Advanced Auditing, Assurance and Professional Ethics - November 2015

The Central Government, after consultation with the Institute of Chartered Accountants of India, has issued the Companies (Auditor's Report) Order, 2015, (CARO, 2015) under section 143(11) of the Companies Act, 2013, dated 10" April, 2015. The requirements of the Order are supplemental to the existing provisions of section 143 of the Act regarding the auditor's report. The Order is not intended to limit the duties and responsibilities of auditors but only requires a statement to be included in the audit…

The Central Government has amended the Companies (Cost Records and Audit) Rules, 2014 dated 31s! December, 2014 which prescribes the classes of companies required to include cost records in their books of account, applicability of cost audit, maintenance of records etc. Maintenance of Cost Records: Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 provides the classes of companies, engaged in the production of goods or providing services, required to include cost records in their books of account.…

Cost Records: The following general features of the cost records to be maintained in the books of accounts as per Form CRA-1 pursuant to rule 5(1) of the Companies (Cost Records and Audit) Rules, 2014 have been amended by the Central Government vide notification dated 31st December, 2014- (i) Material Costs- Proper records shall be maintained showing separately all receipts, issues and balances both in quantities and cost of each item of raw material required for the production of goods…

(a) CA Jack, a recently qualified practicing Chartered Accountant got his first audit assignment of Futura (P) Ltd. for the financial year 2014-15. He obtained all the relevant appropriate audit evidence for the items related to Statement of Profit and Loss. However, while auditing the Balance Sheet items, CA Jack left out obtaining appropriate audit evidence, say, confirmations, from the outstanding Accounts Receivable amounting ₹150 lakhs, continued as it is from the last year, on the affirmation of the management…

(a) Ferry Ltd. is a leading employee friendly company operating in India. The company outsourced the most critical function of its HR Department i.e. the actuarial services to Ms. Preeti, a renowned practicing actuary, for ascertaining its employee cost, gratuity and leave encashment liabilities. As the auditor of Ferry Ltd., you would like to use the report submitted by the actuary as an audit evidence. How would you evaluate the work of the actuary? (b) CA Amboj, a practicing chartered…

4. (a) You are the auditor of Max Ltd., a distributor of automotive components, and have been provided with the following description of the sales order processing system. Order entry Sales orders are taken over the telephone and entered into the computer by a sales order clerk via a terminal in the sales office while the customer is on the line. On entry the order details are read back to the customer for confirmation. The computer checks that there are…

5. Techno Ltd., for the first time, is considering computerizing its manner of maintaining documentation. This change will have a significant effect on the organization control, flow of document information processing and so on. This will also require the auditor of the company to gain knowledge about computer environment (Hardware, software etc.) and keep pace with rapidly changing technology even to the extent of using sophisticated Audit software. You, being an expert of audit under CIS environment are required to…

(a) CA Adroit was indebted to Anfractuous (P) Ltd. for a sum of % 6,00,000 as on 01.04.2015. However, CA Adroit having come to know that he might be appointed as auditor of the company, he squared up the amount on 10.7.2015. Later on, he was appointed as an auditor of the company for the year ended 31.3.2016 at the Annual General Meeting held on 16.07.2015. Subsequently, one of the shareholders complains that the appointment of CA Adroit as an…