Q1Audit planning and changes to audit strategy
2 marks easy
Is CA Rahul Dhawan right in changing the planned audit strategy and plan after the audit team has started reading up on the company?
(A) Yes, Management should be consulted and a revised plan is essential
(B) No, CA Rahul Dhawan is not right as the overall audit strategy has been established the same cannot be changed. Audit plan however can be revised
(C) CA Rahul Dhawan is right in changing the plan as it is new audit strategy and the audit plan
(D) No - CA Rahul Dhawan is wrong as per the SA 300
Q1Audit Principles and Procedures
8 marks hard
Examine with reasons (in short) whether the following statements are correct or incorrect (Attempt any 7 out of 8)
Q2Debtors confirmation and management representations
2 marks easy
In order to obtain management representations should the audit team seek from debtors balance?
(A) GSR & Company can compare the balance effected in financial statements with invoices
(B) GSR & Company obtain direct balance confirmation from the debtors as this is external
(C) GSR & Company can obtain management representations with respect to the balance. Status of debtors for debts is the external confirmation
Q2Risk Assessment and Audit Planning
11 marks very hard
Discuss the following:
Q3Debtors confirmation procedures
2 marks easy
In order to confirm with debtors to provide the reply of confirmation required directly to the management, is it appropriate?
(A) Yes, the management has the authority to communicate with the debtors
(B) No, management is not in control to ask for a direct response to GM of accounts impairment as written confirmation is the requirement obtained directly by the audit team to the auditors
(C) No, the auditor will ensure that only correct confirmation is provided to the auditors
Q3Contingent liabilities definition
0 marks easy
... is a possible obligation that arises from the past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity
(a) Contingent liability
(b) Reserves
(c) Contingent Liabilities
(d) Liability
Q3SA 315 and Companies Act Requirements
10 marks hard
Answer the following:
Q3.cIT Risks and Audit Impact
3 marks medium
Analyze how risks in the IT system if not mitigated could have an impact on the audit.
Q3.dBusiness Relationship under Companies Act 2013
3 marks medium
Under the provision of Section 143(3) of Companies Act, 2013, every statutory auditor may request a person who is a director or any person (not being an auditor of that company). In this context, discuss meaning of term "business relationship"?
Q4Audit procedures for litigation and legal claims
2 marks easy
For continuing with the litigation going against the company which of the following audit procedures should be performed?
(A) GSR & Company can enquire the management including in house legal counsel
(B) GSR & Company should review the minutes of meetings of those charged with governance
(C) GSR & Company can review the legal expense account
(D) GSR & Company must obtain audit procedures with respect to litigation claims of the company except for obtaining written representations from the management
Q4Quality control procedures
0 marks easy
Materialization of... engagements, procedures designed to provide evidence of compliance by engagement teams with the firm's quality control policies and procedures is known as
(a) Monitoring
(b) Inspection
(c) Subsequent Audit procedures
(d) Compliance procedures
Q4.aCARO 2020 - Reporting Requirements
5 marks medium
Discuss the reporting requirements regarding statutory duties and Internal Audit as per CARO, 2020.
Q4.bAudit of Receivables - Case Scenario
4 marks hard
During audit of M/s Bansal Traders, the auditor came to know that an amount is locking in account receivables. Moreover, Management of Bansal Tarla Ltd. is worried about the system over running from accounts receivables and after receivement, some balance amount is expected as fire sale or obsolescence. The material could be suppressed resulting into frauds and finally incurring losses.
Q5Fraud risk assessment
2 marks easy
Is the understanding regarding adequacy of fraud risk posed by ML in audit correct?
(A) Only understanding as per point 1, it is correct
(B) Only understanding as per point no. 2 is correct
(C) Understanding as per point no. 1 & point no. 2 both are correct
(D) Understanding as per point no. 2, both are incorrect
Q5Materiality in audit
0 marks easy
The concept of materiality is applied by the auditor
(a) in planning and performing the audit
(b) in evaluating the effect of identified misstatements on the audit
(c) both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit
(d) none of the above is correct
Q5Types of Fraud
2 marks easy
What is the kind of fraud that the auditor has faced in the above case?
(a) Teeming and Lading
(b) Cash skimming
(c) Defalcation of cash by infusing cash payment
(d) Misappropriation of receivables
Q5.aAudit of Property Additions
4 marks hard
XYZ Ltd. during final audit in the subsequent period does during its financial year 2021-22 is a serious error audit. You have been supposed as an auditor and you want to verify the additions made to property during the audit. Suggest the audit procedures for verification of the same.
Q5.bPredecessor Auditor - Prior Period Statements
4 marks medium
If the financial statements of the prior period were audited by a predecessor auditor, in addition to checks on amounts, what is needed to be stated.
Q5.cCorresponding Figures in Audit Opinion
4 marks medium
When corresponding figures are presented, the auditor's opinion shall not refer to the corresponding figures except in limited circumstances. Explain these circumstances.
Q5.dAuditor's Role in Hotel - Inventory and Controls
6 marks medium
Explain and state the role of auditor with respect to the following in case of a hotel:
Q6Audit procedures
0 marks easy
Mr. B and his team members in detail checked and evaluated the books of accounts and relevant documents in an example of which audit procedure
(a) Inspection
(b) Re-performance
(c) Recalculation
(d) Observation
Q6Audit Procedures
2 marks easy
Statement 1: Audit procedures consist of Risk Assessment Procedures and other procedures. Statement 2: Substantive procedures consist of test of details and analytical procedures.
(a) Only Statement 1 is correct
(b) Only Statement 2 is correct
(c) Both 1 & 2 are correct
(d) Both statements are incorrect
Q6.aBank Audit - Operating Expenses
4 marks medium
Explain the audit approach you would follow to check the Operating Expenses of a Bank.
Q6.bRisk Management System in Banks
4 marks medium
What are the general requirements of an effective Risk Management System in Banks?
Q6.cAudit Against Rules and Orders
4 marks medium
Audit against rules and orders aims to ensure that the expenditure conforms to the relevant provisions of the Constitution and of the laws and rules made thereunder. These rules, regulations and orders against which regularity audit is conducted fall under various categories. Explain.
Q6.dReserves as Source of Financing
3 marks medium
Reserves are a vital source of financing by internal resources. Explain and also discuss about:
Q6.eEmployees Provident Fund Scheme
3 marks medium
Under the Employees Provident Fund Scheme, the employer is required to deduct and remit the employer's contribution to the Fund. Explain.
Q7SA 500 Analytical Procedures
2 marks easy
Statement 1: As per the Standard on Auditing (SA) 500 "Analytical Procedures", the term "analytical procedures" means the process also comprising such investigation as is necessary of identified financial data and other relevant information or that differ from expected values by a significant amount. Statement II: Analytical procedures also encompasses such investigation as is necessary of identified differences between amounts, ratios and trends for other relevant information or that differ from expected values by a significant amount.
(a) Only Statement I is correct
(b) Only Statement II is correct
(c) Both statements are correct
(d) Both Statements are incorrect
Q8Auditor's Essential Qualities
2 marks easy
Mr. A auditor and Mr. B, Finance Manager of XYZ Pvt Ltd are friends. Mr. A prepares the audit report according to the wishes and directions of Mr. B. In this situation which essential quality of the auditor has been compromised:
(a) Professional Competence
(b) Independence
(c) Professional Skepticism
(d) Due care
Q9Banking Facilities
2 marks easy
The term "Drawing Power" is associated with which of the following facilities as sanctioned by any Bank:
(a) Letter of Credit
(b) Term Loan
(c) Staff Advances
(d) Overdraft Limit
Q10Analytical Procedures Methods
2 marks easy
The auditor of Vikram Ltd wants to know from you which of the following methods are analytical procedures: I. Comparison of client and industry data II. Comparison of client data with prior period data III. Comparison of client data with client-determined expected results IV. Comparison of client data with auditor-determined expected results
(a) I and III only
(b) I & II only
(c) III & IV only
(d) I, II, III and IV
Q2.1Audit procedures
2 marks easy
Case: Case Scenario 2: Rajesh Industries is a newly formed private limited company, engaged in the manufacturing of solar panels. The company is a new entrant in the Indian Market and Associates, a Prominent Firm of CA Rajesh Matta and CA Pravin Matta - as their First Auditors. Rajesh Matta and Associates accepted the assignment and CA Rajesh Matta was assigned to perform First Audit. During the Company's First Audit, it was observed that the company was dealing with a new customer who seemed to deal with foreign companies engaged in similar business and that they compare the Company's Figures. Duri…
CA Rajesh Matta should perform which audit procedure?
(a) Substantive Procedures
(b) Random Sampling
(c) Statistical Sampling
Q2.2Audit analysis procedures
2 marks easy
Case: Case Scenario 2: Rajesh Industries
What was the initial procedure carried on CA Rajesh Matta?
(a) Trend Analysis
(b) Ratio Analysis
(c) Statistical Modeling
(d) Random Sampling
Q2.3Audit working papers - retention rights
2 marks easy
Case: Case Scenario 2: Rajesh Industries
Who has the right to retain the audit working papers of the Company in current case?
(a) Audit Committee
(b) Board of Directors
(c) Auditor
(d) Members of the Audit Committee
Q2.4Audit procedures - tests of details
2 marks easy
Case: Case Scenario 2: Rajesh Industries
When CA Rajesh Matta decided to go in detail checking of Sales, which Audit Procedure he applied to obtain the evidence?
(a) Test of Transactions
(b) Test of Balances
(c) Both (a) and (b)
(d) Analytical Procedures
Q2.5Impact on financial statements
2 marks easy
Case: Case Scenario 2: Rajesh Industries
The impact of the expense carried on by the Company for credited cheques will have an impact on
(a) Gross Receipts and Debtors
(b) Gross Receipts and Inventory
(c) Debtors