Advanced Auditing, Assurance and Professional Ethics - November 2016 MTP

(a) While auditing a lawyer company, Mr. X, the statutory auditor of the company, was unable to get the confirmation about the existence and value of certain books existed in the library worth Rs. 35 lakh. However, the management gave him a certificate to prove the existence and value of the books as appearing in the books of account. The auditor accepted the same without any further procedure and signed the audit report. Is he right in his approach? (b)…

Yamma Co. Ltd. has five entertainment centers to provide recreational facilities for public especially for children and youngsters at 5 different locations in the peripheral of 250 kilometers. Collections are made in cash. Specify the adequate system towards sale of tickets and collection of money. (4 Marks) (b) In the course of audit of Kishan Ltd. for the financial year 2015-16, its auditor M/s Zen & Co. observed that the management has passed certain forged transactions against the company amounting…

“Permanent Consolidation Adjustments are made only on the first occasion of the preparation and presentation of consolidated financial statements”. What are the Permanent Consolidation Adjustments? Explain the role of auditor in this context.(6 Marks) (b) Section 143(1) of the Companies Act, 2013 requires the auditor to make an enquiry into certain specific areas which the auditor needs to examine from propriety angle also. You are required to enumerate those areas of propriety audit under section 143(1) of the Companies Act…

Zindagi Insurance Ltd., you observed that the major proportion of expense of the company is the remuneration/commission paid to its insurance agents. As the auditor of the company, what audit procedure would you adopt for verification of such expense? (5 Marks) (b) Energy shortage and the cost of environmental quality control have made the use of energy very costly to many industrial establishments which encouraged Green Ltd. to opt for energy audit being first step of any energy management programmes.…

(a) Raksha Ltd., a company engaged in manufacturing of chemicals is consistently recording higher sales turnover, but declining net profits since the last 5 years. As an investigator appointed to find out the reasons for the same, what are the points you would verify? (6 Marks) (b) “An asset, including a leased asset, becomes non-performing when it ceases to generate income for the Bank.” Discuss the criteria for classification of nonperforming assets. (6 Marks) (c) Review of the internal audit…

Comment on the following with reference to the Chartered Accountants Act, 1949 and schedules thereto: (a) CA. Rajan, in practice, was appointed to carry out internal audit of a stock broker, listed with DSE. However, he failed to communicate his appointment to the statutory auditors of the company. The statutory auditors feel this is violation of professional code of ethics. (b) CA. Roshan, in practice, was requested by one of his client to examine and report prospective financial information prepared…

Write short notes on any four of the following: (a) Block selection. (b) True and Fair Cost of Production. (c) Classification of frauds by NBFC. (d) Collection of Evidence by Peer Reviewer. (e) Types of Companies required to constitute Audit Committee under section 177 of the Companies Act, 2013 (4 × 4 = 16 Marks) Test Series: September, 2016 MOCK TEST PAPER – 2 FINAL COURSE: GROUP – I PAPER – 3: ADVANCED AUDITING AND PROFESSIONAL ETHICS Question No. 1…

(a) CA. Yusuf has been appointed as an auditor of Ajanta Ltd., a textile entity. While going through the employee records of the company, CA. Yusuf identified that most of the labourers employed are of the age between 11-12 years. On enquiring the same, the management argues that there is no such boundation with regard to employment of such lower age children and contends that it is out of the scope of audit as well to check such compliance. Comment…