QMCQ-1Preconditions for an audit - SA 210
0 marks easy
As per SA-210, preconditions for an audit do not include which of the following?
(A) Acceptability of financial reporting framework
(B) Responsibility of management regarding preparation of financial statements
(C) Making available records to the auditor
(D) Integrity of key management personnel
QMCQ-2Fundamental principles of professional ethics - ICAI Code
0 marks easy
An auditor signs a false audit report knowingly. Which of the following fundamental principles of professional ethics is violated in such a case?
(A) Objectivity
(B) Integrity
(C) Professional Competence and due care
(D) Professional behaviour
QMCQ-3Nature of audit programme - SA 300
0 marks easy
Which of the following statements is MOST APPROPRIATE?
(A) Audit programme is a detailed plan of audit strategy
(B) Audit programme cannot be reviewed
(C) Audit programme is a detailed plan of applying audit procedures
(D) Audit programme is relevant for year for which it is prepared, it is useless for subsequent years.
QMCQ-4Going concern doubt indicators - SA 570
0 marks easy
A company is engaged in business of obtaining eggs from one day old chicks. Which of the following is NOT an example of an event or condition that may cast significant doubt on the ability of the company to continue as a going concern?
(A) Mortality of 90% of livestock of the company
(B) Decision by govt to ban commercial rearing of birds amidst protests by activists for preventing cruelty to animals
(C) Shifting of farm labour to respective villages due to MGNREGA scheme of Govt causing acute scarcity throughout the year
(D) Increase in cost of feed of chicks by 20% during the year
QMCQ-5Funded vs non-funded facilities - bank audit
0 marks easy
'Letters of credit' and 'Foreign bills purchased and discounted' are examples of respectively:
(A) Funded facility and non-funded facility
(B) Non-funded facility and funded facility
(C) Funded facility and funded facility
(D) Non-funded facility and Non-funded facility
Q1Multiple SA topics - true/false with reasons
0 marks easy
State with reason (in short) whether the following statements are true or false:
Q5Audit programme development - Chapter 2
0 marks easy
While developing an audit programme, the auditor may conclude that relying on certain internal controls is an effective and efficient way to conduct his audit. Explain stating clearly the points to be kept in mind while developing an audit programme.
Q8External confirmation procedures - other situations - SA 505
0 marks easy
External confirmation procedures frequently are relevant when addressing assertions associated with account balances and their elements but need not be restricted to these items. Apart from confirmations for bank balances and accounts receivables, what are the other situations where external confirmation procedures may provide relevant audit evidence in responding to assessed risks of material misstatement?
Q10Benefits of internal control evaluation - Chapter 4
0 marks easy
The review of internal controls will enable the auditor to know the areas where control is weak. Explain stating clearly the benefits of evaluation of internal control to the auditor.
Q1.1Pervasive effects on financial statements - SA 705
0 marks hard
Case: SAM & Company, a Chartered Accountant firm, is in the process of finalising the audit of Health is Wealth Limited which is a Company listed on the Bombay Stock Exchange. Health is Wealth Limited has made its presence felt in over 10 countries, including India, making it a leader in the global fitness industry. It runs a chain of fitness centres that offers energetic group workouts and multiple workout formats to choose from. It also offers the best equipment, knowledgeable staff and personal advice in a welcoming environment. SAM & Company being a very reputed firm, was appointed for the statu…
CA K explained to Mr. N the pervasive effects on the financial statements in the auditor's judgement. Which of the following combination best answers as explained by CA K?
(A) (i) and (ii)
(B) (ii) and (iii)
(C) (iii) and (iv)
(D) (i), (ii) and (iii)
Q11Management override of controls - fraud techniques - SA 240
0 marks easy
Fraudulent financial reporting often involves management override of controls that otherwise may appear to be operating effectively. Illustrate techniques by which fraud can be committed by management overriding controls.
Q1.2Unmodified opinion phrase equivalence - SA 700
0 marks hard
Case: SAM & Company, a Chartered Accountant firm, is in the process of finalising the audit of Health is Wealth Limited which is a Company listed on the Bombay Stock Exchange. Health is Wealth Limited has made its presence felt in over 10 countries, including India, making it a leader in the global fitness industry. It runs a chain of fitness centres that offers energetic group workouts and multiple workout formats to choose from. It also offers the best equipment, knowledgeable staff and personal advice in a welcoming environment. SAM & Company being a very reputed firm, was appointed for the statu…
When expressing an unmodified opinion on financial statements, SAM & Company used the following phrase: 'In our opinion, the accompanying financial statements give a true and fair view of [...] in accordance with [the applicable financial reporting framework].' Which is the other phrase which is regarded as being equivalent to the above phrase and could also be used by SAM & Company?
(A) In our opinion, the accompanying financial statements give a true and correct view of [...] in accordance with [the applicable financial reporting framework];
(B) In our opinion, the accompanying financial statements present correctly, in all material respects, [...] in accordance with [the applicable financial reporting framework];
(C) In our opinion, the accompanying financial statements present fairly, in all material respects, [...] in accordance with [the applicable financial reporting framework];
(D) In our opinion, the accompanying financial statements give a correct and fair view of [...] in accordance with [the applicable financial reporting framework].
Q12Fraud indicators - auditor-management relationship - SA 240
0 marks easy
Write the examples of circumstances that indicate the possibility of fraud due to problematic or unusual relationship between the auditor and management.
Q1.3Basis for Opinion section contents - SA 700
0 marks hard
Case: SAM & Company, a Chartered Accountant firm, is in the process of finalising the audit of Health is Wealth Limited which is a Company listed on the Bombay Stock Exchange. Health is Wealth Limited has made its presence felt in over 10 countries, including India, making it a leader in the global fitness industry. It runs a chain of fitness centres that offers energetic group workouts and multiple workout formats to choose from. It also offers the best equipment, knowledgeable staff and personal advice in a welcoming environment. SAM & Company being a very reputed firm, was appointed for the statu…
Which of the following statements is not included in the section with the heading 'Basis for Opinion' in the Auditor's Report?
(A) Audit was conducted in accordance with the Accounting Standards.
(B) Auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit and has fulfilled the auditor's other ethical responsibilities in accordance with these requirements.
(C) Description of the auditor's responsibilities under the SAs.
(D) States whether the auditor believes that the audit evidence the auditor has obtained, is sufficient and appropriate to provide a basis for the auditor's opinion.
Q13Understanding automated/IT environment - Chapter 6
0 marks easy
List the points that an auditor should consider to obtain an understanding of the Company's automated environment.
Q1.4Emphasis of Matter paragraph - SA 706
0 marks hard
Case: SAM & Company, a Chartered Accountant firm, is in the process of finalising the audit of Health is Wealth Limited which is a Company listed on the Bombay Stock Exchange. Health is Wealth Limited has made its presence felt in over 10 countries, including India, making it a leader in the global fitness industry. It runs a chain of fitness centres that offers energetic group workouts and multiple workout formats to choose from. It also offers the best equipment, knowledgeable staff and personal advice in a welcoming environment. SAM & Company being a very reputed firm, was appointed for the statu…
A paragraph was included in the Auditor's Report of Health is Wealth Limited that referred to a matter which was appropriately disclosed in the financial statements that, in the auditor's judgment, was of such importance that it was fundamental to users' understanding of the financial statements. What is this section of the Auditor's Report called?
(A) Other Matters.
(B) Emphasis of Matters.
(C) Key Audit Matters.
(D) Auditor's Responsibilities for the Audit of the Financial Statements.
Q14IT-specific risks to internal control - Chapter 6
0 marks easy
Which are specific risks to the company's internal control having IT environment?
Q1.5Corresponding figures - auditor's opinion reference - SA 710
0 marks hard
Case: SAM & Company, a Chartered Accountant firm, is in the process of finalising the audit of Health is Wealth Limited which is a Company listed on the Bombay Stock Exchange. Health is Wealth Limited has made its presence felt in over 10 countries, including India, making it a leader in the global fitness industry. It runs a chain of fitness centres that offers energetic group workouts and multiple workout formats to choose from. It also offers the best equipment, knowledgeable staff and personal advice in a welcoming environment. SAM & Company being a very reputed firm, was appointed for the statu…
CA A explained the circumstances to Mr. R in which, when the corresponding figures are presented, auditor's opinion referred to the corresponding figures. Which of these circumstances did he mention to Mr. R?
(A) If the auditor obtains audit evidence that a material misstatement exists in the prior period financial statements on which a modified opinion has been previously issued.
(B) If the auditor's report on the prior period, as previously issued, included a qualified opinion, a disclaimer of opinion, or an adverse opinion and the matter which gave rise to the modification is resolved.
(C) Prior Period Financial Statements are audited by another auditor.
(D) Prior Period Financial Statements not audited.
Q15Audit sampling definition and requirements - SA 530 - Chapte
0 marks easy
Explain the meaning of Audit Sampling as per the relevant standard on auditing. State the requirements relating to audit sampling, sample design, sample size and selection of items for testing.
Q16Simple random sampling method - SA 530 - Chapter 7
0 marks easy
This method is considered appropriate provided the population to be sampled consists of reasonably similar units and fall within a reasonable range i.e. it is suitable for a homogeneous population having a similar range. Explain about that method.
Q17Substantive analytical procedures design and performance - S
0 marks easy
Explain the aspects to be considered by an auditor when designing and performing substantive analytical procedures, either alone or in combination with test of details, as substantive procedures in accordance with SA 330.
Q18Reliability of data for analytical procedures - SA 520 - Cha
0 marks easy
Discuss with examples the factors that are relevant when determining whether data is reliable for purposes of designing substantive analytical procedures.
Q19Audit assertions identification - Chapter 9
0 marks easy
Name the assertions for the following audit procedures:
Q20Completeness assertion - export trade receivables audit proc
0 marks easy
PK Pvt Ltd, based in Moradabad, is engaged in export of brassware goods. The company has huge export receivables as on 31st March 2022. It is also analysed from Export Sales account of the company that large number of small shipments were almost despatched daily during month of March 2022. List out few audit procedures you would adopt as an auditor to verify completeness assertion of export trade receivables.
Q2.1Special Mention Accounts (SMA) sub-categories - bank audit
0 marks hard
Case: Bharat Bank, a nationalised bank, has branches all over India and has been the most popular public sector bank in India for the past few years. The bank is governed by the Banking Regulations Act, 1949 and the Central Statutory Auditors of the bank, ABC & Associates, were appointed according to the provisions of the relevant enactments. The engagement partner CA C commenced the audit with his team of seven members so that the audit is completed on time and all the documents are submitted before the due date. The audit at all the branches also started simultaneously and ABC & Associates was in …
What are the sub categories of the special mention accounts?
(A) SMA 0 (accounts showing stress signals), SMA 1 (Overdue between 31-60 days) and SMA 2 (Overdue between 61-90 days)
(B) SMA 0 (accounts showing stress signals), SMA 1 (Overdue between 0-45 days) and SMA 2 (Overdue between 46-90 days)
(C) SMA 0 (accounts not yet due for payment), SMA 1 (Overdue between 31-60 days) and SMA 2 (Overdue between 61-90 days)
(D) SMA 0 (accounts not yet due for payment), SMA 1 (Overdue between 0-45 days) and SMA 2 (Overdue between 46-90 days)
Q21Audit Committee applicability - Companies Act 2013 - Chapter
0 marks easy
XYZ Limited is engaged in the business of Shoes having geographical presence across India. Following details are available from the last audited financial statements of XYZ Limited for the financial year 2020-21:
Paid-up Capital as on 31st March, 2021: Rs. 9.8 Crores
Turnover for Financial Year 2020-21: Rs. 98 Crores
Outstanding Loan from Bank as on 31st March, 2021: Rs. 25 Crores
Liability on Outstanding Debentures as on 31st March, 2021: Rs. 26 Crores
Comment on the applicability of constitution of Audit Committee for XYZ Limited for the financial year 2021-22 based on the above information.
Q2.2Types of security - pledge, hypothecation, assignment - bank
0 marks hard
Case: Bharat Bank, a nationalised bank, has branches all over India and has been the most popular public sector bank in India for the past few years. The bank is governed by the Banking Regulations Act, 1949 and the Central Statutory Auditors of the bank, ABC & Associates, were appointed according to the provisions of the relevant enactments. The engagement partner CA C commenced the audit with his team of seven members so that the audit is completed on time and all the documents are submitted before the due date. The audit at all the branches also started simultaneously and ABC & Associates was in …
Creation of security of Aquabrass Private Ltd. and Prism Works was in the form of:
(A) Mortgage and Hypothecation.
(B) Lien and Set-off.
(C) Hypothecation and Pledge.
(D) Pledge and Assignment.
Q22Rotation of auditors applicability - Companies Act 2013 - Ch
0 marks easy
S Private Limited has a paid-up share capital of Rs. 49 Crores and borrowings from bank of Rs. 99 Crores. The audit firm P & Company was appointed as statutory auditors of the Company for one term of five consecutive years. Whether the provision of rotation of auditors applicable to the company? Comment.
Q2.3NPA classification - term loan overdue 90 days - RBI prudent
0 marks hard
Case: Bharat Bank, a nationalised bank, has branches all over India and has been the most popular public sector bank in India for the past few years. The bank is governed by the Banking Regulations Act, 1949 and the Central Statutory Auditors of the bank, ABC & Associates, were appointed according to the provisions of the relevant enactments. The engagement partner CA C commenced the audit with his team of seven members so that the audit is completed on time and all the documents are submitted before the due date. The audit at all the branches also started simultaneously and ABC & Associates was in …
In your opinion is Trustworthy a standard asset or a substandard asset?
(A) Though it is due for 90 days, it is 100% secured so it is a standard asset.
(B) Since it is due for 90 days, it is a substandard asset irrespective of the security.
(C) Since it is not due for more than 90 days, it is a standard asset irrespective of the security.
(D) Since it is not due for more than 90 days and it is 100% secured, it is a standard asset.
Q23Reappointment of retiring auditor - Companies Act 2013 - Cha
0 marks easy
Enumerate the circumstances under which the retiring auditor can be re-appointed.
Q2.4Cash credit NPA classification - drawing power vs sanctioned
0 marks hard
Case: Bharat Bank, a nationalised bank, has branches all over India and has been the most popular public sector bank in India for the past few years. The bank is governed by the Banking Regulations Act, 1949 and the Central Statutory Auditors of the bank, ABC & Associates, were appointed according to the provisions of the relevant enactments. The engagement partner CA C commenced the audit with his team of seven members so that the audit is completed on time and all the documents are submitted before the due date. The audit at all the branches also started simultaneously and ABC & Associates was in …
Is Super40 correctly classified as a standard asset?
(A) Yes, since the recoveries in both term loan and cash credit were regular and outstanding balance in the cash credit was less than the sanctioned limit.
(B) No, since the outstanding balance of the cash credit facility exceeded the drawing power for more than 90 days, so both the advances, that is, the term loan and cash credit facility will be classified as NPA.
(C) No, since the outstanding balance of the cash credit facility exceeded the drawing power for more than 90 days, the cash credit facility will be classified as NPA and term loan as standard.
(D) Yes, since the recoveries in both term loan and cash credit were regular, there is no relevance of sanctioning power/drawing power.
Q24Emphasis of Matter paragraph - circumstances - SA 706 - Chap
0 marks easy
Mention the examples of circumstances where the auditor may consider it necessary to include an Emphasis of Matter paragraph.
Q2.5Funded vs non-funded advances - bank audit
0 marks hard
Case: Bharat Bank, a nationalised bank, has branches all over India and has been the most popular public sector bank in India for the past few years. The bank is governed by the Banking Regulations Act, 1949 and the Central Statutory Auditors of the bank, ABC & Associates, were appointed according to the provisions of the relevant enactments. The engagement partner CA C commenced the audit with his team of seven members so that the audit is completed on time and all the documents are submitted before the due date. The audit at all the branches also started simultaneously and ABC & Associates was in …
Which among the following is a non-funded loan?
(A) Demand Loans
(B) Bills Discounted and Purchased
(C) Letter of Credit
(D) Participation on Risk Sharing basis
Q25Opinion section contents in auditor's report - SA 700 - Chap
0 marks easy
While drafting auditor's report of LK Ltd., what are the matters to be included by auditor in Opinion Section paragraph?
Q26SMA nature and significance; interest income variation - ban
0 marks easy
CA. Puranjay is appointed as statutory branch auditor of two branches of a nationalised bank for year 2021-22. During the course of audit, he came across the following:
Q27Audit of advances - considerations for evidence - Chapter 12
0 marks easy
In carrying out audit of advances, the auditor is primarily concerned with obtaining evidence about amounts included in balance sheet in respect of advances which are outstanding. Explain stating clearly all the considerations in this context.