CA Final Question Papers Group I Advanced Auditing and Professional Ethics June 2009

 CA Final Question Papers Group I 

Advanced Auditing and Professional Ethics

June 2009

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) You are appointed to compile financial statements of Y & Co. for tax purposes. During the course of work, you learn that the inventory is grossly understated. On pointing the same, the partners of Y & Co. tell you that since you are not conducting an audit, the said figures duly certified by the firm should be accepted. 5 (0)
(b) While conducting statutory Audit of ABC Ltd., you come across IOUs amounting to Rs. 2 crores as against a cash balance shown in books of Rs. 2.10 crores. You also observe that despite similar high balances throughout the year, small amounts of Rs. 50,000 are withdrawn from the bank to meet day–to–day expenses. 5 (0)
(c) Z Ltd. had appointed an outside expert to assess accrued gratuity liability of the company. Based on the said report, the company provides Rs. 80 lakhs as gratuity in the financial statements. 4 (0)
(d) A Company’s net worth is eroded and creditors are unpaid due to liquidity constraints. The management represents to the statutory auditor that the promoter’s wife is expected to give an unsecured loan to meet the liquidity constraints and that negotiations are underway to secure large export orders. 4 (0)
2. Comment with reference to the Chartered Accountants Act, 1949 and Schedules thereto:
(a) H, a Chartered Accountant in practice is a partner in 3 firms. On the personal Letter Heads of H, names/address of all the 3 firms are mentioned. 4 (0)
(b) D, who conducts the tax audit u/s 44AB of the Income Tax Act, 1961 of M/s ABC, a partnership firm, has received the entire audit fees of Rs. 25,000 in April, 2009 in respect of the tax audit for the year ended 31.3.2009. The audit report was, however, signed on 25.5.2009. 4 (0)
(c) M/s LMN, a firm of Chartered Accountants having 5 partners accepts an audit assignment of a newly formed private limited company for audit fees of Rs. 5,000. 5 (0)
(d) P, a Chartered Accountant in practice, accepts appointment as statutory auditor for LMN Pvt. Ltd. Q, brother of P has substantial interest in LMN Pvt. Ltd. 5 (0)
3. Answer the following:
(a) You are appointed statutory auditor of X Ltd. X Ltd. has an internal audit system and reports for the same are given to you. Mention the factors you will consider to ensure that the said system of internal audit of X Ltd. is commensurate with the size of the company and nature of its business. 8 (0)
(b) The audit report of P Ltd. for the year 2007–08 contained a qualification regarding nonprovision of doubtful debts. As the statutory auditor of the company for the year 2008–09, how would you report, if:
(i) The company does not make provision for doubtful debts in 2008–09?
(ii) The company makes adequate provision for doubtful debts in 2008–09?
8 (0)
4. Answer the following:
(a) What are the duties of a statutory auditor regarding disqualification of a director u/s 274(1)(g) of the Companies Act, 1956 ? 8 (0)
(b) While doing the audit of consolidated Financial Statements, which current period consolidation adjustments are to be taken into account? 8 (0)
5. Answer the following:
(a) Loans were given out of the funds of an Employees Provident Fund to the employer company in contravention of the applicable rules. As the auditor of the said Provident Fund, M discloses the contraventions to the Trustees of the fund, but failed to do so to the members of the fund. Comment. 5 (0)
(b) X Ltd. did not follow the applicable Accounting Standard for disclosing Earnings Per Share (EPS) in the financial statements. The fact of such non–disclosure was however, mentioned in the notes forming part of accounts. As the statutory auditor of X Ltd., how would you report in the above case? 5 (0)
(c) What are the considerations to be kept in mind while performing analytical procedures on data prepared by the client. 6 (0)
6. Answer the following:
(a) List the special features involved in the audit of a Cooperative Society. 8 (0)
(b) Draft an Audit programme for conducting the audit of a Public Trust registered under section 12A of the Income Tax Act, 1961. 8 (0)
7. Answer the following:
(a) Enumerate the verification procedures in relation to audit of a Hire–Purchase Finance Company. 8 (0)
(b) As the tax auditor of a non–corporate entity u/s 44AB of the Income Tax Act, 1961, how would you ensure compliance of section 145 of the Income Tax Act, 1961? 8 (0)
8. Answer the following:
(a) What are the points to be considered while evaluating the “Knowledge of the Business” in the conduct of an audit? 8 (0)
(b) Write short notes on: 4+4
(i) Probable format of Environmental Statement. (0)
(ii) “Reporting” stage in Peer Review. (0)

Leave a Comment