Advanced Auditing, Assurance and Professional Ethics - Jan 2026 RTP

On page no. 19.109 insertion of Clause (5) in Part II of Second Schedule Clause (5) acts as an auditor of the company in contravention of the provisions of the Companies Act, 2013. 2 JANUARY 2026 EXAMINATION REVISION TEST PAPERS ADVANCED AUDITING, ASSURANCE AND PROFESSIONAL ETHICS QUESTIONS PART A: Multiple Choice Questions Integrated Case Scenarios Mr. Vivek was appointed as the engagement partner on behalf of Reliant & Co., a Chartered Accountant Firm, to conduct statutory audit assignment of Zenith…

The details of the emission forms part of the Essential Indicators and need to be mandatorily disclosed. However, the plan for future energy consumption is only a Leadership Indicator and is considered as optional disclosure. Whether CA Nisha would be held guilty of professional misconduct if she accepts the offer to become a member of the Board of Management of Navlok Co-operative Bank (Primary Urban Co-operative Bank)? (a) It is permissible for a CA in practice to become a member…

During the audit of loan accounts of Worthy Bank for the year ended 31st March 2025, you come across a borrower account of Star Limited with an outstanding loan of ` 1.70 crore, which was classified as NPA in December 2024. The borrower made a partial repayment of ` 70 lakh in March 2025, however, remaining amount ` 1 crore is still overdue. Despite this, the bank has upgraded the account to Standard as of 31st March 2025 in its…

The account is correctly upgraded, as partial repayment of ` 70 lakh was received before the balance sheet date. (b) The account can be classified as Standard based on management’s judgment of the borrower’s repayment capacity. (c) The account should continue to be classified as NPA, since the entire overdue principal and interest were not settled before 31st March 2025. (d) The classification can be adjusted retrospectively if the full repayment is received in April 2025. During the audit of…

Co., Chartered Accountants, is a large audit firm engaged in audits and assurance services across various sectors. The firm currently maintains audit documentation in both electronic and physical (hard copy) formats. However, during audit it was observed that physical files are neither scanned and incorporated into the electronic files nor crossreferenced with them. As a result, the documentation remains scattered with no integrated or centralised audit file for the engagement. Additionally, several audit working papers lack clarity on whether the…

Manufacturing Ltd. (CML) is engaged in the production of speciality machinery for the automotive industry. The company operates in a competitive market and is under pressure to meet determined revenue and profitability targets to secure additional funding from the investors. The audit firm AJN LLP has been engaged to conduct CML's statutory audit for the financial year 2024-25. AJN LLP performed risk assessment procedures and related activities towards obtaining information in identifying risk of material misstatement due to fraud and…

During the statutory audit of Nature Care Ltd., CA Vigilant has planned to attend the physical inventory count of the company. Nature Care Ltd. is engaged in the production of pharmaceutical tablets and capsules catering to domestic and export markets, particularly the Middle East. The manufacturing facility is spread over 15 acres in the Industrial Area, Delhi. Raw materials such as powders and chemicals are stored in sacks and drums while work-in-progress (WIP) and finished goods are stored in production…

Opaque Pharmaceuticals Ltd. has outstanding long-term receivables of ` 415 crore as on 31st March 2024, arising from pending insurance claims for compensation due to supply chain disruptions caused by regulatory delays and unforeseen production stoppages. Some of these claims are under legal proceedings while others are in the process of negotiation with the insurance companies. Management has disclosed in the notes to accounts that these amounts are considered fully recoverable. CA Neha, the statutory auditor, has relied solely on…