MAY 2018

1) Name the assertions for the following audit procedures:

(i) Year end inventory verification.
(ii) Depreciation has been properly charged on all assets.
(iii) The title deeds of the lands disclosed in the Balance Sheet are held in the name of
(iv) the company.
(v) All liabilities are properly recorded in the financial statements.
(vi) Related party transactions are shown properly. (5 Marks)

2) Expenses which are essentially of a revenue nature if incurred for creating an asset or adding to
its value for achieving higher productivity are regarded as expenses of a capital nature. Describe
any five such expenses. (5 Marks).
3) Principal aspects to be considered by an auditor while conducting an audit of final statements of
accounts. (5 Marks).
4) List any five points that an auditor should consider to obtain an understanding of the Company's
automated environment. (5 Marks)
5) What constitutes a 'true and fair' view, is the matter of an auditor's judgement in the particular
circumstances of a case. In order to ensure 'true and fair' view, auditor has to review certain
points. Mention any such 5 (five) points in brief. (5 Marks)
6) ) Mention any five attributes to be considered by an auditor while verifying for a depreciation
and amortisation expenses. (5 Marks)
7) As statutory auditor of the company, list out audit procedures required to be undertaken for the
following: (i) Interest income from fixed deposits. (4 Marks) (ii) Dividend income. (2 Marks) (iii)
Gain/(loss) on sale of investment in Mutual funds. (2 Marks) Also indicate disclosure
requirements of above as per Companies Act, 2013. (2 Marks
8) ) M & Co. was appointed as auditor of IGI Ltd.. As an auditor what are the factors that would be
considered in the development of overall audit plan? (5 Marks)
9) State the matters to be included in the auditor's report as per CARO, 2016, regarding: (i) Private
Placement of Preferential Issues. (2 Marks) (ii) Utilisation of IPO and further public offer. (2
Marks)
10) Briefly discuss the limitations of Internal Control. (6 Marks
11) Briefly discuss the limitations of Internal Control. (6 Marks
12) Define Emphasis of Matter Paragraph and how it should be disclosed in the Independent
Auditor's Report? (5 Marks)
13) At the AGM of HDB Pvt. Ltd., Mr. R was appointed as the statutory auditor. He, however,
resigned after 3 months since he wanted to pursue his career in banking sector. The Board of
Director has appointed Mr. L as the statutory auditor in board meeting within 30 days. Comment
on the matter with reference to the provisions of Companies Act, 2013. (5 Marks)
14) XYZ & Associates, Chartered Accountants, while evaluating the operating effectiveness of
internal controls, detects deviation from controls. In such a situation, state the specific inquiries
to be made by an auditor to understand these matters and their potential consequences. (5
Marks)
15) Mr. A is appointed as statutory auditor of a company for the Financial Year ended 31st March,
2018. During the course of audit, it was found that few doubtful transactions had been
committed by finance manager who retired in March, 2018. The fraud was going on since last 2-
3 years and the total amount misappropriated exceeding ` 100 lakhs. As a statutory auditor,
what would be reporting responsibilities of Mr. A? (5 Marks)
16) M/s. ABC & Co. is an Audit firm, having partners CA. A, CA. B and CA. C. The firm has been
offered the appointment as an Auditor of XYZ Ltd. for the Financial Year 2017-18. Mr. D, the
relative of CA. A, is holding 25,000 shares (face value of ` 10 each) in XYZ Ltd. having market
value of ` 90,000. Are M/s. ABC & Co. qualified to be appointed as Auditors of XYZ Ltd.? (5
Marks)
17) Mr. M, has served as an auditor in the Co-Operative Department of a Government, is appointed
as a statutory auditor by a Co-Operative Society that has receipts over ` 3 crores during the
financial year. He is not a Chartered Accountant. Mr. D, Chartered Accountant is appointed to
conduct tax audit of the society under section 44AB of the Income Tax Act, 1961. Comment. (5
Marks)
18) Mr. A approaches a bank for financial assistance for his upcoming project. The Bank Branch
Manager, after verifying the proposal, is agreeable to financing Mr. A, but asks for the security to
be offered to the bank. Discuss the nature of securities required to be offered to the bank. (5
Marks)
19) State the objectives of audit of Local Bodies. (5 Marks)
20) The auditor should understand and consider the risks that may arise from the use of Information
Technology (IT) Systems. (5 Marks)

NOV 2018

21) Factors that should be considered for deciding upon the extent of checking on a sampling plan.
(5 Marks)
22) "An adequate planning benefits the audit of financial statements." Discuss. (5 Marks)
23) "Professional judgment is essential to the proper conduct of an audit." Discuss. (5 Marks)
24) ) With respect to audit in an automated environment, explain the following: (i) CAATs (ii) Data
Analytics (iii) Database (iv) Information Systems (v) Privileged access (5 Marks)
25) M/s Pankaj & Associates, Chartered Accountants, have been appointed as an auditor of ABC
Limited. CA Pankaj did not apply any audit procedures regarding opening balances. He argued
that since financial statements were audited by the predecessor auditor therefore he is not
required to verify them. Is CA Pankaj correct in his approach? (5 Marks)
26) "While the auditor may choose to analyse the monthly trends for expenses like rent, power and
fuel but for other expenses, an auditor generally prefers to verify other attributes." Mention
those attributes. (5 Marks)
27) Write the audit procedures to be performed as an auditor for valuation (assertion) of
following:
(i) Loans and Advances and other current assets. (5 Marks)
(ii) Finished goods and goods for resale. (5 Marks
28) "Planning is not a discrete phase of an audit, but rather a continual and iterative process."
Discuss. (5 Marks)
29) "The company has raised funds by issuing fully convertible debentures. These funds were raised
for the expansion and diversification of the business. However, the company utilized these funds
for repayment of long term loans and advances." Advise the auditor regarding reporting
requirements under CARO, 2016. (4 Marks
30) "A multinational co. wants to appoint you to carry the statutory audit." Discuss with reference to
SA 330 the substantive procedures to be performed to assess the risk of material misstatement.
(6 Marks)
31) "MMJ Ltd., an unlisted public company, did not appoint any internal auditor for the financial
year ending on 31st March, 2019. The company had paid up capital of ` 20 crores and reserves of
` 25 crores. Its turnover for the preceeding 3 years were ` 75 crores for the year ended 31st
March, 2018, ` 150 crores for March, 2017 and ` 190 crores for March, 2016. The company had
availed term loan from the bank of `130 crores. The outstanding balance of the term loan as on
31st March, 2018 is ` 90 crores." As an auditor of the company, how would you deal with the
above? (5 Marks)
32) ) "An auditor is required to make specific evaluations while forming an opinion in an audit
report." State them. (5 Marks
33) ) "An auditor is required to make specific evaluations while forming an opinion in an audit
report." State them. (5 Marks
34) Briefly mention the matters that are relevant in planning attendance at physical inventory
counting. (5 Marks)
35) Write any five circumstances of conflicting or missing evidence that indicate the possibility of
fraud. (5 Marks)
36) "CA. NM who is rendering management consultancy service to LA Ltd. wants to accept offer
letter for appointment as an auditor of the LA Ltd. for the next financial year." Discuss with
reference to the provision of the Companies Act, 2013. (5 Marks)
37) Briefly explain the provisions for qualification and appointment of Auditors under the MultiState
Co-operative Societies Act, 2002. (5 Marks)
38) "The Auditor should examine the efficacy of various internal controls over advances, to
determine the nature, timing and extent of his substantive procedures." Discuss briefly. (5
Marks
39) Write basic standards set for Expenditure Audit of Government. (5 Marks)
40) "Ramjilal & Co. had been allotted the branch audit of a nationalized bank for the year ended 31st
March, 2018. In the audit planning, the partner of Ramjilal & Co., observed that the allotted
branches are predominantly based in rural areas and major portion of the advances were for
agricultural purpose." Now he needs your assistance on the following points so as to incorporate
them in the audit plan: (i) for determination of NPA norms for agricultural advances (ii) for
accounts where there is erosion in the value of security/frauds committed by the borrowers. (5
Marks)

( MAY 2019)

41) "Sampling risk can lead to erroneous conclusions". Justify. (4 Marks)

42) List out the points that should be kept in mind by the auditor for the purpose of constructing an
audit programme. (3 Marks)
43) CA Raj, an engagement partner wants to take decision, regarding acceptance and continuance of
an audit engagement. Which informations, he should obtain before accepting an engagement?
(3 Marks
44) ) Describe how the process of establishing the overall audit strategy assists the auditor in
marshalling his human resources. (4 Marks)
45) ) "P India" Ltd. is a manufacturer of various sports products. The company is having several cases
of litigation pending in courts. The auditor wanted to identify litigation and claims, which may
give rise to risk of material misstatements. Suggest the audit procedures in the given case. (4
Marks)

46) Which are specific risks to the company's internal control having IT environment? (4 Marks)

47) "Independence of mind and independence in appearance are interlinked perspectives of

Independence of auditors." Explain. (3 Marks)

48) "Completion Memorandum" is helpful as part of the audit documentation. Explain. (3 Marks)

49) ) You are an auditor of PQR Ltd. which has spent ` 10 lakhs on Research activities of the product
during period under audit. Board of Directors want to recognize it as an internally generated
intangible assets. Advise and discuss the conditions necessary to be fulfilled to recognize the
intangible assets in the financial statements. (4 Marks)

50) While auditing purchases which types of analytical procedures will be performed by the auditor
to obtain audit evidence as to overall reasonableness of purchase quantity and price. (4 Marks)

51) While reviewing Employee benefits expenses of a company, how you as an auditor you will
evaluate its hiring, appraisal and retirement process? (3 Marks)

52) The securities premium account may only be applied by the company towards the issue of
unissued shares of the company to the members of the company as fully paid bonus shares.
Comment. (3 Marks)

53) Board of Directors of "XYZ Ltd." found the auditors of the Company acted in a fraudulent
manner, and decided to remove the auditors in board's meeting. Comment on the action of
Board of Directors and describe correct procedure to be followed for removal of auditors before
expiry of their term. (4 Marks)

54) Auditors have right to attend only those general meetings at which the accounts audited by
them are to be discussed. Comment. (4 Marks)

55) Though legally auditor may exercise right of Lien in case of companies, it is mostly impracticable
for legal and practicable constraints. Do you agree? (3 Marks)

56) Explain the Reporting requirements the auditor should ensure under CARO 2016 related to fixed
assets. (3 Marks)

57) You are appointed as an auditor of Banking Co., and hold discussions with engagement team.
List out matters which you would discuss at the planning stage of an audit to gain better
understanding of the bank and its environment. (4 Marks)

58) Define the different types of lease agreements as per Accounting Standard/Ind-ASc
59) Mr. Piyush, the Bank Manager develops controls to aid in managing key business and financial
risks. Discuss the various requirements for an effective risk management system in a bank (.4
MARKS)

60) Central Govt. hold 55% of the paid up share Capital in Kisan Credit Co-operative Society, which
is incurring huge losses. Advise when the Central Government can direct Special Audit under
Section 77 of the Multi State Co-operative Society Act. (3 Marks)

61) Discuss the power of C & AG in Government audit. (3 Marks)

(NOV 2019)

62) ) The auditor shall plan and perform an audit with professional skepticism recognizing that
circumstances may exist that cause the financial statements to be materially misstated. Discuss
any four examples of professional skepticism. (4 Marks)
63) In establishing overall audit strategy, the auditor shall ascertain the reporting objectives of the
engagement to plan the timing of the audit and the nature of the communications required.
Elucidate those cases by which auditor can ascertain the reporting objectives of the
engagement. (4 Marks)
64) The engagement partner shall take the responsibility for the overall 'quality on each audit
engagement to which that partner is assigned. Discuss with reference to SA 220 "Quality Control
for an audit of financial statements". (3 Marks)
65) The auditor’s responsibility includes reporting on Internal Financial Controls over Financial
Reporting which includes an understanding IT environment of the company and relevant risks
and controls. Mention any three situations where IT will be relevant to an audit. (3 Marks)
66) Discuss the various points which auditor needs to consider in determining whether it is
appropriate to use audit evidence about operating effectiveness of controls obtained in previous
audit, and if so, the length of the time period that may elapse before retesting. (4 Marks)
67) Validity and consequence of issue of shares at discount, check with respect to the provisions of
the Companies Act, 2013. (4 Marks)
68) Explain the disclosure requirements of IND AS compliant Schedule III to Companies Act, 2013 for
each component of "Other Equity." (3 Marks)
69) Discuss the audit procedure to be considered by an auditor while performing analytical
procedure to obtain audit evidence as to overall reasonableness of purchase quantity and price.
(3 Marks
70) Discuss the points to be considered by auditor for the purpose of constructing an audit
programme. (4 Marks)
71) "Before the commencement of audit, the joint auditors should discuss and develop a joint audit
plan." Discuss the points to be considered in developing the joint audit plan by the joint auditors.
(4 Marks)
72) Board of Directors of MN Ltd. wants to appoint CA B, a practicing Chartered Accountant, as an
internal auditor of the company as they believe that they could not appoint any other person as
an internal auditor other than practicing chartered accountant. (3 Marks)
73) Examine the correctness of the statement of Board of Directors of MN Ltd. with respect to
provisions of Companies Act, 2013. (d) CA A, auditor of ABC Ltd. wants to design substantive
analytical procedure and for that he wants to check whether the data is reliable or not. Mention
the relevant points which he has to consider whether data is reliable for purpose of designing
the substantive analytical procedures. (3 Marks)
74) When corresponding figures are presented, the auditor’s opinion shall not refer to the
corresponding figures. Discuss the exceptions of the above statement when the prior period
financial statements are audited. (4 Marks)
75) M Ltd. has given certain loans to related parties and also has accepted certain deposits. As an
auditor, how will you include the above items in paragraph 3 of CARO, 2016? (4 Marks)
76) Briefly explain the policies and procedures of assembling the final audit file on a timely basis
after the date of auditor's report under SQC-1. (3 Marks)
77) “Inadequate internal control over assets may increase the susceptibility of misappropriation of
those assets.” State any three examples of such occurrence of misappropriation of such assets.
(4 Marks)
78) ''There is no difference in provisioning of NPA as regards to categories of NPA, whether the debt
is secured or unsecured." Critically evaluate the statement on the basis of provisioning norms of
NPA of nationalised bank. (4 Marks)
79) In the case of audit of a charitable institution, what attentions should be paid by the auditor
regarding audit of expenditure items? (4 Marks
( OR )
80) You have been appointed auditor of M/s. Divine Children Hospital. Discuss any four important
points that would attract your attention while audit. (4 Marks)
81) The discussion between members of the engagement team members and the audit
engagement partner should be done on the susceptibility of the bank's financial statements to
material misstatements. Briefly discuss the points ordinarily included in discussion of the
engagement team. (3 Marks)
82) There are certain points which are required to be considered specially in the audit of accounts
of a partnership. Discuss any three points briefly. (3 Marks)