statements or other information
provided by an entity. Such reports or certificates can also be
required to be issued to fulfill a contractual reporting obligation or
may be required by the management or those charged with
governance of an entity for its own special purposes.
3. Sometimes, the applicable law and regulation or a
contractual arrangement that an entity might have entered into,
prescribe the wording of report or certificates. The wording often
requires the use of word or phrase like "certify" or "true and
correct" to indicate absolute level of assurance expected to be
provided by the practitioner on the subject matter. Absolute
assurance indicates that a practitioner has performed procedures
as considered appropriate to reduce the engagement risk3 to zero.
4. A practitioner is expected to provide either a reasonable
assurance (about whether the subject matter of examination is
materially misstated) or a limited assurance (stating that nothing
has come to the practitioner's attention that causes the
1
The term "Professional accountant in public practice" has the same meaning as
given in the Framework for Assurance Engagements, issued by the Institute of
Chartered Accountants of India in 2007.
2
For meaning of the term "Historical Financial Information", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
3
For meaning of the term "Engagement Risk", refer the Glossary of Terms given
in the Appendix 1 to the Guidance Note.
GN on Reports or Certificates for Special Purposes (Revised 2016)
practitioner to believe that the subject matter is materially
misstated). A practitioner is not expected to reduce the
engagement risk to zero. This is because there are inherent
limitations attached to the procedures which a practitioner may
perform in relation to issuance of a report or certificate, as the
case may be. The inherent limitations arise from:
(a) the nature of financial reporting;
(b) the use of selective testing;
(c) the inherent limitations of internal controls;
(d) the fact that much of the evidence4 available to the
practitioner is persuasive rather than conclusive;
(e) the nature of procedures to be performed in a specific
situation;
(f) the use of professional judgment5 in gathering and
evaluating evidence and forming conclusions based on
that evidence;
(g) in some cases, the characteristics of the underlying subject
matter6 when evaluated or measured against the criteria7;
and
(h) the need for the engagement to be conducted within a
reasonable period of time and at a reasonable cost.
5. In view of the above, depending upon the nature, timing
and extent of procedures that can be performed based upon the
facts and circumstances of the case, a report or certificate issued
by a practitioner can provide either reasonable or limited level of
assurance. Therefore, whenever a practitioner is required to give
a "certificate" or a "report" for special purpose, the practitioner
needs to undertake a careful evaluation of the scope of the
engagement, i.e., whether the practitioner would be able to
4
For meaning of the term "Evidence", refer the Glossary of Terms given in the
Appendix 1 to the Guidance Note.
5
For meaning of the term "Professional Judgment", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
6
For meaning of the term "Underlying Subject Matter", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
7
For meaning of the term "Criteria", refer the Glossary of Terms given in the
Appendix 1 to the Guidance Note.
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provide reasonable assurance or limited assurance on the subject
matter.
6. The word `certificate' as described in the laws and
regulations or even in the contracts that an entity might have
entered into can normally be associated with reasonable
assurance. However, depending upon the circumstances and
based upon the nature, timing and extent of the procedures which
a practitioner can perform, the practitioner can conclude that a
reasonable assurance cannot be expressed on the subject matter
of the "certificate" and only limited assurance conclusion can be
given. The practitioner's procedures in case where reasonable
assurance is to be expressed would be substantially different (and
more extensive) from circumstances where limited assurance is to
be expressed. The Guidance Note, at relevant places, lists the
different procedures to be performed in a reasonable assurance
engagement vis a vis limited assurance engagement. Accordingly,
for the purpose of this Guidance Note, the terms, "report" /
"certificate" indicates an "assurance report" issued in compliance
with this Guidance Note.
7. Assurance engagements include both assertion based
engagements8, in which a party other than the practitioner
measures or evaluates the underlying subject matter against the
criteria, and direct reporting engagements9, in which the
practitioner measures or evaluates the underlying subject matter
against the criteria. To be meaningful, the level of assurance
obtained by the practitioner is likely to enhance the intended
users'10 confidence about the subject matter information11 to a
degree that is clearly more than inconsequential.
8. The Guidance Note should be read in the context of the
Framework for Assurance Engagements, issued by the Institute of
8
For meaning of the term "Assertion based Engagements", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
9
For meaning of the term "Direct Reporting Engagements", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
10
For meaning of the term "Intended Users", refer the Glossary of Terms given in
the Appendix 1 to the Guidance Note.
11
For meaning of the term "Subject Matter Information", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
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GN on Reports or Certificates for Special Purposes (Revised 2016)
Chartered Accountants of India (ICAI). Appendix 1 to the
Guidance Note contains a glossary of certain important terms
used in the Guidance Note and is an integral part of the Guidance
Note. Further, for the purposes of this Guidance Note, reference
to "appropriate party(ies)" should be read hereafter as "the
responsible party12, the measurer13 or the evaluator14, or the
engaging party15, as appropriate."
Scope
9. This Guidance Note covers assurance engagements16
other than audits or reviews of historical financial information, as
described in the Framework for Assurance Engagements
(Assurance Framework) issued by the ICAI. This Guidance Note
does not apply to assurance engagements for which subject
specific Standards on Assurance Engagements have been issued
by the ICAI.
10. Not all engagements performed by the practitioners are
assurance engagements. Some frequently performed
engagements that are not assurance engagements, and therefore
not covered by the Guidance Note, include:
(a) Engagements covered by Standards on Related Services
(SRS), such as agreed-upon procedures and compilation
engagements;
(b) The preparation of tax returns where no assurance
opinion/conclusion is expressed; and
(c) Consulting (or advisory) engagements, such as
management and tax consulting.
12
For meaning of the term "Responsible Party", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
13
For meaning of the term "Measurer", refer the Glossary of Terms given in the
Appendix 1 to the Guidance Note.
14
For meaning of the term "Evaluator", refer the Glossary of Terms given in the
Appendix 1 to the Guidance Note.
15
For meaning of the term "Engaging Party", refer the Glossary of Terms given in
the Appendix 1 to the Guidance Note.
16
For meaning of the term "Assurance Engagements", refer the Glossary of
Terms given in the Appendix 1 to this Guidance Note.
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11. This Guidance Note can also be applied on the reports or
certificates related to historical non-financial information that a
practitioner may be called upon to issue from time to time. ICAI,
from time to time, issues specific Guidance Notes to provide
guidance on certain assurance engagements. While complying
with the requirements of those specific Guidance Notes, a
practitioner may also draw guidance from the principles
enunciated in this Guidance Note.
Objectives
12. In conducting an assurance engagement, the objectives of
the practitioner are:
(a) To obtain either reasonable assurance17 or limited
assurance18, as appropriate, about whether the subject
matter information is free from material misstatement19;
(b) To express an opinion (in a reasonable assurance
engagement)/a conclusion (in a limited assurance
engagement) regarding the outcome of the measurement
or evaluation of the underlying subject matter through a
written report. The report also describes the basis for the
conclusion;
(c) Where the subject matter information is made up of a
number of aspects, separate opinion/conclusion may be
provided on each aspect. All such separate
opinions/conclusions do not need to relate to the same
level of assurance. Rather, each opinion/conclusion is
expressed in the form that is appropriate to either a
reasonable assurance engagement or a limited assurance
engagement. References in this Guidance Note to the
opinion/conclusion in the assurance report include each
17
For meaning of the term "Reasonable Assurance Engagement", refer the
Glossary of Terms given in the Appendix 1 to the Guidance Note.
18
For meaning of the term "Limited Assurance Engagement", refer the Glossary
of Terms given in the Appendix 1 to the Guidance Note.
19
For meaning of the term "Misstatement", refer the Glossary of Terms given in
the Appendix 1 to the Guidance Note.
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GN on Reports or Certificates for Special Purposes (Revised 2016)
opinion/conclusion when separate opinions/conclusions
are provided;
(d) To communicate further as required by this Guidance
Note.
13. In all cases when reasonable assurance or limited
assurance, as appropriate, cannot be obtained and a qualified
opinion/conclusion in the practitioner's assurance report is
insufficient in the circumstances for the purposes of reporting to
the intended users, this Guidance Note requires that the
practitioner disclaim an opinion / a conclusion or withdraw (or
resign) from the engagement, where withdrawal is possible under
applicable law or regulation.
14. The roles played by the responsible party, the measurer or
evaluator, and the engaging party can vary. The management and
governance structures vary by jurisdiction and by entity, reflecting
influences such as different cultural and legal backgrounds, and
size and ownership characteristics. Such diversity means that it is
not possible for the Guidance Note to specify for all engagements,
the person(s) with whom the practitioner is to inquire of, request
representations from, or otherwise communicate with in all
circumstances. In some cases, for example, when the appropriate
party(ies) is(are) only part of a complete legal entity, identifying
the appropriate management personnel or those charged with
governance with whom to communicate, will require the exercise
of professional judgment to determine which person(s) have the
appropriate responsibilities for, and knowledge of, the matters
concerned.
Conduct of an Assurance Engagement in
Accordance with Guidance Note
15. The Guidance Note aims to bring out the procedural
differences between a limited assurance engagement vis a vis a
reasonable assurance engagement. In this Guidance Note,
guidance that applies to only limited assurance or reasonable
assurance engagements have been presented in a columnar
format with the letter "L" (limited assurance) or "R" (reasonable
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GN on Reports or Certificates for Special Purposes (Revised 2016)
assurance) after the paragraph number. Although some
procedures are required only for reasonable assurance
engagements, these may nonetheless be appropriate in some
limited assurance engagements.
Inability to Achieve an Objective
16. If any of the objectives enumerated in this Guidance Note
(refer paragraphs 12 to 14) cannot be achieved, the practitioner
should evaluate whether this requires the practitioner to modify
the practitioner's opinion/conclusion or withdraw from the
engagement (where withdrawal is possible under applicable law or
regulation). In case the practitioner is unable to achieve an
objective, it represents a significant matter requiring
documentation in accordance with paragraph 92 of this Guidance
Note.
Ethical and Quality Control Requirements
17. A practitioner who performs assurance engagements
covered under this Guidance Note is governed by the same
ethical and quality control requirements as are described in
paragraphs 4 and 5 of the Framework for Assurance
Engagements.
Engagement Acceptance and Continuance
18. The practitioner needs to be satisfied that appropriate
procedures regarding the acceptance and continuance of client
relationships and assurance engagements have been followed,
and should determine that conclusions reached in this regard are
appropriate.
19. The practitioner should accept or continue an assurance
engagement only when:
(a) The practitioner has no reason to believe that relevant
ethical requirements, including independence, will not be
satisfied;
(b) The practitioner is satisfied that those persons who are to
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GN on Reports or Certificates for Special Purposes (Revised 2016)
perform the engagement collectively (the engagement
team)20 have the appropriate competence and capabilities;
and
(c) The basis upon which the engagement is to be performed
has been agreed, through:
i. Establishing that the preconditions for an
assurance engagement are present (see also
paragraphs 21-22); and
ii. Confirming that there is a common understanding
between the practitioner and the engaging party of
the terms of the engagement, including the
practitioner's reporting responsibilities.
20. If the practitioner obtains information that would have
caused the practitioner to decline the engagement had that
information been available earlier, the practitioner should take
necessary action promptly. In case of a firm21, the practitioner
(i.e., the engagement partner22)23 should communicate that
information promptly to the firm, so that the firm and the
engagement partner can take the necessary action.
Preconditions for the Assurance Engagement
21. In order to establish whether the preconditions for an
assurance engagement are present, the practitioner should, on
the basis of a preliminary knowledge of the engagement
circumstances24 and discussion with the appropriate party(ies),
determine whether:
(a) The roles and responsibilities of the appropriate parties are
20
For meaning of the term "Engagement Team", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
21
For meaning of the term "Firm", refer the Glossary of Terms given in the
Appendix 1 to the Guidance Note.
22
For meaning of the term "Engagement Partner", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
23
In the context of a firm, the term practitioner would imply reference to the
engagement partner.
24
For meaning of the term "Engagement Circumstances", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
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GN on Reports or Certificates for Special Purposes (Revised 2016)
suitable in the circumstances; and
(b) The engagement exhibits all of the following
characteristics:
(i) The underlying subject matter is appropriate;
(ii) The criteria that the practitioner expects to be
applied in the preparation of the subject matter
information are suitable for the engagement
circumstances, including that these exhibit the
following characteristics as described in paragraph
35 of the Framework for Assurance Engagements:
a. Relevance.
b. Completeness.
c. Reliability.
d. Neutrality.
e. Understandability.
(iii) The criteria that the practitioner expects to be
applied in the preparation of the subject matter
information will be available to the intended users25.
(iv) The practitioner expects to be able to obtain the
evidence needed to support the member's
conclusion;
(v) The practitioner's opinion/conclusion, in the form
appropriate to either a reasonable assurance
engagement or a limited assurance engagement, is
to be contained in a written report; and
(vi) A rational purpose including, in the case of a limited
assurance engagement, that the practitioner
expects to be able to obtain a meaningful level of
assurance.
22. If the preconditions for an assurance engagement are not
25
Refer Para 37 of the Framework for Assurance Engagements.
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GN on Reports or Certificates for Special Purposes (Revised 2016)
present, the practitioner should discuss the matter with the
engaging party. If changes cannot be made to meet the
preconditions, the practitioner would be well advised not to accept
the engagement as an assurance engagement, unless required by
law or regulation to do so.
Limitation on Scope Prior to Acceptance of the
Engagement
23. If the engaging party imposes a limitation on the scope of
the practitioner's work in the terms of a proposed assurance
engagement, such that the practitioner believes the limitation will
result in the practitioner disclaiming an opinion / a conclusion on
the subject matter information, the practitioner should not accept
such an engagement as an assurance engagement, unless
required by law or regulation to do so.
Agreeing on the Terms of the Engagement
24. The practitioner should agree the terms of the engagement
with the engaging party. The agreed terms of the engagement
should be specified in sufficient detail in an engagement letter or
other suitable form of written agreement, written confirmation, or in
law or regulation. It is in the interests of both, the engaging party
and the practitioner, that the practitioner communicates in writing
the agreed terms of the engagement before the commencement
of the engagement to help avoid misunderstandings. The terms of
engagement, at a minimum, should include the following:
(a) the objective and scope of engagement;
(b) the responsibilities of the practitioner;
(c) the responsibilities of engaging party;
(d) the responsibilities of the responsible party (if different from
the engaging party);
(e) identification of the suitable criteria to be used;
(f) identification of the subject matter including reference to the
law or regulation or the contracts;
(g) Unrestricted access to whatever records, documentation and
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GN on Reports or Certificates for Special Purposes (Revised 2016)
other information requested in connection with the
engagement;
(h) The fact that the engagement cannot be relied upon to
disclose errors, illegal acts or other irregularities, for
example, fraud or defalcations that may exist;
(i) reference to the expected form and content of report to be
issued by the practitioner; and
(j) a statement that there may be circumstances in which a
report may differ from its expected form and content.
25. The agreed terms of engagement can also include other
general terms of engagement so long as those terms are not
inconsistent with the applicable laws and regulations.
26. The form and content of the written agreement or contract
will vary with the engagement circumstances. For example, if law
or regulation prescribes in sufficient detail the terms of the
engagement, the practitioner need not record them in a written
agreement, except for the fact that such law or regulation applies
and that the appropriate party acknowledges and understands its
responsibilities under such law or regulation. Law or regulation,
particularly in the public sector, may mandate the appointment of
a practitioner and set out specific powers, such as the power to
access appropriate party(ies)'s records and other information, and
responsibilities, such as requiring the practitioner to report directly
to an authority, the legislature or the public, in case appropriate
party(ies) attempt to limit the scope of the engagement.
27. On recurring engagements, the practitioner should assess
whether the circumstances require the terms of the engagement
to be revised and whether there is a need to remind the engaging
party of the existing terms of the engagement.
Acceptance of a Change in the Terms of the
Engagement
28. The practitioner should not agree to a change in the terms
of the engagement where there is no reasonable justification for
doing so. If such a change is made, the practitioner should not
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disregard evidence that was obtained prior to the change. A
change in circumstances that affects the intended users'
requirements, or a misunderstanding concerning the nature of the
engagement, may justify a request for a change in the
engagement, for example, from an assurance engagement to a
non-assurance engagement, or from a reasonable assurance
engagement to a limited assurance engagement. An inability to
obtain sufficient appropriate evidence to form a reasonable
assurance opinion/conclusion is not an acceptable reason to
change from a reasonable assurance engagement to a limited
assurance engagement.
Assurance Report Prescribed by Law or
Regulation
29. In some cases, law or regulation prescribes the layout or
wording of the assurance report. In these circumstances, the
practitioner would need to evaluate:
(a) Whether intended users might misunderstand the
assurance conclusion; and
(b) If so, whether additional explanation in the assurance
report can mitigate possible misunderstanding.
30. If the practitioner concludes that additional explanation in
the assurance report cannot mitigate possible misunderstanding,
as the law or regulation does not allow the practitioner to provide
such additional explanation in the assurance report to mitigate the
risk of users misunderstanding of the assurance conclusion, the
practitioner should not accept the engagement, unless required by
law or regulation to do so.
31. In case the practitioner is required to issue an assurance
report under the applicable laws or regulations, the practitioner
should discuss the matter with the engaging party. The
practitioner should provide a draft of the assurance report to be
issued that duly incorporates the essential elements thereof as
prescribed in paragraph 80 of the Guidance Note to the layout or
the wordings so prescribed. Both, the practitioner and the
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engaging party, should agree on the resulting modifications to the
layout or wording prescribed under the laws or regulations. The
agreement on layout or wording of the assurance report should be
duly documented in the engagement letter. The practitioner should
then accept and perform the engagement and issue the final
assurance report duly incorporating therein the essential elements
prescribed in the Guidance Note. If the engaging party does not
agree to this approach, the practitioner should consider whether it
would be appropriate to accept the engagement.
32. It may also happen that the concerned authorities reject
the aforesaid assurance report issued by the practitioner on
account of the modifications made to the prescribed layout or
wording. In such circumstances, the practitioner should obtain the
evidence of rejection of the assurance report by the concerned
authorities and make it a part of the engagement documentation.
The practitioner, in such a case, may issue the assurance report
in the format prescribed under the law or regulation since the
practitioner would have complied with the requirements of this
Guidance Note while issuing the certificate in the first instance.
The practitioner can also consider enclosing a statement
containing essential elements of an assurance report as
prescribed in paragraph 80 of this Guidance Note to the format
prescribed under the law or regulation. The enclosure should also
state the fact that a report issued earlier in accordance with this
Guidance Note had been rejected by the concerned authorities.
32A. It is recognised that rejections of assurance reports or
certificates issued might have also occurred in the past or there
could be a situation where the concerned regulator has expressly
indicated that any modification to the layout or the wording of the
format is not acceptable and if time period available to follow the
process in paragraphs 31 and 32 is not sufficient, the practitioner
may issue the assurance report in the format prescribed under the
law or regulation. If the practitioner has complied with all the
requirements of this Guidance Note, the practitioner should also
enclose a statement containing essential elements of an
assurance report as prescribed in paragraph 80 of this Guidance
Note, to the format prescribed under the law or regulation by
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giving suitable reference of the statement in the format. (e.g. "in
terms of our statement of even date" or "to be read with the
enclosed statement of even date" etc.)
33. Similarly, the practitioner may conclude, that even where
permitted by the law/regulation or it is otherwise accepted by the
concerned regulatory bodies to provide additional information/
explanation in the assurance report, doing the same will not
mitigate the risk of users' misunderstanding of the assurance
conclusion expressed. In such circumstance, the practitioner
should mention the circumstances not allowing the practitioner to
bring down the risk of users' misunderstanding in the report being
issued by the practitioner. The practitioner should also include
such matters in the scope of work documented in the engagement
letter.
Professional Skepticism26, Professional
Judgment, and Assurance Skills and
Techniques
34. The practitioner would need to plan and perform an
engagement with professional skepticism, recognizing that
circumstances may exist that may cause the subject matter
information to be materiality misstated.
35. The practitioner needs to exercise professional judgment in
planning and performing an assurance engagement, including
determining the nature, timing and extent of procedures.
36. The practitioner should also apply assurance skills and
techniques27 as part of an iterative, systematic engagement
process.
Planning
37. The practitioner should plan the engagement so that it will
be performed in an effective manner, including setting the scope,
timing and direction of the engagement, and determining the
26
For meaning of the term "Professional Skepticism", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
27
For meaning of the term "Assurance Skills and Techniques", refer the Glossary
of Terms given in the Appendix 1 to the Guidance Note.
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nature, timing and extent of planned procedures that are required
to be carried out in order to achieve the objective of the
engagement.
38. The practitioner should determine whether the criteria are
suitable for the engagement circumstances, including that they
exhibit the characteristics identified in paragraph 21(b)(ii).
39. If it is discovered after the engagement has been accepted
that one or more preconditions for an assurance engagement is
not present, the practitioner should discuss the matter with the
appropriate party(ies), and determine:
(a) Whether the matter can be resolved to the practitioner's
satisfaction;
(b) Whether it is appropriate to continue with the engagement;
and
(c) Whether and, if so, how to communicate the matter in the
assurance report.
40. If it is discovered after the engagement has been accepted
that some or all of the applicable criteria are unsuitable or some or
all of the underlying subject matter is not appropriate for an
assurance engagement, the practitioner would need to consider
withdrawing from the engagement, if withdrawal is possible under
applicable law or regulation. If the practitioner continues with the
engagement, the practitioner should express a qualified or
adverse opinion/conclusion, or disclaimer of opinion/conclusion,
as appropriate in the circumstances.
Materiality
41. The practitioner would consider materiality when:
(a) Planning and performing the assurance engagement,
including when determining the nature, timing and
extent of procedures; and
(b) Evaluating whether the subject matter information is
free from material misstatement.
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42. Professional judgments about materiality are made in light
of surrounding circumstances, but are not affected by the level of
assurance, that is, for the same intended users and purpose,
materiality for a reasonable assurance engagement is the same
as for a limited assurance engagement because materiality is
based on the information needs of intended users.
43. The applicable criteria may discuss the concept of
materiality in the context of the preparation and presentation of the
subject matter information and thereby provide a frame of
reference for the practitioner in considering materiality for the
engagement. Although applicable criteria may discuss materiality
in different terms, the concept of materiality generally includes the
matters discussed in paragraphs 42-50. If the applicable criteria
do not include a discussion of the concept of materiality, these
paragraphs provide the practitioner with a frame of reference.
44. Misstatements, including omissions, are considered to be
material if they, individually or in the aggregate, could reasonably
be expected to influence relevant decisions of intended users
taken on the basis of the subject matter information. The
practitioner's consideration of materiality is a matter of
professional judgment, and is affected by the practitioner's
perception of the common information needs of intended users as
a group. In this context, it is reasonable for the practitioner to
assume that intended users:
(a) Have a reasonable knowledge of the underlying subject
matter, and a willingness to study the subject matter
information with reasonable diligence;
(b) Understand that the subject matter information is prepared
and assured to appropriate levels of materiality, and have an
understanding of any materiality concepts included in the
applicable criteria;
(c) Understand any inherent uncertainties involved in the
measuring or evaluating the underlying subject matter; and
(d) Make reasonable decisions on the basis of the subject
matter information taken as a whole.
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Unless the engagement has been designed to meet the particular
information needs of specific users, the possible effect of
misstatements on specific users, whose information needs may
vary widely, is not ordinarily considered.
45. Materiality is considered in the context of qualitative factors
and, when applicable, quantitative factors. The relative importance
of qualitative factors and quantitative factors when considering
materiality in a particular engagement is a matter for the
practitioner's professional judgment.
46. Qualitative factors may include such things as:
(a) The number of persons or entities affected by the subject
matter.
(b) The interaction between, and relative importance of, various
components of the subject matter information when it is
made up of multiple components, such as a report that
includes numerous performance indicators.
(c) The wording chosen with respect to subject matter
information that is expressed in narrative form.
(d) The characteristics of the presentation adopted for the
subject matter information when the applicable criteria allow
for variations in that presentation.
(e) The nature of a misstatement, for example, the nature of
observed deviations from a control when the subject matter
information is a statement that the control is effective.
(f) Whether a misstatement affects compliance with law or
regulation.
(g) In the case of periodic reporting on an underlying subject
matter, the effect of an adjustment that affects past or
current subject matter information or is likely to affect future
subject matter information.
(h) Whether a misstatement is the result of an intentional act or
is unintentional.
(i) Whether a misstatement is significant having regard to the
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practitioner's understanding of known previous
communications to users, for example, in relation to the
expected outcome of the measurement or evaluation of the
underlying subject matter.
(j) Whether a misstatement relates to the relationship between
the responsible party, the measurer or evaluator, or the
engaging party or their relationship with other parties.
(k) When a threshold or benchmark value has been identified,
whether the result of the procedure deviates from that value.
(l) When the underlying subject matter is a governmental
program or public sector entity, whether a particular aspect
of the program or entity is significant with regard to the
nature, visibility and sensitivity of the program or entity.
(m) When the subject matter information relates to a conclusion
on compliance with law or regulation, the seriousness of the
consequences of non-compliance.
47. Quantitative factors relate to the magnitude of
misstatements relative to reported amounts for those aspects of
the subject matter information, if any, that are:
(a) Expressed numerically; or
(b) Otherwise related to numerical values (for example, the
number of observed deviations from a control may be a
relevant quantitative factor when the subject matter
information is a statement that the control is effective).
48. When quantitative factors are applicable, planning the
engagement solely to detect individually material misstatements
overlooks the fact that the aggregate of uncorrected and
undetected individually immaterial misstatements may cause the
subject matter information to be materially misstated. It may
therefore be appropriate when planning the nature, timing and
extent of procedures for the practitioner to determine a quantity
less than materiality as a basis for determining the nature, timing
and extent of procedures.
49. Materiality relates to the information covered by the
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assurance report. Therefore, when the engagement covers some,
but not all, aspects of the information communicated about an
underlying subject matter, materiality is considered in relation to
only that portion that is covered by the engagement.
50. Concluding on the materiality of the misstatements
identified as a result of the procedures performed requires
professional judgment. For example, in a compliance
engagement, the entity may have complied with nine provisions of
the relevant law or regulation, but did not comply with one
provision. Professional judgment is needed to conclude whether
the entity complied with the relevant law or regulation as a whole.
For example, the practitioner may consider the significance of the
provision with which the entity did not comply, as well as the
relationship of that provision to the remaining provisions of the
relevant law or regulation.
Understanding the Underlying Subject Matter
and Other Engagement Circumstances
51. The practitioner should make inquiries of the appropriate
party(ies) regarding:
(a) Whether they have knowledge of any actual, suspected or
alleged intentional misstatement or non-compliance with
laws and regulations affecting the subject matter
information;
(b) Whether the responsible party has an internal audit
function28 and, if so, make further inquiries to obtain an
understanding of the activities and main findings of the
internal audit function with respect to the subject matter
information; and
(c) Whether the responsible party has used any experts in the
preparation of the subject matter information.
28
For meaning of the term "Internal Audit Function", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
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Limited Assurance Reasonable Assurance
52L. The practitioner should 52R. The practitioner should
obtain an understanding of the obtain an understanding of the
underlying subject matter and underlying subject matter and
other engagement other engagement
circumstances sufficient to: circumstances sufficient to:
(a) Enable the practitioner to (a) Enable the practitioner to
identify areas where a identify and assess the
material misstatement of risks of material
the subject matter misstatement29 in the
information is likely to subject matter information;
arise; and and
(b) Thereby, provide a basis (b) Thereby, provide a basis for
for designing and designing and performing
performing procedures to procedures to respond to
address the areas the assessed risks and to
identified in paragraph obtain reasonable
52L(a) and to obtain assurance to support the
limited assurance to practitioner's opinion.
support the practitioner's
conclusion.
53L. In obtaining an 53R. In obtaining an
understanding of the underlying understanding of the underlying
subject matter and other subject matter and other
engagement circumstances engagement circumstances
under paragraph 52L, the under paragraph 52R, the
practitioner should consider the practitioner should obtain an
process used to prepare the understanding of internal control
subject matter information. over the preparation of the
subject matter information
relevant to the engagement.
This includes evaluating the
design of those controls relevant
to the engagement and
determining whether they have
been implemented by
performing procedures in
29
For meaning of the term "Risk of Material Misstatement", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
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addition to the inquiry of the
personnel responsible for the
subject matter information.
Obtaining Evidence
Risk Consideration and Responses to Risks
Limited Assurance Reasonable Assurance
54L. Based on the 54R. Based on the
practitioner's understanding practitioner's understanding (see
(see paragraph 52L), the paragraph 52R) the practitioner
practitioner should: should:
(a) Identify areas where a (a) Identify and assess the risks
material misstatement of of material misstatement in
the subject matter the subject matter
information is likely to information; and
arise; (b) Design and perform
(b) Design and perform procedures to respond to the
procedures to address assessed risks and to obtain
the areas identified in reasonable assurance to
paragraph 54L(a) and to support the practitioner's
obtain limited assurance opinion. In addition to any
to support the other procedures on the
practitioner's conclusion. subject matter information
that are appropriate in the
engagement circumstances,
the practitioner's procedures
would include obtaining
sufficient appropriate
evidence as to the operating
effectiveness of relevant
controls over the subject
matter information when:
(i) The practitioner's
assessment of the risks
of material misstatement
includes an expectation
that controls are
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operating effectively, or
(ii) Procedures other than
testing of controls
cannot alone provide
sufficient appropriate
evidence.
Determining Whether Revision of Risk Assessment in a
Additional Procedures are Reasonable Assurance
necessary in a Limited Engagement
Assurance Engagement
55L. If the practitioner 55R. The practitioner's
becomes aware of a matter(s) assessment of the risks of
that causes the practitioner to material misstatement in the
believe that the subject matter subject matter information may
information may be materially change during the course of the
misstated, the practitioner engagement as additional
should design and perform evidence is obtained. In
additional procedures to circumstances where the
obtain further evidence until practitioner obtains evidence
the practitioner is able to: which is inconsistent with the
(a) Conclude that the matter evidence on which the
is not likely to cause the practitioner originally based the
subject matter assessment of the risks of
information to be material misstatement, the
materially misstated; or practitioner should revise the
assessment and modify the
(b) Determine that the
planned procedures accordingly.
matter(s) causes the
subject matter
information to be
materially misstated.
56. When designing and performing procedures, the
practitioner would also need to consider the relevance and
reliability of the information to be used as evidence. If:
(a) Evidence obtained from one source is inconsistent with
that obtained from another; or
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(b) The practitioner has doubts about the reliability of
information to be used as an evidence,
the practitioner should determine what changes or
additions to the procedures are necessary to resolve the
matter, and should consider the effect of the matter, if any,
on other aspects of the engagement.
57. The practitioner should accumulate uncorrected
misstatements identified during the engagement other than those
that are clearly trivial and determine the effect of the misstatement
on the assurance report.
Work Performed by a Practitioner's Expert30
58. When the work of a practitioner's expert is to be used, the
practitioner should also:
(a) Evaluate whether the practitioner's expert has the
necessary competence, capabilities and objectivity for the
practitioner's purposes. In the case of a practitioner's
external expert, the evaluation of objectivity should include
inquiry regarding interests and relationships that may
create a threat to that expert's objectivity;
(b) Obtain a sufficient understanding of the field of expertise of
the practitioner's expert;
(c) Agree with the practitioner's expert on the nature, scope
and objectives of that expert's work; and
(d) Evaluate the adequacy of the practitioner's expert's work
for the practitioner's purposes.
Work Performed by Another Practitioner, a
Responsible Party's or Measurer's or
Evaluator's Expert, or an Internal Auditor
59. When the work of another practitioner is to be used, the
practitioner should evaluate whether that work is adequate for the
practitioner's purposes.
30
For meaning of the term "Practitioner's Expert", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
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60. If information to be used as evidence has been prepared
using the work of a responsible party's or a measurer's or
evaluator's expert, the practitioner should, to the extent necessary
having regard to the significance of that expert's work for the
practitioner's purposes:
(a) Evaluate the competence, capabilities and objectivity of
that expert;
(b) Obtain an understanding of the work of that expert; and
(c) Evaluate the appropriateness of that expert's work as
evidence.
61. If the practitioner plans to use the work of the internal audit
function, the practitioner should evaluate the following:
(a) The extent to which the internal audit function's
organizational status and relevant policies and procedures
support the objectivity of the internal auditors;
(b) The level of competence of the internal audit function;
(c) Whether the internal audit function applies a systematic
and disciplined approach, including quality control; and
(d) Whether the work of the internal audit function is adequate
for the purposes of the engagement.
Written Representations
62. The practitioner should request from the appropriate
party(ies) a written representation:
(a) That it has provided the practitioner with all information of
which the appropriate party(ies) is aware that is relevant to
the engagement.
(b) Confirming the measurement or evaluation of the
underlying subject matter against the applicable criteria,
including that all relevant matters are reflected in the
subject matter information.
63. If, in addition to required representations, the practitioner
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determines that it is necessary to obtain one or more written
representations to support other evidence relevant to the subject
matter information, the practitioner should request such other
written representations.
64. When written representations relate to matters that are
material to the subject matter information, the practitioner should:
(a) Evaluate their reasonableness and consistency with other
evidence obtained, including other representations (oral or
written); and
(b) Consider whether those making the representations can
be expected to be well-informed on the particular matters.
65. The date of the written representations should be as near
as practicable to, but not after, the date of the assurance report.
Requested Written Representations Not Provided or Not
Reliable
66. If one or more of the requested written representations are
not provided or the practitioner concludes that there is sufficient
doubt about the competence, integrity, ethical values, or diligence
of those providing the written representations, or that the written
representations are otherwise not reliable, the practitioner should:
(a) Discuss the matter with the appropriate party(ies);
(b) Re-evaluate the integrity of those from whom the
representations were requested or received and evaluate
the effect that this may have on the reliability of
representations (oral or written) and evidence in general;
and
(c) Take appropriate actions, including determining the
possible effect on the conclusion in the assurance report.
Subsequent Events
67. When relevant to the engagement, the practitioner should
consider the effect on the subject matter information and on the
assurance report of events up to the date of the assurance report,
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and should respond appropriately to the facts that become known
to the practitioner after the date of the assurance report, that, had
they been known to the practitioner at that date, may have caused
the practitioner to amend the assurance report. The extent of
consideration of subsequent events depends on the potential for
such events to affect the subject matter information and to affect
the appropriateness of the practitioner's conclusion. However, the
practitioner has no responsibility to perform any procedures
regarding the subject matter information after the date of the
assurance report.
Other Information31
68. When documents containing the subject matter information
and the assurance report thereon include other information, the
practitioner should read that other information to identify material
inconsistencies, if any, with the subject matter information or the
assurance report and, if on reading that other information, the
practitioner:
(a) Identifies a material inconsistency between that other
information and the subject matter information or the
assurance report; or
(b) Becomes aware of a material misstatement of fact32 in that
other information that is unrelated to matters appearing in
the subject matter information or the assurance report,
The practitioner should discuss the matter with the appropriate
party(ies) and take further action as appropriate.
Description of Applicable Criteria
69. The practitioner would need to evaluate whether the
subject matter information adequately refers to or describes the
applicable criteria. The description of the applicable criteria
31
For meaning of the term "Other Information", refer the Glossary of
Terms given in the Appendix 1 to the Guidance Note.
32
For meaning of the term "Misstatement of Fact", refer the Glossary of Terms
given in the Appendix 1 to the Guidance Note.
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advises intended users of the framework on which the subject
matter information is based, and is particularly important when
there are significant differences between various criteria regarding
how particular matters may be treated in the subject matter
information.
70. A description that the subject matter information is
prepared in accordance with particular applicable criteria is
appropriate only if the subject matter information complies with all
relevant requirements of those applicable criteria that are
effective. A description of the applicable criteria that contains
imprecise qualifying or limiting language (for example, "the subject
matter information is in substantial compliance with the
requirements of XYZ") is not an adequate description as it may
mislead users of the subject matter information.
Forming the Assurance Opinion/Conclusion
71. The practitioner should evaluate the sufficiency and
appropriateness of the evidence obtained in the context of the
engagement and, if necessary in the circumstances, attempt to
obtain further evidence. The practitioner should consider all
relevant evidence, regardless of whether it appears to corroborate
or to contradict the measurement or evaluation of the underlying
subject matter against the applicable criteria. If the practitioner is
unable to obtain necessary further evidence, the practitioner
should consider the implications for the practitioner's
opinion/conclusion in paragraph 7233.
72. The practitioner should form an opinion/a conclusion about
whether the subject matter information is free of material
misstatement. In forming that opinion/conclusion, the practitioner
should consider the practitioner's conclusion in paragraph 71
regarding the sufficiency and appropriateness of evidence
obtained and an evaluation of whether uncorrected misstatements
are material, individually or in the aggregate.
73. Evidence is necessary to support the practitioner's
33
Refer Para 41- 45 of the Framework for Assurance Engagements.
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opinion/conclusion and assurance report. It is cumulative in nature
and is primarily obtained from procedures performed during the
course of the engagement. It may, however, also include
information obtained from other sources, such as previous
engagements (provided the practitioner has determined whether
changes have occurred since the previous engagement that may
affect its relevance to the current engagement) or the quality
control procedures for client acceptance and continuance.
Evidence may come from sources inside and outside the
appropriate party(ies). Also, information that may be used as
evidence may have been prepared by an expert employed or
engaged by the appropriate party(ies). Evidence comprises both
information that supports and corroborates aspects of the subject
matter information, and any information that contradicts aspects of
the subject matter information. In addition, in some cases, the
absence of information (for example, refusal by the appropriate
party(ies) to provide a requested representation) is used by the
practitioner, and therefore, also constitutes evidence. Most of the
practitioner's work in forming the assurance opinion/conclusion
consists of obtaining and evaluating evidence.
74. If the practitioner is unable to obtain sufficient appropriate
evidence, a scope limitation exists and the practitioner should
express a qualified opinion/conclusion or disclaim an
opinion/conclusion, or withdraw from the engagement, where
withdrawal is possible under applicable law or regulation, as
appropriate.
Preparing the Assurance Report
75. The assurance report should be in writing and should
contain a clear expression of the practitioner's opinion/conclusion
about the subject matter information. Where the subject matter
information is made up of a number of aspects, separate
opinions/conclusions may be provided on each aspect. All such
separate opinions/conclusions do not need to relate to the same
level of assurance. Rather, each conclusion is expressed in the
form that is appropriate to either a reasonable assurance
engagement or a limited assurance engagement. References in
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this Guidance Note to the opinion/conclusion in the assurance
report include each opinion/conclusion when separate
opinions/conclusions are provided.
76. The practitioner's opinion/conclusion should be clearly
separated from information or explanations that are not intended
to affect the practitioner's opinion/conclusion, including any
Emphasis of Matter, Other Matter, findings related to particular
aspects of the engagements, recommendations or additional
information included in the assurance report. The wording used
should make it clear that an Emphasis of Matter, Other Matter,
findings, recommendations or additional information is not
intended to detract from the practitioner's opinion/conclusion.
77. Oral and other forms of expressing conclusions can be
misunderstood without the support of a written report. For this
reason, the practitioner shall not report orally without providing a
written assurance report.
78. This Guidance Note does not require a standardized
format for reporting on all assurance engagements. Instead, it
identifies the basic elements the assurance report is to include.
Assurance reports are tailored to the specific engagement
circumstances. The practitioner may use headings, paragraph
numbers, typographical devices, for example the bolding of text,
and other mechanisms to enhance the clarity and readability of
the assurance report.
79. The practitioner may choose a "short form" or "long form"
style of reporting to facilitate effective communication to the
intended users. "Short-form" reports ordinarily include only the
basic elements. "Long-form" reports include other information and
explanations that are not intended to affect the practitioner's
conclusion. In addition to the basic elements, long-form reports
may describe in detail the terms of the engagement, the
applicable criteria being used, findings relating to particular
aspects of the engagement, details of the qualifications and
experience of the practitioner and others involved with the
engagement, disclosure of materiality levels, and, in some cases,
recommendations. The practitioner may find it helpful to consider
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the significance of providing such information to the information
needs of the intended users. As required by paragraph 76,
additional information is clearly separated from the practitioner's
conclusion and phrased in such a manner so as make it clear that
it is not intended to detract from that conclusion.
Assurance Report Content
80. In order to assert compliance with this Guidance Note,
among other things, the assurance report should include at a
minimum the following basic elements:
(a) A title that clearly indicates the report is an independent
assurance report. An appropriate title helps to identify the
nature of the assurance report, and to distinguish it from
reports issued by others, such as those who do not have to
comply with the same ethical requirements as the
practitioner. In case, the applicable law or regulation or the
contractual arrangement entered by the entity specifies a
title or phrases to identify the assurance report, the
practitioner may use the title or phrases so prescribed.
(b) An addressee. An addressee identifies the party or parties
to whom the assurance report is directed. The assurance
report is ordinarily addressed to the engaging party, but in
some cases there may be other intended users.
(c) An identification or description of the level of assurance
obtained by the practitioner, the subject matter information
and, when appropriate, the underlying subject matter.
When the practitioner's conclusion is phrased in terms of a
statement made by the appropriate party, that statement
should accompany the assurance report, be reproduced in
the assurance report or be referenced therein to a source
that is available to the intended users. Identification and
description of the subject matter information and, when
appropriate, the underlying subject matter may include, for
example:
The point in time or period of time to which the
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measurement or evaluation of the underlying
subject matter relates.
Where applicable, the name of the responsible
party or component of the responsible party to
which the underlying subject matter relates.
An explanation of those characteristics of the
underlying subject matter or the subject matter
information of which the intended users should be
aware, and how such characteristics may influence
the precision of the measurement or evaluation of
the underlying subject matter against the applicable
criteria, or the persuasiveness of available
evidence. For example:
o The degree to which the subject matter
information is qualitative versus quantitative,
objective versus subjective, or historical
versus prospective.
o Changes in the underlying subject matter or
other engagement circumstances that affect
the comparability of the subject matter
information from one period to the next.
(d) Identification of the applicable criteria. The assurance
report identifies the applicable criteria against which the
underlying subject matter was measured or evaluated so
that the intended users can understand the basis for the
practitioner's opinion/conclusion. The assurance report
may include the applicable criteria, or refer to them if they
are included in the subject matter information or if they are
otherwise available from a readily accessible source. It
may be relevant in the circumstances, to disclose:
The source of the applicable criteria, and whether
or not the applicable criteria are embodied in law or
regulation, or issued by authorized or recognized
bodies of experts that follow a transparent due
process, that is, whether they are established
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criteria in the context of the underlying subject
matter (and if they are not, a description of why
they are considered suitable).
Measurement or evaluation methods used when
the applicable criteria allows for choice between a
number of methods.
Any significant interpretations made in applying the
applicable criteria in the engagement
circumstances.
Whether there have been any changes in the
measurement or evaluation methods used.
(e) Where appropriate, a description of any significant inherent
limitations associated with the measurement or evaluation
of the underlying subject matter against the applicable
criteria. While in some cases, inherent limitations can be
expected to be well-understood by the intended users of
an assurance report, in other cases it may be appropriate
to make explicit reference to them in the assurance report.
For example, in an assurance report related to the
effectiveness of internal control, it may be appropriate to
note that the historic evaluation of effectiveness is not
relevant to future periods due to the risk that internal
control may become inadequate because of changes in
conditions, or that the degree of compliance with policies
or procedures may deteriorate.
(f) When the applicable criteria are designed for a specific
purpose, a statement alerting readers to this fact and that,
as a result, the subject matter information may not be
suitable for another purpose. In some cases the applicable
criteria used to measure or evaluate the underlying subject
matter may be designed for a specific purpose. For
example, a regulator may require certain entities to use
particular applicable criteria designed for regulatory
purposes. To avoid misunderstandings, the practitioner
alerts readers of the assurance report to this fact and that
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therefore, the subject matter information may not be
suitable for another purpose.
In addition to the alert as required in the preceding
paragraph, the practitioner may consider it appropriate to
indicate that the assurance report is intended solely for
specific users. Depending on the engagement
circumstances, for example, the law or regulation of the
particular jurisdiction, this may be achieved by restricting
the distribution or use of the assurance report. While an
assurance report may be restricted in this way, the
absence of a restriction regarding a particular user or
purpose does not itself indicate that a legal responsibility is
owed by the practitioner in relation to that user or for that
purpose. Whether a legal responsibility is owed will depend
on the legal circumstances of each case and the relevant
jurisdiction.
(g) A statement to identify the responsible party and the
measurer or evaluator if different, and to describe their
responsibilities and the practitioner's responsibilities.
Identifying relative responsibilities informs the intended
users that the responsible party is responsible for the
underlying subject matter, that the measurer or evaluator is
responsible for the measurement or evaluation of the
underlying subject matter against the applicable criteria,
and that the Practitioner's role is to independently express
an opinion/conclusion about the subject matter information.
(h) A statement that the engagement was performed in
accordance with this Guidance Note.
(i) A statement that the firm, of which the practitioner is a
partner has applied SQC 1, Quality Control for Firms that
Perform Audits and Reviews of Historical Financial
Information, and Other Assurance and Related Services
Engagements.
(j) A statement that the practitioner complies with the
independence and other ethical requirements of the Code
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of Ethics issued by the Institute of Chartered Accountants
of India. The following is an illustration of a statement in
the assurance report regarding compliance with ethical
requirements:
"We conducted our engagement in accordance with the
Guidance Note on Reports or Certificates for Special
Purposes issued by the Institute of Chartered Accountants
of India. That Guidance Note requires that we comply with
the ethical requirements of the Code of Ethics issued by
the Institute of Chartered Accountants of India."
(k) An informative summary of the work performed as the
basis for the practitioner's opinion/conclusion. In the case
of a limited assurance engagement, an appreciation of the
nature, timing, and extent of procedures performed is
essential to understanding the practitioner's
opinion/conclusion. In a limited assurance engagement,
the summary of the work performed should state that:
(i) The procedures performed in a limited assurance
engagement vary in nature and timing from, and
are less in extent than for, a reasonable assurance
engagement; and
(ii) Consequently, the level of assurance obtained in a
limited assurance engagement is substantially
lower than the assurance that would have been
obtained had a reasonable assurance engagement
been performed.
It is important that the summary be written in an
objective way that allows intended users to
understand the work done as the basis for the
practitioner's opinion/conclusion. In most cases,
this will not involve detailing the entire work plan,
but on the other hand it is important for it not to be
so summarized as to be ambiguous, nor written in a
way that is overstated or embellished.
(l) The practitioner's opinion/conclusion:
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(i) When appropriate, the opinion/conclusion should
inform the intended users of the context in which
the practitioner's opinion/conclusion is to be read.
It may be appropriate to inform the intended users
of the context in which the practitioner's
opinion/conclusion is to be read when the
assurance report includes an explanation of
particular characteristics of the underlying subject
matter of which the intended users should be
aware. The practitioner's opinion/conclusion may,
for example, include wording such as: "This
opinion/conclusion has been formed on the basis of
the matters outlined elsewhere in this independent
assurance report."
(ii) In a reasonable assurance engagement, the
opinion is expressed in a positive form. Examples
of opinion expressed in a form appropriate for a
reasonable assurance engagement include:
When expressed in terms of the underlying
subject matter and the applicable criteria,
"In our opinion, the entity has complied, in
all material respects, with XYZ law";
When expressed in terms of the subject
matter information and the applicable
criteria, "In our opinion, the Statement of
Net Worth is properly prepared, in all
material respects, based on XYZ criteria"; or
When expressed in terms of a statement
made by the appropriate party, "In our
opinion, the [appropriate party's] statement
that the entity has complied with XYZ law is,
in all material respects, fairly stated," or "In
our opinion, the [appropriate party's]
statement that the key performance
indicators are presented in accordance with
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GN on Reports or Certificates for Special Purposes (Revised 2016)
XYZ criteria is, in all material respects, fairly
stated".
(iii) In a limited assurance engagement, the conclusion
is expressed in a form that conveys whether, based
on the procedures performed and evidence
obtained, a matter(s) has come to the practitioner's
attention to cause the practitioner to believe that
the subject matter information is materially
misstated. Examples of conclusions expressed in a
form appropriate for a limited assurance
engagement include:
When expressed in terms of the underlying
subject matter and the applicable criteria,
"Based on the procedures performed and
evidence obtained, nothing has come to our
attention that causes us to believe that [the
entity] has not complied, in all material
respects, with XYZ law."
When expressed in terms of the subject
matter information and the applicable
criteria, "Based on the procedures
performed and evidence obtained, we are
not aware of any material amendments that
need to be made to the assessment of key
performance indicators for them to be in
accordance with XYZ criteria."; or
When expressed in terms of a statement
made by the appropriate party, "Based on
the procedures performed and evidence
obtained, nothing has come to our attention
that causes us to believe that the
[appropriate party's] statement that [the
entity] has complied with XYZ law, is not, in
all material respects, fairly stated."
(iv) The opinion/conclusion in (ii) or (iii) should be
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phrased using appropriate words for the underlying
subject matter and applicable criteria given the
engagement circumstances and need to be
phrased in terms of:
a. The underlying subject matter and the
applicable criteria;
b. The subject matter information and the
applicable criteria; or
c. A statement made by the appropriate party.
Forms of expression which may be useful for
underlying subject matters include, for example,
one, or a combination of, the following:
For compliance engagements--"in
compliance with" or "in accordance with."
For engagements when the applicable
criteria describe a process or methodology
for the preparation or presentation of the
subject matter information--"properly
prepared."
For engagement when the principles of fair
presentation are embodied in the applicable
criteria--"fairly stated."
(v) When the practitioner expresses a modified
opinion/conclusion, the assurance report should
contain:
a. A section that provides a description of the
matter(s) giving rise to the modification; and
b. A section that contains the practitioner's
modified opinion/conclusion
(m) The practitioner's signature. The assurance report is
signed by the practitioner in his personal name. Where a
Firm is appointed to carry out the engagement, the report
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GN on Reports or Certificates for Special Purposes (Revised 2016)
is signed in the personal name of the practitioner and in
the name of the audit firm. The partner/proprietor signing
the assurance report also needs to mention the
membership number assigned by the ICAI. They also
include the registration number of the Firm, wherever
applicable, as allotted by ICAI, in the assurance reports
signed by them.
(n) The date of the assurance report. The assurance report
should be dated no earlier than the date on which the
practitioner has obtained the evidence on which the
practitioner's opinion/conclusion is based, including
evidence that those with the recognized authority have
asserted that they have taken responsibility for the subject
matter information.
(o) The place of signature.
Reference to the Practitioner's Expert in the
Assurance Report
81. If the practitioner refers to the work of a practitioner's
expert in the assurance report, the wording of that report should
not imply that the practitioner's responsibility for the
opinion/conclusion expressed in that report is reduced because of
the involvement of that expert.
Assurance Report Prescribed by Law or
Regulation
82. If the practitioner is required by law or regulation to use a
specific layout or wording of the assurance report, the assurance
report should refer to this Guidance Note, only if the assurance
report includes, at a minimum, each of the elements identified in
paragraph 80.
Unmodified and Modified Opinions/Conclusions
83. The practitioner should express an unmodified
opinion/conclusion when the practitioner concludes:
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GN on Reports or Certificates for Special Purposes (Revised 2016)
(a) In the case of a reasonable assurance engagement, that
the subject matter information is prepared, in all material
respects, in accordance with the applicable criteria; or
(b) In the case of a limited assurance engagement, that,
based on the procedures performed and evidence
obtained, no matter(s) has come to the attention of the
practitioner that causes the practitioner to believe that the
subject matter information is not prepared, in all material
respects, in accordance with the applicable criteria.
84. If the practitioner considers it necessary to:
(a) Draw intended users' attention to a matter presented or
disclosed in the subject matter information that, in the
practitioner's judgment, is of such importance that it is
fundamental to intended users' understanding of the
subject matter information (an Emphasis of Matter
paragraph); or
(b) Communicate a matter other than those that are presented
or disclosed in the subject matter information that, in the
practitioner's judgment, is relevant to intended users'
understanding of the engagement, the practitioner's
responsibilities or the assurance report (an Other Matter
paragraph),
and this is not prohibited by law or regulation, the
practitioner may do so in a paragraph in the assurance
report, with an appropriate heading, that clearly indicates
the practitioner's opinion/conclusion is not modified in
respect of the matter/s. In the case of an Emphasis of
Matter paragraph, such a paragraph should refer only to
the information presented or disclosed in the subject
matter information.
85. The practitioner would need to express a modified
opinion/conclusion in the following circumstances:
(a) When, in the practitioner's professional judgment, a scope
limitation exists and the effect of the matter could be
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material. In such cases, the practitioner should express a
qualified opinion/conclusion or a disclaimer of
opinion/conclusion.
(b) When, in the practitioner's professional judgment, the
subject matter information is materially misstated. In such
cases, the practitioner should express a qualified
opinion/conclusion or adverse opinion/conclusion.
Examples of qualified and adverse opinions/conclusions
and a disclaimer of opinions/conclusion are:
Qualified conclusion (an example for limited
assurance engagements with a material
misstatement) "Based on the procedures
performed and the evidence obtained, except for
the effect of the matter described in the Basis for
Qualified Conclusion section of our report, nothing
has come to our attention that causes us to believe
that the [appropriate party's] statement does not
present fairly, in all material respects, the entity's
compliance with XYZ law."
Adverse opinion (an example for a material and
pervasive misstatement for both reasonable
assurance and limited assurance engagements)
"Because of the significance of the matter
described in the Basis for Adverse
Opinion/Conclusion section of our report, the
[appropriate party's] statement does not present
fairly the entity's compliance with XYZ law."
Disclaimer of conclusion (an example for a material
and pervasive limitation of scope for both
reasonable assurance and limited assurance
engagements) "Because of the significance of the
matter described in the Basis for Disclaimer of
Opinion/Conclusion section of our report, we have
not been able to obtain sufficient appropriate
evidence to form an opinion/ conclusion on the
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[appropriate party's] statement. Accordingly, we do
not express an opinion/ conclusion on that
statement."
86. The practitioner should express a qualified
opinion/conclusion when, in the practitioner's professional
judgment, the effects, or possible effects, of a matter are not so
material and pervasive as to require an adverse
opinion/conclusion or a disclaimer of opinion/conclusion. A
qualified opinion/conclusion should be expressed as being "except
for" the effects, or possible effects, of the matter to which the
qualification relates.
87. The term `pervasive' describes the effects on the subject
matter information of misstatements or the possible effects on the
subject matter information of misstatements, if any, that are
undetected due to an inability to obtain sufficient appropriate
evidence. Pervasive effects on the subject matter information are
those that, in the practitioner's professional judgment:
(a) Are not confined to specific aspects of the subject matter
information;
(b) If so confined, represent or could represent a substantial
proportion of the subject matter information; or
(c) In relation to disclosures, are fundamental to the intended
users' understanding of the subject matter information.
(d) The nature of the matter, and the practitioner's judgment
about the pervasiveness of the effects or possible effects
on the subject matter information, affects the type of
conclusion to be expressed.
88. If the practitioner expresses a modified opinion/conclusion
because of a scope limitation but is also aware of a matter(s) that
causes the subject matter information to be materially misstated,
the practitioner should include in the assurance report a clear
description of both the scope limitation and the matter(s) that
causes the subject matter information to be materially misstated.
89. When the statement made by the appropriate party has
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identified and properly described that the subject matter
information is materially misstated, the practitioner should either:
(a) Express a qualified opinion/conclusion or adverse
opinion/conclusion phrased in terms of the underlying
subject matter and the applicable criteria; or
(b) If specifically required by the terms of the engagement to
phrase the opinion/conclusion in terms of a statement
made by the appropriate party, express an unqualified
opinion/conclusion but include an Emphasis of Matter
paragraph in the assurance report, referring to the
statement made by the appropriate party that identifies and
properly describes that the subject matter information is
materially misstated. In some cases, the measurer or
evaluator may identify and properly describe that the
subject matter information is materially misstated. For
example, in a compliance engagement the measurer or
evaluator may correctly describe the instances of non-
compliance. In such circumstances, paragraph 88 requires
the practitioner to draw the intended users' attention to the
description of the material misstatement, by either
expressing a qualified or adverse opinion/conclusion or by
expressing an unqualified opinion/conclusion but
emphasizing the matter by specifically referring to it in the
assurance report.
90. Appendix 2 to the Guidance Note contains illustrative
formats of Reports/Certificates.
Other Communication Responsibilities
91. The practitioner should consider whether, pursuant to the
terms of the engagement and other engagement circumstances,
any matter has come to the attention of the practitioner that is to
be communicated with the responsible party, the measurer or
evaluator, the engaging party, those charged with governance or
others.
Documentation
92. The practitioner should prepare on a timely basis
engagement documentation that provides a record of the basis for
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the assurance report that is sufficient and appropriate to enable an
experienced practitioner, having no previous connection with the
engagement, to understand:
(a) The nature, timing and extent of the procedures performed
to comply with the Guidance Note and applicable legal
and regulatory requirements;
(b) The results of the procedures performed, and the evidence
obtained; and
(c) Significant matters arising during the engagement, the
conclusions reached thereon, and significant professional
judgments made in reaching those conclusions.
93. If the practitioner identifies information that is inconsistent
with the practitioner's final opinion/conclusion regarding a
significant matter, the practitioner should document how the
practitioner addressed the inconsistency.
94. The practitioner should assemble the engagement
documentation in an engagement file and complete the
administrative process of assembling the final engagement file on
a timely basis after the date of the assurance report. SQC 1
requires establishment of policies and procedures for the timely
completion of the assembly of engagement files. An appropriate
time limit within which to complete the assembly of the final
engagement file is ordinarily not more than 60 days after the date
of the assurance report.
95. The completion of the assembly of the final engagement
file after the date of the assurance report is an administrative
process that does not involve the performance of new procedures
or the drawing of new opinion/conclusions. Changes may,
however, be made to the documentation during the final assembly
process if they are administrative in nature. Examples of such
changes include:
Deleting or discarding superseded documentation.
Sorting, collating and cross-referencing working papers.
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Signing off on completion checklists relating to the file
assembly process.
Documenting evidence that the practitioner has obtained,
discussed and agreed with the relevant practitioners of the
engagement team before the date of the assurance report.
96. After the assembly of the final engagement file has been
completed, the practitioner should not delete or discard
engagement documentation of any nature before the end of its
retention period. The retention period for assurance engagements
ordinarily is no shorter than seven years from the date of
assurance report.34
97. If the practitioner finds it necessary to amend existing
engagement documentation or add new engagement
documentation after the assembly of the final engagement file has
been completed the practitioner should, regardless of the nature
of the amendments or additions, document:
a) The specific reasons for making the amendments or
additions; and
b) When, and by whom, they were made and reviewed.
34
Refer Para 83 of SQC 1
44
APPENDIX 1
Glossary of Terms Used in the Guidance Note
For purposes of this Guidance Note, the following terms have the
meanings attributed below.
1. Assurance engagementAn engagement in which a
practitioner aims to obtain sufficient appropriate evidence in order
to express an opinion/conclusion, designed to enhance the degree
of confidence of the intended users, other than the responsible
party about the subject matter information (that is, the outcome of
the measurement or evaluation of an underlying subject matter
against criteria). Each assurance engagement is classified on two
dimensions:
Either a reasonable assurance engagement or a limited
assurance engagement:
o Reasonable assurance engagementAn
assurance engagement in which the practitioner
reduces engagement risk to an acceptably low level
in the circumstances of the engagement, as the
basis for the practitioner's opinion. The
practitioner's opinion is expressed in a form that
conveys the practitioner's opinion on the outcome
of the measurement or evaluation of the underlying
subject matter against the criteria.
o Limited assurance engagementAn assurance
engagement in which the practitioner reduces
engagement risk to a level that is acceptable in the
circumstances of the engagement but where that
risk is greater than for a reasonable assurance
engagement, as the basis for expressing a
conclusion in a form that conveys whether, based
on the procedures performed and evidence
obtained, a matter(s) has(have) come to the
practitioner's attention to cause the practitioner to
believe that the subject matter information is
GN on Reports or Certificates for Special Purposes (Revised 2016)
materially misstated. The nature, timing, and extent
of procedures performed in a limited assurance
engagement is limited compared with that
necessary in a reasonable assurance engagement
but is planned to obtain a level of assurance that is,
in the practitioner's professional judgment,
meaningful.
Either assertion based engagement or a direct reporting
engagement:
o Assertion based engagementAn assurance
engagement in which a party other than the
practitioner measures or evaluates the underlying
subject matter against the criteria. A party other
than the practitioner also often presents the
resulting subject matter information in a report or
statement. In some cases, however, the subject
matter information may be presented by the
practitioner in the assurance report. In an
attestation engagement, the practitioner's
conclusion addresses whether the subject matter
information is free from material misstatement. The
practitioner's conclusion may be phrased in terms
of:
(i) The underlying subject matter and the
applicable criteria;
(ii) The subject matter information and the
applicable criteria; or
(iii) A statement made by the appropriate party.
o Direct reporting engagementAn assurance
engagement in which the practitioner measures or
evaluates the underlying subject matter against the
applicable criteria and the practitioner presents the
resulting subject matter information as part of, or
accompanying, the assurance report. In a direct
engagement, the practitioner's conclusion
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addresses the reported outcome of the
measurement or evaluation of the underlying
subject matter against the criteria.
2. Assurance skills and techniquesThose planning,
evidence gathering, evidence evaluation, communication and
reporting skills and techniques demonstrated by an assurance
practitioner that are distinct from expertise in the underlying
subject matter of any particular assurance engagement or its
measurement or evaluation. Assurance skill and techniques
include:
Application of professional skepticism and professional
judgment;
Planning and performing an assurance engagement,
including obtaining and evaluating evidence;
Understanding information systems and the role and
limitations of internal control;
Linking the consideration of materiality and engagement
risks to the nature, timing and extent of procedures;
Applying procedures as appropriate to the engagement
(which may include inquiry, inspection, re-calculation, re-
performance, observation, confirmation, and analytical
procedures); and
Systematic documentation practices and assurance report-
writing skills.
3. CriteriaThe benchmarks used to measure or evaluate
the underlying subject matter. The "applicable criteria" are the
criteria used for the particular engagement. Suitable criteria are
required for reasonably consistent measurement or evaluation of
an underlying subject matter within the context of professional
judgment. Without the frame of reference provided by suitable
criteria, any conclusion is open to individual interpretation and
misunderstanding. The suitability of criteria is context-sensitive,
that is, it is determined in the context of the engagement
circumstances. Even for the same underlying subject matter there
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can be different criteria, which will yield a different measurement
or evaluation. For example, a measurer or evaluator might select,
as one of the criteria for the underlying subject matter of customer
satisfaction, the number of customer complaints resolved to the
acknowledged satisfaction of the customer; another measurer or
evaluator might select the number of repeat purchases in the
three months following the initial purchase. The suitability of
criteria is not affected by the level of assurance, that is, if criteria
are unsuitable for a reasonable assurance engagement, they are
also unsuitable for a limited assurance engagement, and vice
versa. Suitable criteria include, when relevant, criteria for
presentation and disclosure.
4. Engagement circumstances The broad context defining
the particular engagement, which includes the terms of the
engagement; whether it is a reasonable assurance engagement or
a limited assurance engagement, the characteristics of the
underlying subject matter; the measurement or evaluation criteria;
the information needs of the intended users; relevant
characteristics of the responsible party, the measurer or evaluator,
and the engaging party and their environment; and other matters,
for example events, transactions, conditions and practices, that
may have a significant effect on the engagement.
5. Engagement partner The partner or other person in the
firm who is a member of the Institute of Chartered Accountants of
India and is in full time practice and is responsible for the
engagement and its performance, and for the assurance report
that is issued on behalf of the firm, and who, where required, has
the appropriate authority from a professional, legal or regulatory
body.
6. Engagement risk The risk that the practitioner
expresses an inappropriate conclusion when the subject matter
information is materially misstated35.
7. Engaging party The party(ies) that engages the
35
Refer to Para 47-48 and Para 51 of the Framework for Assurance
Engagements.
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practitioner to perform the assurance engagement. The engaging
party may be under different circumstances, management or
those charged with governance of the responsible party, a
legislature, the intended users, the measurer or evaluator, or a
different third party
8. Engagement team All personnel performing an
engagement, including any experts contracted by the firm in
connection with that engagement.
9. Evidence Information used by the practitioner in arriving
at the practitioner's conclusion. Evidence includes both,
information contained in relevant information systems, if any, and
other information
10. Firm A sole practitioner/proprietor, partnership or any
such entity of professional accountants, as may be permitted by
law.
11. Historical financial information Information expressed in
financial terms in relation to a particular entity, derived primarily
from that entity's accounting system, about economic events
occurring in past time periods or about economic conditions or
circumstances at points in time in the past.
12. Internal audit function A function of an entity that
performs assurance and consulting activities, designed to
evaluate and improve the effectiveness of the entity's governance,
risk management and internal control processes.
13. Intended users The individual(s) or organization(s), or
group(s) thereof that the practitioner expects will use the
assurance report.
In some cases there may be intended users other than those to
whom the assurance report is addressed. The practitioner may not
be able to identify all those who will read the assurance report,
particularly, where a large number of people have access to it. In
such cases, particularly where possible, users are likely to have a
broad range of interests in the underlying subject matter, intended
users may be limited to major stakeholders with significant and
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common interests. Intended users may be identified in different
ways, for example, by agreement between the practitioner and the
responsible party or engaging party, or by law or regulation.
Intended users or their representatives may be directly involved
with the practitioner and the responsible party (and the engaging
party, if different) in determining the requirements of the
engagement. Regardless of the involvement of others however,
and unlike an agreed-upon procedures engagement (which
involves reporting factual findings based upon procedures agreed
with the engaging party and any appropriate third parties, rather
than a conclusion):
(a) The practitioner is responsible for determining the nature,
timing and extent of procedures; and
(b) The practitioner may need to perform additional
procedures, if information comes to the practitioner's
attention that differs significantly from that on which the
determination of planned procedures was based.
In some cases, intended users (for example, bankers and
regulators) impose a requirement on, or request the appropriate
party(ies) to arrange for an assurance engagement to be
performed for a specific purpose. When engagements use criteria
that are designed for a specific purpose, paragraph 80 requires a
statement alerting readers to this fact. In addition, the practitioner
may consider it appropriate to indicate that the assurance report is
intended solely for specific users. Depending on the engagement
circumstances, this may be achieved by restricting the distribution
or use of the assurance report.
14. Measurer or evaluator The party(ies) who measures or
evaluates the underlying subject matter against the criteria. The
measurer or evaluator possesses expertise in the underlying
subject matter. In many attestation engagements, the responsible
party may also be the measurer or evaluator, and the engaging
party. The measurer or evaluator is responsible for having a
reasonable basis for the subject matter information. What
constitutes a reasonable basis will depend on the nature of the
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underlying subject matter and other engagement circumstances.
In some cases, a formal process with extensive internal controls
may be needed to provide the measurer or evaluator with a
reasonable basis that the subject matter information is free from
material misstatement. The fact that the practitioner will report on
the subject matter information is not a substitute for the measurer
or evaluator's own processes to have a reasonable basis for the
subject matter information.
15. Misstatement A difference between the subject matter
information and the appropriate measurement or evaluation of the
underlying subject matter in accordance with the criteria.
Misstatements can be intentional or unintentional, qualitative or
quantitative, and include omissions.
16. Misstatement of fact (with respect to other
information)Other information that is unrelated to matters
appearing in the subject matter information or the assurance
report that is incorrectly stated or presented. A material
misstatement of fact may undermine the credibility of the
document containing the subject matter information.
17. Other information Information (other than the subject
matter information and the assurance report thereon) which is
included, either by law, regulation or custom, in a document
containing the subject matter information and the assurance report
thereon.
18. Practitioner's expert An individual or organization
possessing expertise in a field other than assurance, whose work
in that field is used by the practitioner to assist the practitioner in
obtaining sufficient appropriate evidence. A practitioner's expert
may be either a practitioner's internal expert (who is a partner or
staff, including temporary staff, of the practitioner's firm or a
network firm), or a practitioner's external expert.
19. Professional judgment The application of relevant
training, knowledge and experience, within the context provided
by assurance and ethical standards, in making informed decisions
about the courses of action that are appropriate in the
circumstances of the engagement.
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20. Professional skepticism An attitude that includes a
questioning mind, being alert to conditions which may indicate
possible misstatement, and a critical assessment of evidence.
21. Responsible party The party(ies) responsible for the
underlying subject matter. All assurance engagements have at
least three parties: the responsible party, the practitioner, and the
intended users. In many attestation engagements, the responsible
party may also be the measurer or evaluator, and the engaging
party.
22. Risk of material misstatement The risk that the subject
matter information is materially misstated prior to the engagement.
23. Subject matter information The outcome of the
measurement or evaluation of the underlying subject matter
against the criteria, i.e., the information that results from applying
the criteria to the underlying subject matter. In some cases, the
subject matter information may be a statement that evaluates an
aspect of a process, or of performance or compliance, in relation
to the criteria. For example, "ABC's governance structure
conformed with XYZ criteria during the period ..."
24. Underlying subject matterThe phenomenon that is
measured or evaluated by applying criteria.
52
APPENDIX 2
Illustrative Formats of Reports/Certificates
Note: The illustrative formats of assurance reports or
certificates for special purposes given in Appendix 2
should be tailored by the practitioner to meet the
specific circumstances and requirements of the
engagement.
Illustration 1: Practitioner's Report for
Turnover/Net Worth/Net Profit/Working Capital/similar
engagement pursuant to a Tender requirement
The Board of Directors
[Name of the Company]
[Company Address]
Independent Practitioner's Report on the Statement of
[Annual Turnover for financial years
ended.........and............ (specify periods); Current
Assets; Current Liabilities; Computation of Working
Capital and Computation of Net worth as
at........................... (specify date)]
1. This Report is issued in accordance with the terms of our
engagement letter/agreement dated ........................
[specify date].
2. The accompanying Statement of Annual Turnover for
financial years ended ............and................. (specify
period) and the Statement of Current Assets; Current
Liabilities; Working Capital and Net Worth as at
..................... (specify date) (hereinafter referred together
as the "Statement") contains the details as required pursuant
to compliance with the terms and conditions contained in
........................ [refer to the clause] of the Tender
document issued by ................................................
[refer to the authority] dated ................................ (specify
date) with reference [specify the contract reference if
GN on Reports or Certificates for Special Purposes (Revised 2016)
available] (hereinafter referred to as the "Tender
Document"), which we have initialled for identification
purposes only.
Management's Responsibility for the Statement
3. The preparation of the Statement is the responsibility of the
Management of ................................... [Name of the
Company] (hereinafter the "Company") including the
preparation and maintenance of all accounting and other
relevant supporting records and documents. This
responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation
and presentation of the Statement and applying an
appropriate basis of preparation; and making estimates that
are reasonable in the circumstances.
4. The Management is also responsible for ensuring that the
Company complies with the requirements of the Tender
Document and provides all relevant information to
.......................... [Name of the authority].
Practitioner's Responsibility
5. Pursuant to the requirements of the Tender Document, it is
our responsibility to provide a reasonable assurance
whether:
i) the amounts in the Statement of Annual Turnover
for the year ended ................................. (specify
period) have been accurately extracted from the
audited financial statements;
ii) the amounts in the Statement in respect of current
assets and current liabilities that form part of the
working capital computation have been accurately
extracted from the audited financial statements for
the year ended .............................. (specify the
period) and the computation of working capital is
arithmetically correct;
iii) the amounts in the Statement that form part of the
Net Worth computation have been accurately
54
GN on Reports or Certificates for Special Purposes (Revised 2016)
extracted from the audited financial statements for
the year ended; and [month][date][year] and the
computation of net worth is arithmetically correct;
and
iv) the computation of net worth and working capital is
in accordance with the method of computation set
out in the clause [ ] of the Tender Document.
6. The audited financial statements referred to in paragraph 5
above, have been audited by us, on which we issued an
unmodified audit opinion vide our report(s) dated
................................... (specify dates) respectively. Our
audits of these financial statements were conducted in
accordance with the Standards on Auditing and other
applicable authoritative pronouncements issued by the
Institute of Chartered Accountants of India. Those
Standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement.
7. We conducted our examination of the Statement in
accordance with the Guidance Note on Reports or
Certificates for Special Purposes issued by the Institute of
Chartered Accountants of India. The Guidance Note
requires that we comply with the ethical requirements of the
Code of Ethics issued by the Institute of Chartered
Accountants of India.
8. We have complied with the relevant applicable
requirements of the Standard on Quality Control (SQC) 1,
Quality Control for Firms that Perform Audits and Reviews
of Historical Financial Information, and Other Assurance
and Related Services Engagements.
Opinion
9. Based on our examination, as above, we are of the opinion
that:
i) the amounts in the Statement in respect of Annual
Turnover, Current assets and Current liabilities
55
GN on Reports or Certificates for Special Purposes (Revised 2016)
have been accurately extracted from the audited
financial statements for the years ended [date] and
[date];
ii) the amounts that form part of the working capital
and net worth computation have been accurately
extracted from the audited financial statements for
the years ended ........................[specify date]
and [specify date]; and that the computation of
working capital and net worth in the Statement is
mathematically accurate and is in accordance with
the method of computation set out in the clause [ ]
of the Tender Document.
Restriction on Use
10. The certificate is addressed to and provided to the Board of
Directors of the Company solely for the purpose to enable
comply with requirement of Tender Document and to submit
the accompanying Statement to [specify the authority], and
should not be used by any other person or for any other
purpose. Accordingly, we do not accept or assume any
liability or any duty of care for any other purpose or to any
other person to whom this certificate is shown or into whose
hands it may come without our prior consent in writing.
For XYZ and Co.
Chartered Accountants
Firm's Registration Number
Signature
(Name of the Member Signing the Assurance Report)
(Designation36)
Membership Number
Place of Signature
Date
36
Partner or Proprietor, as the case may be.
56
GN on Reports or Certificates for Special Purposes (Revised 2016)
Illustration 2: Auditor's Annual Activity Certificate
for Indian Branch Office/Liaison Office of Foreign
Companies
The Authorised Representatives,
[Name of the Branch Office/Liaison Office]
[Address]
Independent Auditor's Annual Activity Certificate for
Indian Branch of [Name of the Foreign Company]
1. This Certificate is issued in accordance with the terms of our
agreement dated [date].
2. [Name of the Indian Branch /Liaison Office], (the "Indian
Branch"/ "Liaison Office/s") with PAN No. [Insert PAN Number
of the Branch /Liaison Office/s] of [Name of the Foreign
Company] (UIN [Insert UIN]) was established to undertake
certain activities specifically permitted by the Reserve Bank of
India (the "RBI") vide its approval letter/s No/s. [*] (the
"letter/s").
Authorised Representatives' Responsibility
3. The Authorised Representatives of the Branch Office/Liaison
Office are responsible for ensuring that the Indian Branch/
Liaison Office complies with the requirement of approval letter
and for providing all relevant information to the RBI.
Auditor's Responsibility
4. Pursuant to the requirements of the RBI Master Circular No. 7
dated July 02, 2012 (the "Circular"), our responsibility is to
express reasonable assurance in the form of an opinion based
on our audit and examination of books and records as to
whether the Indian Branch/ Liaison Office/s has/ have
undertaken only those activities that have been specifically
permitted by the RBI and has/ have complied with the
specified terms and conditions.
5. We audited the financial statements of [Name of the Indian
Branch /Liaison Office] as of and for the financial year ended
57
GN on Reports or Certificates for Special Purposes (Revised 2016)
31 March XXXX, on which we issued an unmodified audit
opinion vide our reports dated ...................................
(specify date). Our audits of these financial statements were
conducted in accordance with the Standards on Auditing and
other applicable authoritative pronouncements issued by the
Institute of Chartered Accountants of India. Those Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement.
6. We conducted our examination of the Statement in
accordance with the Guidance Note on Reports or Certificates
for Special Purposes issued by the Institute of Chartered
Accountants of India. The Guidance Note requires that we
comply with the ethical requirements of the Code of Ethics
issued by the Institute of Chartered Accountants of India.
7. We have complied with the relevant applicable requirements of
the Standard on Quality Control (SQC) 1, Quality Control for
Firms that Perform Audits and Reviews of Historical Financial
Information, and Other Assurance and Related Services
Engagements.
Opinion
8. Based on our audit of financial statements for the year ended
31 March 20XX and the information and explanations given to
us, we are of the opinion that the [Name of the Branch /Liaison
Office/s] has/ have37 undertaken only those activities during
the period from [month] [date], [year] to [month] [date] that
have been specifically permitted by the Reserve Bank of India,
vide its approval letter/s38 No/s39 [ ] dated [month][date], [year]
and has/have40 complied with the terms and conditions
specified in the above mentioned letter/s.
37
As Applicable
38
As Applicable
39
As Applicable
40
As Applicable
58
GN on Reports or Certificates for Special Purposes (Revised 2016)
Restriction on Use
9. This certificate has been prepared at the request of the [Name
of the Branch Office/Liaison Office] solely with reference to the
Circular, as amended from time to time. It should not be used
by any other person or for any other purpose. Accordingly, we
do not accept or assume any liability or any duty of care or for
any other purpose or to any other party to whom it is shown or
into whose hands it may come without our prior consent in
writing.
For XYZ and Co.
Chartered Accountants
Firm's Registration Number
Signature
(Name of the Member Signing the Assurance Report)
(Designation41)
Membership Number
Place of Signature
Date
41
Partner or Proprietor, as the case may be.
59
GN on Reports or Certificates for Special Purposes (Revised 2016)
Illustration 3: Auditor's Report on the Manner of
Utilization of Funds required under Securities and
Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015
The Board of Directors
[Name of the Company]
[Company Address]
Independent Auditor's Report on the manner of
utilization of the funds including for purposes other than
those stated in the offer document
1. This report is issued in accordance with the terms of our
agreement dated [].
2. The accompanying Statement contains details of manner of
the utilization of funds including funds utilized for purposes
other than those stated in the offer document for the Rights
Issue (the "Statement"), as required by the Clause 32(5) of
Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015, by the
[Name of the Company] (the "Company"), which we have
initialled for identification purposes only. The Funds were
raised by the Company pursuant to the rights issue of [*]
equity shares of face value of Rs. [ ] each, at a premium of Rs.
[*] each, aggregating to Rs. [*].
Managements' Responsibility for the Statement
3. The preparation of the accompanying Statement is the
responsibility of the Management of the Company. This
responsibility includes designing, implementing and
maintaining internal control relevant to the preparation and
presentation of the Statement, and applying an appropriate
basis of preparation; and making estimates that are
reasonable in the circumstances.
4. The Management is also responsible for ensuring that the
Company complies with the requirements of the Equity Listing
60
GN on Reports or Certificates for Special Purposes (Revised 2016)
Agreement and for providing all relevant information to the
Securities and Exchange Board of India.
Auditor's Responsibility
5. Pursuant to the requirements of the Equity Listing Agreement,
it is our responsibility to obtain reasonable assurance and form
an opinion as to whether the Statement is in agreement with
the [audited financial statements for the year ended [and
books and records]42 of the Company].43
6. The financial statements referred to in paragraph 5 above,
have been audited by us on which we issued an unmodified
audit opinion vide our reports dated [month][date][year]. Our
audits of these financial statements were conducted in
accordance with the Standards on Auditing and other
applicable authoritative pronouncements issued by the
Institute of Chartered Accountants of India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. Our audits were not planned
and performed in connection with any transactions to identify
matters that may be of potential interest to third parties.
7. We conducted our examination of the Statement in
accordance with the Guidance Note on Reports or Certificates
for Special Purposes issued by the Institute of Chartered
Accountants of India. The Guidance Note requires that we
comply with the ethical requirements of the Code of Ethics
issued by the Institute of Chartered Accountants of India.
8. We have complied with the relevant applicable requirements of
the Standard on Quality Control (SQC) 1, Quality Control for
42
Strike off, if not applicable
43
If the audited financial statements of the entity are not available, it may not be
possible for the practitioner to provide reasonable assurance on the utilization of
funds by the entity. However, in case the practitioner is required to issue a report,
the practitioner should consider providing a limited assurance report. Reference
should be made to paragraph 80 of this Guidance Note, which specifies the
requirements to be complied with by the while preparing an assurance report that
expresses a limited assurance.
61
GN on Reports or Certificates for Special Purposes (Revised 2016)
Firms that Perform Audits and Reviews of Historical Financial
Information, and Other Assurance and Related Services
Engagements.
Opinion
9. Based on our examination as above, and the information and
explanations given to us, in our opinion, the Statement is in
agreement with the audited financial statements for the year
ended of the Company and fairly presents, in all material
respects, the manner of the utilization of funds including funds
utilized for purposes other than those stated in the offer
document.
Restriction on Use
10. This report is addressed to and provided to the Board of
Directors of the Company solely for the purpose of enabling it
to comply with its obligations under the Equity Listing
Agreement to submit the accompanying Statement to the Audit
Committee accompanied by a report thereon from the
statutory auditors and should not be used by any other person
or for any other purpose. Accordingly, we do not accept or
assume any liability or any duty of care for any other purpose
or to any other person to whom this report is shown or into
whose hands it may come without our prior consent in writing.
For XYZ and Co.
Chartered Accountants
Firm's Registration Number
Signature
(Name of the Member Signing the Assurance Report)
(Designation44)
Membership Number
Place of Signature
Date
44
Partner or Proprietor, as the case may be.
62
GN on Reports or Certificates for Special Purposes (Revised 2016)
Illustration 4: Practitioner's Report on Statement of
Fixed Assets for the Last Two Years in Respect of One
of the Project of an Entity
The Board of Directors
[Name of the Company]
[Company Address]
Independent Practitioner's Report on Statement of Fixed
Assets
1. This report is issued in accordance with the terms of our
agreement dated [date].
2. The accompanying Schedule of Fixed Assets as at [date] and
[date] has been prepared by M/s xxx (the "Company") in
respect of its project at [ABC] (the "Statement"), pursuant to
the requirement of `Annexure B' of the application filed by the
Company with the ............................................. (specify
the name of the relevant authority) for availing Fixed Capital
Investment Subsidy relating to the new plant commissioned at
xxx. We have initialled the Statement for identification
purposes only.
Management's Responsibility
3. The accompanying Statement, including the creation and
maintenance of all accounting and other records supporting its
contents, is solely the responsibility of the Management of the
Company. The Company's Management is responsible for the
designing, implementing and maintaining internal control
relevant to the preparation and presentation of the Statement,
and applying an appropriate basis of preparation; and making
estimates that are reasonable in the circumstances.
4. The Company's Management is also responsible for ensuring
that the Company complies with the requirements of the
Scheme and for providing all relevant information to the
.............................. (name of the authority).
63
GN on Reports or Certificates for Special Purposes (Revised 2016)
Practitioner's Responsibility
5. It is our responsibility to report on the Statement based on our
examination of the matters in the Statement with reference to
the books of account and other records of the Company for the
years ended [dates], which have been subjected to audit
pursuant to the requirements of the Companies Act, 2013.
6. The financial statements for the financial years ended [dates],
have been audited by us on which we issued an unmodified
audit opinion vide our reports dated [month][date][year]. Our
audits of these financial statements were conducted in
accordance with the Standards on Auditing and other
applicable authoritative pronouncements issued by the
Institute of Chartered Accountants of India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. Our audits were not planned
and performed in connection with any transactions to identify
matters that may be of potential interest to third parties.
7. We conducted our examination of the Statement in
accordance with the Guidance Note on Reports or Certificates
for Special Purposes issued by the Institute of Chartered
Accountants of India. The Guidance Note requires that we
comply with the ethical requirements of the Code of Ethics
issued by the Institute of Chartered Accountants of India.
8. We have complied with the relevant applicable requirements of
the Standard on Quality Control (SQC) 1, Quality Control for
Firms that Perform Audits and Reviews of Historical Financial
Information, and Other Assurance and Related Services
Engagements.
Opinion
9. Based on our examination, as above, and the information and
explanations given to us, we report that the Statement is in
agreement with the books of account and other records of the
Company as produced to us for our examination.
64
GN on Reports or Certificates for Special Purposes (Revised 2016)
Restriction on Use
10. This report has been issued at the request of the Board of
Directors of the Company, for submission to
______________________ (name of the authority) pursuant
to the requirements of the Scheme. Our report should not to
be used for any other purpose or by any person other than the
addressees of this report. Accordingly, we do not accept or
assume any liability or duty of care for any other purpose or to
any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior
consent in writing.
For XYZ and Co.
Chartered Accountants
Firm's Registration Number
Signature
(Name of the Member Signing the Assurance Report)
(Designation45)
Membership Number
Place of Signature
Date
45
Partner or Proprietor, as the case may be.
65
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