ca inter suggested answers | Nov 23 Audit Paper
Table of Content
State with reasons whether the following statements are correct or incorrect.
Answer 1 :
M/s ABC & Associates, statutory auditors of Opaque Ltd., are in the process of finalizing the audit report of the company but in View of their inability to obtain sufficient appropriate audit evidence, they would like to disclaim their opinion on the financial statements. Explain reporting responsibilities of M/s ABC & Associates pursuant to SA 700(Revised). How they will address key audit matters section in accordance with SA 701 when they are expressing disclaimer of an opinion on the financial statements ?
Answer 2 : (A)
COMING SOON
Strained relationship between management and the current or predecessor auditor is one of the risk factors relating to misstatements arisingfrom Fraudulent Financial Reporting. Mention such circumstances.
Answer 2 : (B)
The engagement partner shall form a conclusion on compliance with independence requirements that apply to an audit engagement. State the relevant requirements as per relevant SA 220- Quality control for an audit of Financial Statements.
Answer 2 : (C)
COMING SOON
As per 11(g) of the Companies (Audit and Auditors) Rules,2014 auditor’s report should state whether the accounting software used for maintaining its books of account has a feature of recording audit trail (edit log) facility. what are the reporting requrirements under Rule 11(g)?
Answer 2 : (D)
COMING SOON
UVW Ltd. a biopharma company and global manufacturers of select critical care medical products, has been sanctioned working capital limits of ₹ 5.99 crores from a nationalized bank on the basis of security of current assets, During the year under audit, the statutory auditor of UVW Ltd. considers that inventory is material to the financial statements and performs audit procedures over the company’s final inventory records to determine whether they accurately reflect actual inventory count and without any major discrepancies for each class of inventory. What are the reporting requirements under CARO 2020 in this case ?
Answer 3 : (A)
COMING SOON
Narrate the audit procedures to be performed by an auditor in order to ascertain that the Raw materials and consumables are valued appropriately and as per generally accepted accounting policies and practices.
Answer 3 : (B)
Elucidate the impact on substantive audit if IT related risks are not mitigated in an automated environment.
Answer 3 : (C)
The nature of related party relationships and transactions may, in some circumstances, give rise to higher risks of material misstatement of the financial statements than transactions with unrelated parties. Explain with the help of at least three examples.
Answer 3 : (D)
The auditor’s determination of materiality is a matter of professional judgement and is affected by the auditor’s preception of the financial information needs of users of the financial statements. In this context, what are the assumptions that an auditor reasonably makes in respect of the users of the financial statements ?
Answer 4 : (A)
COMING SOON
How is “Short Term Borrowings” disclosed in the Financial Statements as required under Part I of Schedule III to the Companies Act,2013 ?
Answer 4 : (B)
COMING SOON
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.
Answer 4 : (C)
The nature of the comparative information that is presented in an entity’s financial statements depends on the requirements of the applicable financial reporting framework. There are two different broad approaches to the auditor’s reporting responsibilities in respect of such comparative information: corresponding figures and comparative financial statements. Explain clearly stating the essential audit reporting differences between the approaches.Also define comparative information and audit procedures regarding comparative information.
Answer 4 : (D)
You are the senior member of the engagement team of M/s BB & Associates. Before starting the audit, you explained to other junior assistants about the meaning of Audit evidence. One of the junior assistant is of the view that ‘audit evidence includes only information contained in the accounting records and no other information. Yor are of the opinion that a combination of tests of accounting records and other information is generally used by the auditor to support his opinion on the financial statements.
In the above context, illustrate with two appropriate exampeles of each:
(i) Information contained in the accounting records.
(ii) other information that authenticates the accounting records.
Answer 5: (A)
The auditor's report Shal include a section with a heading "responsibilities of Management for the Financial Statements".Give a brief description about management's responsibilities in the auditor's report as it helps to explain the users the premise on which an audit is conducted.
Also state the requirement specified in Standard on Auditing 210 for the auditor to agree management's responsibilities.
Answer 5: (B)
COMING SOON
While conducting the audit of PDP Ltd. for the financial year 2022-23, the statutory auditor identified certain inconsistencies while applying analytical procedures to the financial and non-financial data of PDP Ltd. Can statutory auditor investigate results of Analytical Procedures duly performed in accordance with SA 520 ? Discuss
Answer 5: (C)
COMING SOON
The auditor shall determine, from the matters communicated with those charged with governance, those matters that required significant auditor attention in performing the audit. In making this determination, explain the areas of concern that an auditor should take into account.
Answer 5: (D)
COMING SOON
CA Z is appointed as the auditor of Chanakya Open University which offers higher learning educational courses through the Distance Mode of Education. Discuss four steps involved in his audit of other receipts/grants and donations received by the University.
Answer 6 : (A)
OR
On 1st May 2022, NGO has been founded with the objective of disaster relief registered under section 8 of the Companies Act, 2013. In addition to corpus contribution, substantial foreign contributions also have been received by NGO. You have been appointed as the first auditor of the said NGO for the F.Y. 2022-23. While planning the audit of NGO which points you will focus upon ? Mention any four such points.
Answer 6 : (A)
COMING SOON
Factors that should be considered for deciding upon the extent of checking on a sampling plan.
Answer 6 : (B)
COMING SOON
An auditing firm should monitor compliance with quality control Policies and procedures, Discuss the purpose of this
Answer 6 : (C)
COMING SOON
Mention any three expenses which are revenue in nature,but qualify as capital expenditure.
Answer 6 : (D)
Ruchika Saboo
An All India Ranker (AIR 7 - CA Finals, AIR 43 - CA Inter), she is one of those teachers who just loved studying as a student. Aims to bring the same drive in her students.
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She specializes in theory subjects - Law and Auditing.
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He cleared his CA Finals in May 2011 and has been into teaching since. He started teaching CA, CS, 11th, 12th, B.Com, M.Com students in an offline mode until 2016 when Konceptca was launched. One of the pioneers in Online Education, he believes in providing a learning experience which is NEAT, SMOOTH and AFFORDABLE.
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