Auditing and Ethics - November 2023

State with reasons whether the following statements are correct or incorrect. (Answer any seven) (a) The relationships between individual financial statements items traditionally considered in the audit of business entities may not always be relevant in the audit of governments or other non-business public sector entities. (b) NGOs registered under the Companies Act, 2013 are not allowed to maintain accounts on cash basis. (c) Sales invoice is an example of external evidence. (d) Any casual vacancy in the office of…

ABC & Associates, statutory auditors of Opaque Ltd., are in the process of finalizing the audit report of the company but in view of their inability to obtain sufficie nt appropriate audit evidence, they would like to disclaim their opinion on the financial statements. Explain reporting responsibilities of M/s ABC & Associates pursuant to SA 700 (Revised). How they will address key audit matters section in accordance with SA 701 when they are expressing disclaimer of an opinion on the…

(a) UVW Ltd. a biopharma company and global manufacturers of select critical care medical products has been sanctioned working capital limits of ` 5.99 crores from a nationalized bank on the basis of security of current assets. During the year under audit, the statutory auditor of UVW Ltd. considers that inventory is material to the financial statements and performs audit procedures over the company's final inventory records to determine whether they accurately reflect actual inventory count and without any major…

(a) The auditor's determination of materiality is a matter of professional judgement and is affected by the auditor's perception of the financial information needs of users of the financial statements. In this context, what are the assumptions that an auditor reasonably makes in respect of the users of the financial statements? (4 Marks) (b) How is "Short Term Borrowings" disclosed in the Financial Statements as required under Part I of Schedule III to the Companies Act, 2013? (4 Marks) (c)…

(a) You are the senior member of the engagement team of M/s BB·& Associates. Before starting the audit, you explained to other junior assistants about the meaning of Audit evidence. One of the junior assistant is of the view that audit evidence includes only information contained in the accounting records and no other information. You are of the opinion that a combination of tests of accounting records and other information is generally used by the auditor to support his opinion…

(a) CA Z is appointed as the auditor of Chanakya Open University which offers higher learning educational courses through the Distance Mode of Education. Discuss four steps involved in his audit of other receipts/grants and donations received by the Univ ersity. (4 Marks) On 1st May 2022, NGO has been founded with the objective of disaster relief registered under section 8 of the Companies Act, 2013. In addition to corpus contribution, substantial foreign contributions also have been received by NGO.…