Auditing and Ethics - May 2019

Examine with reasons whether the following statements are correct or incorrect. (Answer any seven out of eight) (A) Where the firm is appointed as an auditor of the entity the audit report is signed only in the name of audit firm. (B) Satisfactory Control environment is not an absolute deterrent to fraud. (C) Bhartiya Gas Ltd. a Government Company, the Comptroller and Auditor-General of India shall, in respect of a financial year, appoint an auditor duly qualified to be appointed…

(A) "Sampling risk can lead to erroneous conclusions". Justify. (4 Marks) (B) List out the points that should be kept in mind by the auditor for the purpose of constructing an audit programme. (3 Marks) (C) CA Raj, an engagement partner wants to take decision, regarding acceptance and continuance of an audit engagement. Which informations, he should obtain before accepting an engagement? (3 Marks) (D) Describe how the process of establishing the overall audit strategy assists the auditor in marshalling…

"P India" Ltd. is a manufacturer of various sports products. The company is having several cases of litigation pending in courts. The auditor wanted to identify litigation and claims, which may give rise to risk of material misstatements. Suggest the audit procedures in the given case. (4 Marks) (B) Which are specific risks to the company's internal control having IT environment? (4 Marks) (C) "Independence of mind and independence in appearance are interlinked perspectives of Independence of auditors." Explain. (3…

(A) You are an auditor of PQR Ltd. which has spent ` 10 lakhs on Research activities of the product during period under audit. Board of Directors want to recognize it as an internally generated intangible assets. Advise and discuss the conditions necessary to be fulfilled to recognize the intangible assets in the financial statements. (4 Marks) (B) While auditing purchases which types of analytical procedures will be performed by the auditor to obtain audit evidence as to overall reasonableness…

(A) Board of Directors of "XYZ Ltd." found the auditors of the Company acted in a fraudulent manner, and decided to remove the auditors in board's meeting. Comment on the action of Board of Directors and describe correct procedure to be followed for removal of auditors before expiry of their term. (4 Marks) (B) Auditors have right to attend only those general meetings at which the accounts audited by them are to be discussed. Comment. (4 Marks) (C) Though legally…

(A) You are appointed as an auditor of Banking Co., and hold discussions with engagement team. List out matters which you would discuss at the planning stage of an audit to gain better understanding of the bank and its environment. (4 Marks) (B) Define the different types of lease agreements as per Accounting Standard/Ind-AS. (4 Marks) OR PAPER – 6: AUDITING AND ASSURANCE 39 Mr. Piyush, the Bank Manager develops controls to aid in managing key business and financial risks.…