ICAI releases ‘Implementation Guide on Resignation/ Withdrawal from an Engagement to Perform Audit’ of Financial Statements

New Delhi, Dec 28 (KNN) Observing large number of mid-term resignations by auditors this year, the Auditing and Assurance Board (AASB) of the Institute of Chartered Accountants of India (ICAI) has released an “Implementation Guide on Resignation/ Withdrawal from an Engagement to Perform Audit of Financial Statements”

The implementation guide contains guidance on various aspects of auditor’s resignation like circumstances leading to withdrawal/resignation, procedure to be followed by auditors in case of resignation, auditor’s responsibilities, and professional obligations to be complied with by auditors.

The guidelines comes in the wake of rising number of mid-term resignations by auditors particularly auditors of listed companies to examine the reasons and circumstances leading to resignation of auditors.

In this regard, ICAI constituted a group and decided to issue guidance for the members on the matter.

The financial statements of an entity are prepared by the management of the entity to provide information about the financial position, financial performance and cash flows of the entity that is useful to a wide range of users in making economic decisions.

The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework and are free from material misstatement whether due to fraud or error.

An audit of financial statements is intended to provide credibility to the financial statements through the report issued by an auditor.

The implementation guide is applicable in case of audits of all listed entities. Further, in case of audits of banks, insurance companies and other corporate entities, the guidance given in implementation guide be also followed, as applicable.