Advanced Auditing, Assurance and Professional Ethics - November 2020

1. A significant deficiency exists in the process of flow of approval of travel re-imbursements of the officials. This was communicated in the previous year to those charged with Governance and no remedial action was taken on the same so far. The auditors are of the opinion that it need not be communicated again. Is the opinion of the auditors on not to communicate the deficiency in internal control reported in the previous year correct? (a) Yes, the auditor is…

MEA Bank Ltd. has sanctioned overdraft limit of Rs.34 crore to Bharat Ltd. on the working capital of the company as on 31s! March 2017. As per bank norms the drawing power in the overdraft account need to be reviewed on quarterly basis as per the audited stock statement of the company. As a central statutory auditor for the year 2018-19, while verifying the advances for the year ending 31st March 2019, you noticed that the bank has not obtained…

Co LLP is a firm of Chartered Accountants. The firm has 12 Partners. The firm has a good portfolio of clients for statutory audits but the same clients had some other firms as their tax auditors. In the current year (Financial Year 2019-20), many existing clients for whom Nakul Sehdev & Co LLP happens to be the statutory auditor have requested the firm to carry out their tax audits as well. The firm is expecting the no of tax audits…

SKJ Private Ltd is engaged in the business of construction. The company has also got some real estate projects few years back on which it started the work in the last 2 years. The annual turnover of the company is INR 600 crores and profits of INR 40 crores. The statutory auditors of the company got rotated by another audit firm due to mandatory audit rotation requirements as per the Companies Act 2013. The new statutory auditors of the company…

5. XYZ Ltd. is a Public Limited Company engaged in the manufacturing of TMT Bars. M/s. UV & Associates are the statutory auditors of XYZ Ltd. for the Financial Year 2019-20. The company is listed on National Stock Exchange. CA Udhav, the engagement partner is considering the requirements with respect to Regulation 27 and Schedule Il (LODR) for corporate governance compliance of XYZ Ltd. Which of the following is correct in this regard? (a) XYZ Ltd. shall submit a quarterly…

6. Which among the following is not a factor for determining the necessity to use an auditor's expert to assist in obtaining sufficient appropriate audit evidence? (a) The use of a management's expert by the management in preparing the financial statements. (b) The presence of an internal audit function and verification of the subject matter by them. (c) The nature and significance of matter including its complexity. (d) The risk of material misstatement in the matter.

RK & Associates are the tax auditors of OPQ Pvt Ltd. While performing procedures in respect of clause 21(d) of form 3 CD, the tax auditors came across various payment vouchers where the cash paid exceeds INR 50,000 during a day. The tax auditors want the management to report all of these payments in Form 3CD, however, the management has a different view. The management said that the payment voucher is one for various payments made during a day to…

8. While investigating the matters relating to possible misappropriation of cash, cashier says that every day cash is counted and reviewed by the Finance Head. Your specimen review indicates that daily cash summary was not signed off by the Finance Head. In this situation you should: - (a) Conclude that cashier is not telling truth. (b) Consider extending investigation procedures like corroborative enquiry with Finance Head, review of appropriate daily cash summaries etc. (c) Conclude that Finance Head is not…