QB1Correct/incorrect statements - audit risk, SQC1, engagement
14 marks very hard
Examine with reasons (in short) whether the following statements are correct or incorrect: (Attempt any 7 out of 8)
QB2IESBA Code, independence guiding principles, supervision of
14 marks very hard
Discuss the following:
QB3CARO 2016 reporting, internal control environment elements,
14 marks very hard
Answer the following:
QB4Audit committee, inventory physical verification, fraud tria
14 marks very hard
Answer the following:
QB5Litigation audit procedures, C&AG powers, completion memoran
14 marks very hard
Answer the following:
QB6Automated audit tools, internal audit of multiplex ticket re
14 marks very hard
Answer the following:
QCS1-1Contingent liability definition
2 marks hard
Case: M/s TPR & Associates have been appointed as the auditors of Octopus Ltd. for the Financial Year 2019-20. During the course of audit, the auditor notices that there is significant change in the number of debtors of the company. The auditor decided to check the debtors account in detail. Further the company has made various provisions like the provisions for taxation, provision for bad & doubtful debts. Also during the current Financial Year, the auditor attended the physical verification of the inventory being carried out by the management. The auditor notices that there is no substantial chang…
………..is a possible obligation that arises from the past events and whose existence will be confirmed only by the occurrence/non occurrence of one or more uncertain future events not wholly within the control of the entity:
(A) Provision
(B) Reserve
(C) Contingent Liability
(D) Liability
QCS1-2Inventory audit assertions
2 marks hard
Case: M/s TPR & Associates have been appointed as the auditors of Octopus Ltd. for the Financial Year 2019-20. During the course of audit, the auditor notices that there is significant change in the number of debtors of the company. The auditor decided to check the debtors account in detail. Further the company has made various provisions like the provisions for taxation, provision for bad & doubtful debts. Also during the current Financial Year, the auditor attended the physical verification of the inventory being carried out by the management. The auditor notices that there is no substantial chang…
Which of the following is not correct with respect to the inventory held by Octopus Limited:
(A) All inventory units held by the company should have been recorded and recognized in the financial statements.
(B) Any inventory held by a third party on behalf of the company should not be included as part of the inventory balance.
(C) Inventory should be recognized at cost or net realizable value whichever is lower.
(D) Inventory balance as at the year end does not include any element of next year.
QCS1-3Debtor confirmation - management refusal
2 marks hard
Case: M/s TPR & Associates have been appointed as the auditors of Octopus Ltd. for the Financial Year 2019-20. During the course of audit, the auditor notices that there is significant change in the number of debtors of the company. The auditor decided to check the debtors account in detail. Further the company has made various provisions like the provisions for taxation, provision for bad & doubtful debts. Also during the current Financial Year, the auditor attended the physical verification of the inventory being carried out by the management. The auditor notices that there is no substantial chang…
If the management of Octopus Ltd. refuses to allow the auditor, to send the confirmation request to the debtors, the auditor should:
(A) Withdraw from the engagement.
(B) Not listen at all to any requests of the management.
(C) Consider the management's request for refusal and assess its validity and decide the nature, timing, extent of his audit procedures accordingly.
(D) Agree to management request and proceed with audit of other items of the financial statements.
QCS1-4Audit of liabilities
2 marks hard
Case: M/s TPR & Associates have been appointed as the auditors of Octopus Ltd. for the Financial Year 2019-20. During the course of audit, the auditor notices that there is significant change in the number of debtors of the company. The auditor decided to check the debtors account in detail. Further the company has made various provisions like the provisions for taxation, provision for bad & doubtful debts. Also during the current Financial Year, the auditor attended the physical verification of the inventory being carried out by the management. The auditor notices that there is no substantial chang…
Which of the following statements is not true so far as the liabilities of a company are concerned:
(A) Liabilities are the financial obligations of a company including owner's funds.
(B) Liabilities include borrowing, trade payable and other current liabilities and provisions.
(C) Verification of liabilities is as important as that of assets.
(D) All of the above.
QCS1-5External confirmations procedure
2 marks hard
Case: M/s TPR & Associates have been appointed as the auditors of Octopus Ltd. for the Financial Year 2019-20. During the course of audit, the auditor notices that there is significant change in the number of debtors of the company. The auditor decided to check the debtors account in detail. Further the company has made various provisions like the provisions for taxation, provision for bad & doubtful debts. Also during the current Financial Year, the auditor attended the physical verification of the inventory being carried out by the management. The auditor notices that there is no substantial chang…
Statement 1: Confirmations as well as undelivered letters should be given/returned to the auditor and not to the client. Statement 2: When no reply is received, the auditor should perform alternate procedures regarding the balances:
(A) Only statement 1 is correct
(B) Only statement 2 is correct
(C) Both 1 & 2 are correct
(D) Both 1 & 2 are incorrect
QCS2-1Auditor appointment - notice filing with ROC
2 marks hard
Case: ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely coffee is of Rs.95 crores during the immediate preceding Financial Year. During the course of Audit, XYZ & Associates found certain delay in the payment of the Employees Provident Fund by ABC Ltd. They understand that the same need to be reported under the relevant provisions of Companies (Au…
After the appointment of XYZ & Associates, ABC Ltd. should inform the auditor and file a notice of such appointment with registrar within:
(A) 60 days
(B) 30 days
(C) 15 days
(D) 20 days
QCS2-2Auditor independence - relative holding securities
2 marks hard
Case: ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely coffee is of Rs.95 crores during the immediate preceding Financial Year. During the course of Audit, XYZ & Associates found certain delay in the payment of the Employees Provident Fund by ABC Ltd. They understand that the same need to be reported under the relevant provisions of Companies (Au…
If Mrs. X acquires security exceeding the prescribed limit in the ABC Ltd., then XYZ & Associates shall take corrective actions within………….days. What is the prescribed limit:
(A) 100 days, Market Value Rs 1,00,000
(B) 60 days, Face value Rs 1,00,000
(C) 90 days, Face value Rs 1,00,000
(D) 15 days, Market Value Rs 1,00,000
QCS2-3Fraud reporting by auditor under Companies Act Section 143(1
2 marks hard
Case: ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely coffee is of Rs.95 crores during the immediate preceding Financial Year. During the course of Audit, XYZ & Associates found certain delay in the payment of the Employees Provident Fund by ABC Ltd. They understand that the same need to be reported under the relevant provisions of Companies (Au…
Under which section reporting of fraud by an auditor to the Central Government is required and what is the amount of fraud:
(A) Section 143(12), 1 crore & above
(B) Section 139(12), 1 crore & above
(C) Section 143(12), 2 crore & above
(D) None of the above
QCS2-4Cost records maintenance - CARO reporting
2 marks hard
Case: ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely coffee is of Rs.95 crores during the immediate preceding Financial Year. During the course of Audit, XYZ & Associates found certain delay in the payment of the Employees Provident Fund by ABC Ltd. They understand that the same need to be reported under the relevant provisions of Companies (Au…
What is the requirement for ABC Ltd as per the relevant provisions regarding maintenance of cost records:
(A) Maintenance of cost records is mandatory, in form CRA 1.
(B) Maintenance of cost records is mandatory, in form CRA 2.
(C) Maintenance of cost records is mandatory, in any general format.
(D) No requirement of maintenance of cost records.
QCS2-5CARO 2016 - statutory dues arrears reporting threshold
2 marks hard
Case: ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely coffee is of Rs.95 crores during the immediate preceding Financial Year. During the course of Audit, XYZ & Associates found certain delay in the payment of the Employees Provident Fund by ABC Ltd. They understand that the same need to be reported under the relevant provisions of Companies (Au…
Under relevant clause of CARO, 2016, XYZ & Associates is required to report the extent of arrears of Employees Provident Fund as at the balance sheet date:
(A) Exceeding 9 months
(B) Exceeding 3 months
(C) Exceeding 6 months
(D) Exceeding 12 months
QMCQ-1Audit planning - updating strategy and plan
2 marks easy
The auditor shall update and change ______as necessary during the course of the audit.
(A) overall strategy
(B) the overall audit strategy and the audit plan
(C) audit plan
(D) audit program
QMCQ-2External confirmations - negative confirmation request
2 marks easy
A request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request is:
(A) Positive confirmation request
(B) Non-response
(C) Exception
(D) Negative confirmation request
QMCQ-3Independence threats - self-interest threat
2 marks easy
Direct financial interest or materially significant indirect financial interest in a client is an example of:
(A) Self-review threats
(B) Self-interest threats
(C) Advocacy threats
(D) Intimidation threats
QMCQ-4Opening balances - modified opinion under SA 705
2 marks easy
If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor shall express:
(A) a disclaimer opinion
(B) a qualified opinion
(C) a qualified opinion or a disclaimer of opinion, as appropriate, in accordance with SA 705.
(D) unmodified opinion
QMCQ-5Fraud - auditor response to exceptional circumstances
2 marks easy
If, as a result of a misstatement resulting from fraud, the auditor encounters exceptional circumstances that bring into question his ability to continue performing the audit, he shall:
(A) Withdraw from the engagement immediately.
(B) Report to Audit team regarding withdrawal.
(C) Determine the professional and legal responsibilities applicable in the circumstances.
(D) Ask the management for his withdrawal.