CA Exam Papers Final Group I Advanced Auditing and Professional Ethics November 2008

CA Exam Papers Final Group I 

Advanced Auditing and Professional Ethics

November 2008


This Paper has 25 answerable questions with 0 answered.
Roll No……………
Total No. of Questions — 8
Time Allowed : 3 Hours

Maximum Marks : 100
Answer Question Nos. 1 and 2 and four from the rest.
Working notes should form part of the answer.
1. Comment on the following:
(a) X Ltd., paid Rs.25 lakhs as advance to Y Ltd. towards the purchase of a printing machinery on 15.1.08 with delivery instructions to deliver the same in the last week of June, 08. Further on 2.2.08 X Ltd. purchased two diesel generator sets from Y Ltd. for Rs.30 lakhs on 90 days Credit term. In the accounts for 2007–08, X Ltd. intends to adjust the advance paid against Credit purchase and show the net amount of Rs.5 lakhs as due from them. As the statutory auditor, how would you deal with this? 5 (0)
(b) The Statutory auditors of Getwell Ltd. included certain comments in his report u/s 227 of the Companies Act, 1956. Since the company requested the auditors to drop the above comments, as otherwise it will affect their future business, as a compromise the auditor included the comment in the report in ordinary type. 5 (0)
(c) You are the auditor of Easy Communications Ltd. for the year 2007–08. The inventory as at the end of the year i.e. 31.3.08 was Rs.2.25 crores. Due to unavoideable circumstances, you could not be present at the time of annual physical verification. Under the above circumstances how would you ensure that the physical verification conducted by the management was in order? 5 (0)
(d) You have been appointed as the auditor of Good Health Ltd. for 2007–08 which was audited by CA Trustworthy in 2006–07. As the Auditor of the company state the steps you would take to ensure that the Closing Balances of 2006–07 have been brought to account in 2007-08 as Opening Balances and the Opening Balances do not contain misstatements. 5 (0)
2. Comment on the following with reference to the Chartered Accountants Act, 1949 and schedules there to:
(a) CA X was appointed as the Auditor of ABC Ltd. for 2007–08. Since he declined to accept the appointment, the Board of Directors appointed CA Y as the auditor in the place of CA X, which was also accepted by CA Y. 4 (0)
(b) CA Z who is a leading Income Tax Practitioner and consultant in Jaipur is also trading in derivatives. 4 (0)
(c) CA D, a Chartered Accountant prepared a project report for one of his clients to obtain bank finance (long–term) of Rs.50 lakhs from a Commercial Bank. Consequent to the sanction of the loan by the bank CA D raised a bill for his services @ 2% of the loan sanctioned. 4 (0)
(d) CA ZZ who conducted ABC audit of a marathi daily ‘New Era’ certified the circulation figures based on Management Information System Report (M.I.S Report) without examining the books of Account. 4 (0)
3. (a) The auditor must evaluate major clauses of control used in a Computerised Information system to enhance its reliability – Comment. 8 (0)
(b) You have been appointed as the auditor of a Multiplex Cinema House. Draw an audit programme in respect of its Revenue and Expenditure. 8 (0)
4. (a) State the main features of the Qualified and Independent Audit Committee set up under clause 49 of the listing agreement. 8 (0)
(b) As Auditor of Act Fast Ltd. what steps will you take to ensure that the dividend has been paid only out of profit? 8 (0)
5. As the auditor of LMN Ltd. you notice certain differences in the figures between the books of account and offer document. The company explains that it is due to certain adjustments made as per SEBI (Disclosure and Invertor Protection) Guideline, 2000. State such disclosure and adjustments which are to be incorporated in the Financial Statement of the offer document.
(i) Is the company regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs duty, Excise duty, Cess and any other statutory dues with the appropriate authorities and if not, the extent of arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated by the auditor.
(ii) Whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty percent of its net worth and whether it has incurred cash losses in such financial year and in the immediately proceeding financial year.
16 (0)
6. (a) (i) What do you understand by Long–form Audit Report? 2 (0)
(ii) As the concurrent auditor of Nagpur Main Branch of XYZ Bank Ltd. state the issues which have to be considered in the audit of advances. 6 (0)
(b) As the auditor of an Insurance company state the audit procedure you would follow to verify outstanding premium and agents balances. 4 (0)
(c) You are the auditor of IJK Ltd., a NBFC registered with RBI. How would you proceed to ensure the compliance of Prudential Norms directions by it. 4 (0)
7. Write short notes on the following: 4×4=16
(a) Circuit filters/Circuit breakers. (0)
(b) General principles relating to propriety aspect. (0)
(c) Frauds through supplier ledger. (0)
(d) Purpose of appointing Inspecting officer of a Depository. (0)
8. (a) Highlight the provisions relating to corporate responsibility under Sarbanes Oxley Act of 2002. 4 (0)
(b) Explain the objectives of Peer Review. 4 (0)
(c) State the important aspects to be considered by the External auditor in the evaluation of Internal Audit Function. 4 (0)
(d) State whether a Tax audit report can be revised and if so state those circumstances.

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