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Microlesson · 5-min read

Auditor's Report Prescribed by Law or Regulation – SA 700 and Special Law Interaction

## Auditor's Report Prescribed by Law or Regulation

Sometimes a special law or regulation prescribes the form/content of the auditor's report. SA 700 provides guidance on how to reconcile its requirements with such laws.

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### Point 1 – No conflict between special law and SA 700

  • If there is no conflict, follow the layout and wording of SA 700 in full.

### Point 2 – Conflict exists (special law layout/wording differs from SA 700)

When the layout or wording prescribed by special law differs from SA 700, the auditor must:

1. Include elements (a) to (m) of SA 700 (the core required elements of the auditor's report).

2. Add the requirements of the special law on top.

3. No need to separately apply other points within (a)–(m) that are already covered by the special law requirements.

4. The report shall refer to SA only if the (a)–(m) points are actually covered in the report.

> Remember: Points (a)–(m) are the mandatory elements of an auditor's report under SA 700 (e.g., title, addressee, opinion paragraph, basis for opinion, going concern, KAM, responsibilities, etc.).

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### Report on Other Legal & Regulatory Requirements

In India, the auditor's report on company financial statements must include a section on Other Legal and Regulatory Requirements. The typical sequence is:

1. CARO 2020 (Companies (Auditor's Report) Order, 2020) – [4 marks in exams]

2. Internal Financial Controls (IFC) report

3. Section 143(3) requirements (Companies Act, 2013)

> In exams, CARO 2020 attracts dedicated marks (typically 4 marks) as a separate reporting obligation.

Worked example

### Example 1

Example 1 – No conflict scenario:

An auditor is reporting on a trust whose deed requires an auditor's report but does not specify its format.

Answer: Since there is no specific layout prescribed by the trust deed that conflicts with SA 700, the auditor should follow the layout and wording of SA 700 in full.

### Example 2

Example 2 – Conflict scenario:

The Reserve Bank of India prescribes a specific format for auditor's reports on statutory audits of banks, which has a different structure from SA 700.

Answer: The auditor must include SA 700 elements (a)–(m) AND comply with the RBI-prescribed requirements. The report should refer to SAs only if (a)–(m) elements are actually covered in the report.

⚠️ Common exam mistakes

  • Thinking the auditor can completely ignore SA 700 when a special law prescribes the report format — the core elements (a)–(m) must still be included.
  • Forgetting that the sequence for Other Legal & Regulatory Requirements in India is CARO 2020 → IFC → Sec 143(3), not the reverse.
  • Assuming that if the special law covers some (a)–(m) elements, the auditor must re-state them separately — duplication is not required.
Reference: Section 143(3) of Companies Act 2013; CARO 2020 — Companies Act, 2013 / Companies (Auditor's Report) Order, 2020
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