The ICAI had pursuant to the issuance of the Revised SA 700, “Forming an Opinion and Reporting on Financial Statements”, prescribed a revised format of the auditor’s report on financial statements. As per SA 700 an auditor shall modify the opinion in the audit report when:

a) the auditor concludes that, based on the audit evidence obtained, the financial statements as a whole are not free from material misstatements

b) the auditor is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatement

Considering the materiality and the pervasiveness of the effects or possible effects on the financial statements, the auditor may issue a modified report with a:

a) Qualified opinion

b) Adverse Opinion

c) Disclaimer of Opinion

Also, SA 700 requires the auditor to clearly lay down management’s responsibility and auditor’s responsibility. This revised format has been made effective in respect of audits of financial statements for periods beginning on or after 1st April 2012. Considering the fact that SA700 is applicable to non-corporate entities also, ICAI had suggested certain changes vide its letter No. ICAI/DTC/2013-14/Rep-25 dated 7th February, 2014 to the Under Secretary (TPL-III)in Format of Form No. 3CB so as to enable our members to comply with guidelines issued by its Council.


The suggested draft format of a clean report has been submitted to the Under Secretary (TPL-III), CBDT vide its letter No. ICAI/DTC/2013-14/Rep-25 dated 7th February, 2014. The modifications in the report i.e. qualification, adverse opinion, disclaimer of opinion, may be reported by the auditor accordingly.


Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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