Advanced Auditing, Assurance and Professional Ethics - May 2015

(a) KRP Ltd., at its annual general meeting, appointed Mr. X, Mr. Y and Mr. Z as joint auditors to conduct auditing for the financial year 2013-14. For the valuation of gratuity scheme of the company, Mr. X, Mr. Y and Mr. Z wanted to refer their own known Actuaries. Due to difference of opinion, all the joint auditors consulted their respective Actuaries. Subsequently, major difference was found in the actuary reports. However, Mr. X agreed to Mr. Y’s actuary…

3. Your firm has been appointed as an auditor of YSPPP Ltd. The company operates 30 petrol stations throughout India. You are the senior in-charge of the audit for the year ending 31" March, 2014 and are engaged on the audit planning. The company’s sites are long-established and supplying fuel, oil, air and water. Over the last few years, due to the intense price competition in petrol trading, the company has expanded its shops into mini-markets with a wide range…

4. (a) State briefly ten provisions of the Sarbanes-Oxley Act, 2002, which shall, if strictly applied to Indian Corporate, get successful results. (b) There are many objectives to maintain internal control systems. These include to ensuring that: (i) Transactions are executed through management authorization. (ii) All transactions are promptly recorded in an appropriate manner to permit the preparation of financial information and to maintain accountability of assets. (iii) Assets and records are safeguarded from unauthorized access, use or disposition. (iv)…

5. MWA Associates has been appointed as an auditor of a Multinational Company TTS Ltd. The company is working in a CIS environment. You are a member of the audit team of MW&F Associates. The partner in charge of MW&F Associates wants you to train your audit team member about use of Computer Assisted Auditing Techniques (CAATs). You are required to: (a) Explain the factors that a statutory auditor has to consider, in determining, whether to use Computer Assisted Auditing…

Co., Chartered Accountants, appointed as a statutory auditor of R Ltd. for the financial year 2013-14. The company is also in need of some actuarial services. Consequently, the Board of Directors of the company offered the same to M/s Sona & Co., an associate to M/s Renault & Co., which has been duly accepted by the firm. Comment. (b) Navy and Cavy Associates, a Chartered Accountant firm, has been appointed as Statutory Auditor of Poor Ltd. for the financial year…

7. Comment on the following situations: (a) Zank Ltd. has flexi deposit linked current account with various banks. Cheques are issued from the current account and as per the requirements of funds, the flexi deposits are encashed and transferred to current accounts. As of 31st March, 2014 certain cheques issued to vendors are not presented for payment resulting in the credit balance in the books of the company. The management wants to present the book overdraft under current liabilities and…

(a) Mr. Man is a whole-time director of Manthan Ltd. who has a very good relation with the Director (Operations) of the company. Consequently, he entered into a purchase contract for supply of goods of & 5,00,000 with the company without obtaining prior consent of the Board. What is the responsibility of the auditor in relation to the Companies Act, 2013? (b) Mr. A, a practicing Chartered Accountant, audited the financial statements of C Ltd. for the previous year 2012-13…

A Chartered Accountant in practice has been appointed as an auditor of a company which raised finance from the capital market on the basis of a prospectus issued a few years back. The main object for raising the finance was specified to be setting up a project on information technology. The company advanced the sum so raised to various firms and private companies in which the directors of the company were a partner or a director respectively. These parties had…