QG-1Classification of audit procedures and substantive procedure
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Statement 1: Audit procedures consist of Risk Assessments 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 1 & 2 are incorrect
QG-2Cost Records and Audit Rules 2014 - CRA form numbers and pur
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With respect to the forms specified by companies (Cost Records & Audit) Rule 2014, which of the following is incorrect combination:
(A) Form CRA 1- Maintenance of cost records by the Company.
(B) Form CRA 2- Intimation of appointment of another cost auditor to Central Government.
(C) Form CRA 3- Submission of Cost Audit Report to the Board of Directors of the company.
(D) Form CRA 4- Submission of Cost Audit Report by the company to the Registrar.
QG-3SA 520 Analytical Procedures - definition and scope
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Statement I: As per the Standard on Auditing (SA) 520 "Analytical Procedures", the term "analytical procedures" means evaluations of financial information through analysis of plausible relationships among financial data.
Statement II: Analytical procedures also encompass such investigation as is necessary of identified fluctuations or relationships that are inconsistent with 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
QG-4Analytical procedures - types of financial comparisons
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Which of the following is not an example of Analytical Procedures having consideration of comparisons of the entity's financial information:
(A) Comparable information for prior periods.
(B) Anticipated results of the entity, such as budgets or forecasts, or expectations of the auditor, such as an estimation of depreciation.
(C) Similar industry information, such as a comparison of the entity's ratio of sales to accounts receivable with industry averages or with other entities of comparable size in the same industry.
(D) Among elements of financial information that would be expected to conform to a predictable pattern based on the entity's experience, such as gross margin percentages.
QG-5Appointment of partnership firm as company auditor
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Statement I: A firm whereof majority of partners practising in India are qualified for appointment may be appointed by its firm name to be auditor of a company.
Statement II: Where a firm including a limited liability partnership is appointed as an auditor of a company, all the partners shall be authorised to act and sign on behalf of the firm.
(A) Only Statement I is correct
(B) Only Statement II is correct
(C) Both statements are correct
(D) Both Statements are incorrect
QICS1-1IT dependent controls in automated audit environment
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Case: M/s NSG & Associates have been appointed as auditors of Viaan Ltd. for the financial year 2019-20. The processes, operations, accounting and decisions are carried out by using computers in Viaan Ltd. The auditors understand that there are several aspects that they should consider to determine the level of automation and complexity in the business environment of Viaan Ltd. While planning the audit work, the engagement partners discussed with the audit staff about the various types of controls in the automated environment. The different types of audit tests that can be used in audit of an automa…
………. are the manual controls that make use of some form of data or information or report produced from the IT systems and applications.
(A) Application Controls
(B) IT dependent Controls
(C) Automated Controls
(D) General IT Controls
QICS1-2Application controls and General IT Controls characteristics
0 marks hard
Case: M/s NSG & Associates have been appointed as auditors of Viaan Ltd. for the financial year 2019-20. The processes, operations, accounting and decisions are carried out by using computers in Viaan Ltd. The auditors understand that there are several aspects that they should consider to determine the level of automation and complexity in the business environment of Viaan Ltd. While planning the audit work, the engagement partners discussed with the audit staff about the various types of controls in the automated environment. The different types of audit tests that can be used in audit of an automa…
Statement 1: Application controls include both manual and automated controls that operate at a business process level.
Statement 2: General IT Controls apply to mainframe, miniframe as well as end user environment.
(A) Only Statement 1 is correct
(B) Only Statement 2 is correct
(C) Both Statements 1 & 2 are correct
(D) Both Statements 1 & 2 are incorrect
QICS1-3General IT Controls as pervasive/indirect controls
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Case: M/s NSG & Associates have been appointed as auditors of Viaan Ltd. for the financial year 2019-20. The processes, operations, accounting and decisions are carried out by using computers in Viaan Ltd. The auditors understand that there are several aspects that they should consider to determine the level of automation and complexity in the business environment of Viaan Ltd. While planning the audit work, the engagement partners discussed with the audit staff about the various types of controls in the automated environment. The different types of audit tests that can be used in audit of an automa…
…………… are also known as pervasive or indirect controls :-
(A) General IT Controls
(B) Application Controls
(C) IT dependent Controls
(D) None of the above
QICS1-4Types of audit tests in automated environment
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Case: M/s NSG & Associates have been appointed as auditors of Viaan Ltd. for the financial year 2019-20. The processes, operations, accounting and decisions are carried out by using computers in Viaan Ltd. The auditors understand that there are several aspects that they should consider to determine the level of automation and complexity in the business environment of Viaan Ltd. While planning the audit work, the engagement partners discussed with the audit staff about the various types of controls in the automated environment. The different types of audit tests that can be used in audit of an automa…
Which of the following are not the types of audit tests that can be used in the audit in an automated environment?
(A) Observation
(B) Inspection
(C) Re performance
(D) None of the above
QICS1-5Data analytics definition
0 marks hard
Case: M/s NSG & Associates have been appointed as auditors of Viaan Ltd. for the financial year 2019-20. The processes, operations, accounting and decisions are carried out by using computers in Viaan Ltd. The auditors understand that there are several aspects that they should consider to determine the level of automation and complexity in the business environment of Viaan Ltd. While planning the audit work, the engagement partners discussed with the audit staff about the various types of controls in the automated environment. The different types of audit tests that can be used in audit of an automa…
…………… is the combination of processes, tools and techniques that are used to tap vast amounts of electronic data to obtain meaningful information:-
(A) Computer Assisted Audit Techniques
(B) Automated Controls
(C) Data Analytics
(D) None of the above
QICS2-1Overall audit strategy vs audit plan distinction
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Case: M/s JK & Associates have been appointed as auditors of Venus Ltd. for the financial year 2019-20. The team consist of Mr. J & Mr. K both Chartered Accountants as also the engagement partners and the audit staff consisting of 2 article assistants. While starting the audit work of Venus Ltd, the engagement partners briefed the audit staff about the audit work, areas to be covered and the various auditing concepts and their application in the audit of Venus Ltd along with applicable Standard on Auditing. Various topics like audit planning, overall audit strategy, audit programme were discussed in…
.………. sets the scope, timing & direction of the audit and guides the development of the more detailed plan.
(A) Audit Programme
(B) Overall Audit Strategy
(C) Completion Memorandum
(D) Audit Plan
QICS2-2Relationship between overall audit strategy and audit plan
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Case: M/s JK & Associates have been appointed as auditors of Venus Ltd. for the financial year 2019-20. The team consist of Mr. J & Mr. K both Chartered Accountants as also the engagement partners and the audit staff consisting of 2 article assistants. While starting the audit work of Venus Ltd, the engagement partners briefed the audit staff about the audit work, areas to be covered and the various auditing concepts and their application in the audit of Venus Ltd along with applicable Standard on Auditing. Various topics like audit planning, overall audit strategy, audit programme were discussed in…
Statement 1: The establishment of the overall audit strategy and the detailed audit plan are not necessarily discrete or sequential process but are closely inter-related.
Statement 2: The auditor shall establish an overall audit strategy that guides the development of audit plan.
(A) Only Statement 1 is correct
(B) Only Statement 2 is correct
(C) Both Statements 1 & 2 are correct
(D) Both Statements 1 & 2 are incorrect
QICS2-3Performance materiality definition
0 marks hard
Case: M/s JK & Associates have been appointed as auditors of Venus Ltd. for the financial year 2019-20. The team consist of Mr. J & Mr. K both Chartered Accountants as also the engagement partners and the audit staff consisting of 2 article assistants. While starting the audit work of Venus Ltd, the engagement partners briefed the audit staff about the audit work, areas to be covered and the various auditing concepts and their application in the audit of Venus Ltd along with applicable Standard on Auditing. Various topics like audit planning, overall audit strategy, audit programme were discussed in…
…………… means the amount set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatement exceeds materiality for the financial statements as a whole :-
(A) Benchmark Materiality
(B) Materiality in Planning
(C) Performance Materiality
(D) Materiality
QICS2-4Benchmarks for materiality determination
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Case: M/s JK & Associates have been appointed as auditors of Venus Ltd. for the financial year 2019-20. The team consist of Mr. J & Mr. K both Chartered Accountants as also the engagement partners and the audit staff consisting of 2 article assistants. While starting the audit work of Venus Ltd, the engagement partners briefed the audit staff about the audit work, areas to be covered and the various auditing concepts and their application in the audit of Venus Ltd along with applicable Standard on Auditing. Various topics like audit planning, overall audit strategy, audit programme were discussed in…
Which of the following is not an example of benchmark that can be used in determining the materiality in the case of financial statements:-
(A) Total Revenue
(B) Profit before tax
(C) Net Asset Value
(D) None of the above
QICS2-5ICAI guidance notes and statements - nature and mandatory/re
0 marks hard
Case: M/s JK & Associates have been appointed as auditors of Venus Ltd. for the financial year 2019-20. The team consist of Mr. J & Mr. K both Chartered Accountants as also the engagement partners and the audit staff consisting of 2 article assistants. While starting the audit work of Venus Ltd, the engagement partners briefed the audit staff about the audit work, areas to be covered and the various auditing concepts and their application in the audit of Venus Ltd along with applicable Standard on Auditing. Various topics like audit planning, overall audit strategy, audit programme were discussed in…
(i) Guidance notes issued by ICAI provide guidance to members on matters which may arise in the course of their professional work.
(ii) Statements are issued by ICAI with a view to secure compliance by members on some matters.
(iii) Guidance notes are recommendatory in nature.
(iv) Statements are mandatory in nature.
Which of the above are correct?
(A) All the above statements are correct.
(B) Statements 1 & 2 are correct
(C) Statements 1, 2 & 3 are correct
(D) Statements 1, 2 & 4 are correct
Q1Auditing concepts across multiple chapters - true or false
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State with reason (in short) whether the following statements are true or false:
Q11Section 143(12) - fraud reporting to Central Government; Rul
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Auditor of A Ltd while conducting audit in the course of the performance of his duties as auditor, believes with reasons that "an offence of fraud involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed". Analyse and also explain the manner of reporting the matter to the Central Government.
Q12Indicators/circumstances suggesting possibility of fraud - a
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Discrepancies in the accounting records, including transactions that are not recorded in a complete or timely manner or are improperly recorded as to amount, accounting period, classification, or entity policy is one of the example of circumstances that indicate the possibility of fraud. Explain at least four other such examples relating to discrepancies in the accounting records.
Q13Data analytics applications in audit - IDEA and ACL tools
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Data analytics can be used in testing of electronic records and data residing in IT systems using spreadsheets and specialised audit tools viz., IDEA and ACL to perform check completeness of data and population that is used in either test of controls or substantive audit tests. Explain in detail stating all the relevant points.
Q14Methods for testing in automated audit environment
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Explain some of the commonly used methods for testing in an automated environment.
Q15Projecting misstatements to population in audit sampling
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The auditor is required to project misstatements for the population to obtain a broad view of the scale of misstatement but this projection may not be sufficient to determine an amount to be recorded. Explain.
Q16Block sampling method in audit
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Explain the sampling method which involves selection of a block(s) of contiguous items from within the population. Also give example.
Q17Trend analysis as analytical procedure
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Explain the commonly used technique in the comparison of current data with the prior period balance or with a trend in two or more prior period balances.
Q18SA 330 - designing and performing substantive analytical pro
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When designing and performing substantive analytical procedures, either alone or in combination with tests of details, as substantive procedures in accordance with SA 330, the auditor shall determine the suitability of particular substantive analytical procedures for given assertions, taking account of the assessed risks of material misstatement and tests of details, if any, for these assertions. Explain the other relevant points in this context.
Q19Management assertions in financial statements; financial sta
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Companies prepare their financial statements in accordance with the framework of generally accepted accounting principles (Indian GAAP), also commonly referred to as accounting standards (AS). In preparing financial statements, Company's management makes implicit or explicit claims (i.e. assertions) regarding assets, liabilities, equity, income, expenses and disclosures in accordance with the applicable accounting standards. Explain with example stating the relevant assertions involved in this regard. Also explain financial statement audit.
Q20Valuation assertion - inventory example under AS 2
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What does the Valuation assertion mean in respect of Assets, liabilities and equity balances? Explain with the help of example in respect of Inventory.
Q21Branch audit - appointment and reporting under Section 143(8
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ABC Ltd is a company incorporated in India. It has branches within and outside India. Explain who can be appointed as an auditor of these branches within and outside India. Also explain to whom branch auditor is required to report.
Q22Joint audit plan - division of work and other considerations
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Before the commencement of the audit, the joint auditors should discuss and develop a joint audit plan. In developing the joint audit plan, the joint auditors should identify division of audit areas and common audit areas. Explain stating the other relevant considerations in this regard.
Q23Fraud detection - fake invoices below ₹1 crore threshold; au
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The head accountant of a company entered fake invoices of credit purchases in the books of account aggregate of ₹ 50 lakh and cleared all the payments to such bogus creditor. How will you deal as an auditor?
Q24Qualitative aspects of accounting - indicators of management
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In considering the qualitative aspects of the entity's accounting practices, the auditor may become aware of possible bias in management's judgments. The auditor may conclude that lack of neutrality together with uncorrected misstatements causes the financial statements to be materially misstated. Explain and analyse the indicators of lack of neutrality with examples, wherever required.
Q25Contents of Opinion section in auditor's report
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The first section of the auditor's report shall include the auditor's opinion, and shall have the heading "Opinion." The Opinion section of the auditor's report shall also Identify the entity whose financial statements have been audited. Apart from the above, explain the other relevant points to be included in opinion section.
Q26Bank audit - audit of interest expense approach and procedur
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In carrying out an audit of interest expense, the auditor is primarily concerned with assessing the overall reasonableness of the amount of interest expense. Analyse and explain stating the audit approach and procedure in regard to interest expense.
Q27Bank audit - income recognition on non-performing assets
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In view of the significant uncertainty regarding ultimate collection of income arising in respect of non-performing assets, the guidelines require that banks should not recognize income on non-performing assets until it is actually realised. When a credit facility is classified as non-performing for the first time, interest accrued and credited to the income account in the corresponding previous year which has not been realized should be reversed or provided for. This will apply to Government guaranteed accounts also. Analyse and Explain.