Advanced Auditing, Assurance and Professional Ethics - November 2017 MTP

N Projects Limited, a manufacturing company in the Steel industry was allegedly involved in some irregularity relating to allotment of coal blocks for which a complaint was lodged against the company by the government. The financial institutions stopped additional working capital finance which caused a financial crisis resulting in stoppage of production. The company incurred a massive loss during the year 2015-16. There were delays in salary and other payments. Certain key managerial personnel including GM Finance and certain other…

Comment on the following with reference to the Chartered Accountants Act, 1949 and schedules thereto: (a) CA Ciya, a practicing Chartered Accountant gave 60% of the audit fees received by her to Mr. Suhas, who was not a Chartered Accountant, under the nomenclature of office allowances. (b) CA Raj, a Chartered Accountant in practice approached Manager of a Nationa lised Bank for a loan of Rs. 36 lakhs. He has also informed the Manager that if the loan is sanctioned…

(a) State the key requirements of auditing standards of Public Company Accounting over sight board. (4 Marks) (b) Modest Hospital is a multi-speciality hospital which has been facing a lot of pilferage and troubles regarding their inventory maintenance and control. On investigation into the matter it was found that the person in charge of inventory inflow and outflow from the store house is also responsible for purchases and maintaining inventory records. According to you, which basis system of control has…

Under CARO, 2016, as a statutory auditor, how would you report: (i) JKL Ltd. has entered into non-cash transactions with Mr. Rahul, son of director, which is an arrangement by which the JKL Ltd. is in process to acquire assets for consideration other than cash. (ii) STP Limited has its factory building, appearing as fixed assets in its financial statements in the name of one of its director who was overlooking the manufacturing activities. (4  2 = 8 Marks)…

(a) You have been appointed as a statutory central auditor of APNA Bank, a Nationalized bank. What special points would be borne in mind while conducting the audit of compliance with "Statutory Liquidity Ratio" (SLR) requirements? (4 Marks) (b) The RBI restrict companies from carrying on the business of a non-banking financial institution without obtaining the certificate of registration, therefore, obtaining registration under section 45-IA of the Reserve Bank of India Act, 1934 is necessary. Additionally, new clause has been…

(a) CARO, 2016 requires the auditor of the company to report whether maintenance of cost records has been specified by the Central Government under section 148 of the Companies Act, 2013 and whether such accounts and records have been so prepared and maintained. You are required to briefly explain the audit procedure to be followed by the auditor and suggest the reporting pattern. (6 Marks) (b) Vita Ltd. is anticipating taking over a manufacturing concern and appoints you for due…

(a) The financial statements of AKY & Co. have been prepared by management of an entity in accordance with the financial reporting provisions of a contract (that is, a special purpose framework) to comply with provisions of the contract. Based on the contract, management does not have a choice of financial reporting frameworks. As an auditor what considerations would be undertaken while planning and performing audit? (5 Marks) (b) CA. Jack, a recently qualified practicing Chartered Accountant got his first…