Advanced Auditing, Assurance and Professional Ethics - Sep 2025 RTP

During the audit of Tripti Chemicals Ltd., the auditors, Dishu & Co., identified unusual fluctuations in revenue while performing analytical review procedures. Upon further inquiry, they detected a misstatement in revenue recognition, which appeared to have been intentionally made by senior finance personnel. Although management contended it was a one-time error, the auditors suspected of potential fraud. In accordance with the Standards on Auditing, what would be the most appropriate course of action for the auditor? (a) Rely on management’s…

VMC & Co., a firm of Chartered Accountants, has been auditing the financial statements of Reyox Ltd., a listed company, for the past 7 years. CA Rajat, an engagement partner, has led the audit team throughout this period. A recent quality control review raised concerns regarding a familiarity threat, as CA Rajat had developed a close relationship with key management personnel of the client. Which of the following would be the most appropriate course of action for VMC & Co.…

Continue with the same engagement partner, as long as documentation evidences independence in mind and appearance. (b) Appoint a second partner to assist CA Rajat, but allow him to continue as the lead engagement partner. (c) Rotate the engagement partner and appoint another qualified partner to lead the audit engagement. (d) Request Reyox Ltd. to change their finance team to reduce familiarity threats from the client’s side. While conducting the statutory audit of a large manufacturing company with multiple warehouses…

CA Kavya has been appointed as the statutory auditor of XYR InfraTech Ltd. for the financial year 2024-25. The company operates in two business segments: (i) a consumer electronics division that manufactures smart televisions and earns stable profits; and (ii) an infrastructure development division engaged in metro rail projects under government contracts. The infrastructure division has reported operating losses in the past two years due to delays and cost overruns. While planning the audit, CA Kavya needs to determine materiality…

Harsh Electronics Ltd., a manufacturing company, planned to set up a new R&D centre at its existing industrial premises in Pune to mark its 25th anniversary in the financial year 2024–25. To expand the premises, the company decided to acquire an adjacent plot of land owned by Ms. Reena, an executive director of the company. The company offered to exchange one of its underutilised land parcels, located in another industrial area rather than having a cash transaction. Though the company’s…

Tech Solutions Ltd. is in the process of finalising its financial statements for the year ended 31 st March 2025. The company is required to present comparative financial statements, including figures for the year ended 31st March 2024. Roshan & Co., Chartered Accountants, has been appointed as the statutory auditor for the current year. During the audit, CA Roshan, the engagement partner, notes the following: Particulars FY 2023–24 FY 2024–25 Auditor Gupta & Mehra LLP, Chartered Accountants Roshan Co., Chartered…