Institute of Chartered Financial Analysts of India (ICFAI) University 2008 C.A Accounts -PCC--_ – 2 : AUDITING AND ASSURANCE - Question Paper

PAPER – two : AUDITING AND ASSURANCE

QUESTIONS

1. Statements issued by the Institute of Chartered Accountants of India are mandatory
in nature while guidance notes are recommendatory in nature. Comment.

2. elaborate Auditing and Assurance Standards? What is the procedure for issuing
Auditing and Assurance Standards?

3. Detection of errors and frauds is not the primary aim of audit; the primary aim is the
establishment of a degree of reliability of the annual statements of account.
Comment.

4. The auditor may encounter circumstances that individually or in combination, indicate
the possibility that the financial statements may contain a material misstatements
resulting from fraud or fault. List a few circumstances that indicate a possible
misstatement.

5. explain the relationship ranging from
(a) Auditing and accounting
(b) Auditing and legal regulations
(c) Auditing and Statistics & Mathematics
(d) Auditing and Financial Management

6. Write a note on AAS one “ Basic Principles Governing an Audit”.

7. (a) describe Internal auditing.
(b) elaborate the objectives of internal audit?
(c) State the areas in which internal audit operates.

8. (a) What do you mean by management representation letter?
(b) During the course of audit, CA Tripathi , the auditor seeks a representation letter
from ABC Ltd. confirming that the company has a satisfactory title to all assets and
there are no encumbrances on the company’s asset. Management of ABC Ltd.
refuses to provide the representation letter in this regard. What is the choice available
for the auditor as per AAS 11.
(c) provide example of a management representation letter as regard to accounting
policies, assets, capital commitment and investments.

9. (a) What do you mean by analytical procedures?
(b) State at which stages of audit analytical procedures can be used?

10. How will you vouch and/or verify the following:
(a) Machinery acquired under Hire-purchase system
(b) Borrowing from Banks
(c) Sale Proceeds of Junk Materials
(d) Discounted bills receivable dishonoured

11. Write a note on” Independence of Auditor”.

12. Gupta & associates, a firm of chartered accountants has been appointed as an
auditor of ABC Ltd. situated in Delhi. Kumar associates, a firm of other chartered
accountants has been appointed for auditing a division of the identical company
situated at Nagpur. What procedures should Gupta & associates follow while using
the work of Kumar Associates with respect to the financial info of Nagpur
division included in the financial info of ABC Ltd.

13. (a) Why knowledge of business is important to the auditor?
(b) From where the auditor can find knowledge of the industry and the business
entity?

14. (a) What do you mean by related party ?
(b) What audit procedures should be followed by auditor to identify the related parties?

15. Write short notes on the following:
(a) Buy Back of Own Securities.
(b) choice on Share Capital

16. Part I, Schedule VI to the Companies Act, 1956, prescribes the form of balance sheet
and the requirements relating thereto. What is the specific requirement as per Part I,
Schedule VI to the companies Act, 1956 relating to
(a) Share Capital
(b) Contingent Liabilities
(c) Investments
(d) Secured Loans

17. At the AGM of XYZ Ltd., Mr Y was appointed as the statutory auditor. He, however,
resigned after three months due to personal cause. State, how the new auditor will be
appointed by XYZ Ltd.

18. What do you mean by audit matters of governance interest? Prepare a list of such
matters those may be included in audit matters of governance interest.

19. (a) What do you understand by Computer info Systems ?
(b) The overall objective and scope of an audit change in a CIS environment.
Comment.
(c) Enumerate documentation requirement under computer info system.

20. Write short notes on :
(a) Operational Audit
(b) Reliability of Audit Evidence
(c) Audit Programme
(d) Cut-off Transactions relating to Inventories

Earning:   Approval pending.