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Institute of Chartered Financial Analysts of India (ICFAI) University 2007 C.A Accounts FINAL – ADVANCED AUDITING - Question Paper

Thursday, 28 March 2013 02:25Web



MODEL examination ques. PAPER

ans ques. one and two and any 4 from the rest.

1. As a Statutory auditor, how would you deal with the following: (4x5=20)

a) ABC ltd. entered into an agreement with an US based company to acquire knowhow for both manufacturing process and design, drawing of the factory at a total cost of Rs. 20 crores. 75% of the knowhow cost was for design and drawings. ABC ltd. capitalised the cost of drawings etc. with factory building and cost for manufacturing process with the cost of machinery.
b) Q ltd. purchased goods on credit for Rs. 10 crores for export from XYZ ltd. Upon the export order being cancelled Q ltd. decided to sell the identical in the domestic market at a discounted price. Accordingly XYZ ltd. was requested to offer a price discount of 25%. XYZ ltd. wants to adjust the sales figure to the extent of discount requested by Q ltd.
c) During audit of a company, you obtain that a significant portion of the inventories of the company is under the custody and control of the sub-contractors of the company.
d) Before commencement of audit of a company, you have sent your audit engagement letter to the managing director of the company with a request to acknowledge a copy of the letter and return the copy to you. The managing director is refusing to acknowledge and has retained the copy of the letter.

2. Comment on the subsequent with reference to the Chartered Accountants Act, 1949, Code of Ethics and Schedules to the Act: (4x4=16)

a) Mr. Rahim, a practicing chartered accountant, accepted the tax audit of a partnership firm for the financial year ended 31st March 2006. His dad Mr. Salim is a partner in the firm with 10% share in the profits of the firm. The firm has taken an overdraft of Rs. 50,000 from a bank, which has been secured by the personal guarantee of Mr. Rahim.
b) Mr. Pradeep is a newly qualified chartered accountant who has established his practice recently. In order to secure professional work he has sent a request letter to the firm in which he was a article assistant for allotment of work which was handled by him during his articleship.
c) Mr. John, a chartered accountant in practice, has been convicted of a criminal offence by a Court for inducing and abetting his client to commit concealment of income and evasion of taxes and has been sentenced to imprisonment for a period of 6 months.
d) The spouse of Mr Sunil, a chartered accountant in practice, holds 20% of the shares of a company in which he was appointed as internal auditor. In his internal audit report, Mr. Sunil has disclosed the interest held by his spouse.

3. a) What is a comprehensive audit of public enterprises? explain a few of the areas to be examined therein. (10)
b) As an auditor of a dealer whose turnover for the financial year ended 31st March 2006 is Rs. 50 lakhs, briefly outline the steps needed to be taken by you for conducting your audit under Value Added Tax legal regulations. (6)

4. a) As a statutory auditor of a listed company, which has made a preferential allotment of shares to certain parties who are listed in the Register maintained under part 301 of the Companies Act, 1956, how will you report on this matter under Companies (Auditor’s Report) Order, 2003. (6)
b) Briefly state the procedures to be performed by an auditor in an engagement to review financial statements. (10)

5. a) A company engaged in the manufacture of motor cycles has incurred huge expenditure on research and development for improving the efficiency in use of fuel energy in its engines. As the auditor of the company state the matters to be examined by you in audit of the expenditure.
b) Briefly state the control procedures to be performed by an auditor in applying computer assisted audit techniques while auditing in a computer info system environment

6. a) As an auditor of a bank how will you verify the subsequent
i) Debit balance in Inter-office adjustments account
ii) Classification of agricultural advances
b) Can a joint auditor of a company seek access to the working papers of other Joint Auditors of the company?

7. a) What is an agreed-upon procedures engagement? State the contents of the report on such engagement. (10)
b) Briefly state the matters to be examined by the auditor of a general insurance company in respect of evaluation of claims liability (6)

8. Write short notes on any 4 of the following: (4x4=16)

a) Emphasis of matter snippet in Auditor’s Report on Financial Statements
b) Flow Chart technique for valuation of Internal Control
c) Rolling Settlement in respect of stock exchange transactions
d) Unexpired Risks Reserve in case of General Insurance companies
e) Propriety elements in part 227(1A) of the Companies Act, 1956.
f) Special Report to the Registrar of Co-operative Societies

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