Auditing and Ethics - November 2020

Examine with reasons whether the following statements are correct or incorrect. (Answer any seven out of eight) (a) Even if law or regulation prescribes sufficient details of the terms of the audit engagement the auditor should record them in a written agreement. (b) It is not necessary for the auditor to periodically review the audit programme. (c) Dividends are recognized in the statement of profit and loss only when the amount of dividend can be measured reliably. (d) Every LLP…

(a) Describe the guiding principles which the auditor should take into account which serves as the safeguards to eliminate the threats to independence. (4 Marks) (b) With Ref. to SA 320 "Materiality in planning and performing an audit" Indicate the factors which may effect the identification of an appropriate benchmark while determining materiality for the financial statements as a whole. (4 Marks) (c) It is imperative for the auditor to project misstatements for the population while performing audit procedures through…

(a) The auditor shall obtain an understanding of major activities that the entity uses to monitor internal control over financial reporting. Discuss "Monitoring of control'' as a component of Internal control. (4 Marks) (b) While it is true that companies can benefit immensely from the use of data analysis in terms of increased profitability, better customer service, etc., analyse various functions that can be performed even by the auditor also using Data Analytics tools and techniques in the audit process…

(a) ABC limited appointed XYZ & Company, Chartered Accountants, as a Statutory Auditor of the Company for the year 2019-20. CA X, partner of XYZ & Company, was looking after the audit of other income of the company which consists of interest income on fixed deposits. As a Statutory Auditor how would CA X verify interest income on fixed deposits for the year 2019-20? (4 Marks) (b) While conducting the audit of Amrit Ltd. the auditor A of ABC and…

(a) As an auditor of PQR Ltd., you came across a misstatement resulting from fraud or suspected fraud which brings into question your ability to continue performing the audit. Explain the courses of actions available to you. (4 Marks) (b) Clue Ltd. is a Public unlisted company having paid-up share capital of ` 9 crores and public borrowings from the financial institutions of ` 51 crores. They appointed M/s Pray and Co., A Chartered Accountant firm as the statutory auditor…

(a) You are appointed as Statutory Auditor of DEF Bank Limited for the year 2019-20. As an Auditor how will you verify Provisions created by DEF Bank Limited? (4 Marks) (b) (i) You are appointed as an auditor of co-operative society. State the special features of the co-operative audit to be borne in mind by the auditor, concerning: (1) Audit classification of society. (2) Discussion of draft audit report with the management committee. (4 Marks) (ii) The audit of receipts…