Advanced Auditing, Assurance and Professional Ethics - May 2026 RTP

1. Considering the facts given in the scenario, which of the following statements correctly describes the auditor's reporting responsibility in relation to revaluation of Plant and Machinery under CARO 2020? (a) Since the revaluation relates only to one CNC plant forming part of the larger class of Plant and Machinery and the surplus is recognised in Other Comprehensive Income rather than Profit and Loss, the auditor is not required to report under CARO 2020. (b) The auditor is required to…

2. In the context of reporting under Clause 3(ii)(b) of the Companies (Auditor's Report) Order, 2020, which of the following statements is most appropriate in the given scenario? (a) Reporting is not required because the outstanding balance at year-end was below & 5 crore, and the clause is triggered only if the year-end utilisation exceeds @ 5 crore. (b) Since the company is unlisted and the stock statements agree quantitatively with books, reporting under CARO 2020 is not mandatory. (c)…

Sunny & Co. has been appointed as the Central Statutory Auditor of Money Bank Ltd., a private sector bank registered with the Reserve Bank of India, for the financial year 2024-25. While reviewing the computation of Demand and Time Liabilities (DTL), the engagement partner observed the following treatment of certain items: Sr. | Particulars of Item Inclusion/ No. Exclusion 1 Net credit balance of Branch Adjustment Account | Inclusion 2 Amount received from ECGC by invoking the | Exclusion guarantee…

7. An audit team was scheduled to conduct the year-end physical verification of inventory at a client's warehouse. However, due to unexpected travel restrictions and safety guidelines, the auditors are unable to visit the warehouse in person. To avoid delay in completing the audit, the client proposed the use of Augmented Reality (AR)enabled devices to enable the auditor to observe inventory remotely. Which of the following options correctly explains how Augmented Reality (AR) would assist the auditor in this situation?…

Associates, was appointed as the statutory auditor of SARA Ltd., an unlisted company engaged in paper manufacturing. During the audit, the following observations were made: Observation 1: A major flood during the year damaged one of the company’s warehouses, resulting in losses. The management has adequately disclosed the same in the financial statements and considers the loss to be not material. Observation 2: Due to the flood, certain transaction records were completely destroyed, and no duplicate records were maintained. The…

Associates, Chartered Accountants, is the statutory auditor of Velocity Engineering & Projects Ltd., a listed company engaged in execution of large-scale infrastructure projects under Engineering, Procurement and Construction (EPC) contracts across India and overseas. The firm has an experienced partner designated as Engagement Quality Control Reviewer for listed entity audits. During the audit for the year ended 31%t March 2025, the engagement team noticed the following matters: . Revenue of % 1,250 crores recognised under long-term EPC contracts using percentage…

10. CA Kanishka is auditor of a company engaged in poultry farming and egg production. The company has performed very well since its incorporation in 2015. Its sales had also grown and the company had expanded its operations from its home state in North India to eastern regions of the country. However, over the past two years, the company’s financial performance has deteriorated significantly due to: . The impact of the pandemic; and . Three consecutive outbreaks of bird flu…

11. ABC Limited is a listed manufacturing company engaged in heavy engineering activities. During the audit of its financial statements for the year ended 31st March 2025, the statutory auditor noted the following: . The company has overstated closing inventory by ₹8.75 crore due to incorrect valuation of obsolete stock, which has resulted in overstatement of profit before tax by the same amount. . The company has not disclosed a material pending litigation of % 12 crore relating to environmental…