Auditing and Ethics - November 2022

State with reasons whether the following statements are correct or incorrect:(Answer any Seven) (a) In an automated environment, the relationship between the application controls and the General IT controls over IT systems are not interrelated. (b) Historical financial information relates to financial information based on assumptions about occurrence of future events and possible actions by an entity. (c) The auditor shall assemble the audit documentation in the audit file and complete the administrative process of assembling the final audit file…

Co., Chartered Accountants, are appointed as the auditors of ABC Ltd. CA S, the engagement partner, has come across the following while verifying equity share capital of the company: (i) He noticed that some of the equity shares are held by promoters. (ii) Some shares are issued as sweat equity shares to the employees. What is the meaning of sweat equity shares? What are the disclosure requirements of such promoter's shareholding? (4 Marks) (b) CA P is appointed as an…

(a) The objective of auditing is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion. This can be obtained by performing which procedures? Name the types of audit procedures the auditor can perform to obtain audit evidence? (4 Marks) (b) M/s SS & Associates have been appointed as statutory auditors of Green Limited, a…

(a) Z Ltd. is a manufacturer of ready-made garments. During the year 2021-22, they have opened two new branches and there is a substantial increase in their sales. The management has appointed CA R to review the internal control system of the company as they feel that there are lapses in the control environment of the company. What is included in the control environment and what will the auditor evaluate in order obtain an understanding of the control environment? (4…

Ltd. appointed CA N as the statutory auditor for the F.Y. 2021-2022. Previous year's auditor gave a qualified opinion on the Comparative Financial Statements for the year ended 31.03.2021. What will be the reporting responsibility casted on CA N when he forms an opinion and prepares audit report on the Comparative Financial Statements for the F.Y. 2021-2022? (4 Marks) (b) M/s RAP & Co., a firm of Chartered Accountants, has three partners, namely Mr. R, Mr. A and Mr. P.…

(a) TS Ltd. has raised funds by issuing fully convertible debentures. These funds were raised for the expansion and diversification of the business. However, the company utilised these funds for repayment of long-term loans and advances. What are the reporting requirements under CARO 2020 in this case? M/s PQ & Co., Chartered Accountants have been appointed as statutory auditor of CBD Multiplex Cinema Ltd. The audit team started the audit and verified the ledger and other books of accounts for…