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Monday, July 20, 2009

CA Final June 2009 Question Paper with Hints

1. As an auditor, how would you deal with the following:

(a) In the audit of an Organisation whose objects are charitable or religious, holds that the Accounting Standards are not applicable to it, since only a very small proportion of its activities consist of business in nature (Refer Para 3.5, Chapter 5).

(b) During the audit for the year ended on 31st March, 2009 of XYZ Ltd. you come across certain personal expenses of employees have been debited to Profit and Loss account. (Refer Section 227(1A), Chapter 1)

(c) While conducting the audit of ABC Ltd. for the year ended on 31st March, 2009, you find that the company has disposed off substantial part of the fixed assets, but the management of the company represents to you that they will continue in business. (Refer AAS 11, AAS 16 and Clause 4(i) of CARO)

(d) A Ltd. has not made provisions for proposed dividends in its accounts but proposes to charge the dividends to Profit & Loss account as and when paid. (Refer AS 4 and Schedule VI)

2. Comment on the following with reference to the Chartered Accountants Act, 1949 as amended by the Chartered Accountants (Amendment) Act, 2006 and Schedules thereto:

(a) Mr. B, a practicing Chartered Accountant, expressed his opinion on the financials of M/s ABC Ltd. for the year ended on 31st March, 2009. It was later found that the closing stock was valued arbitrarily by Management which was accepted by him without verification and large amount of revenue expenditure was capitalised. (Refer Part I, Clause 7, Second Schedule)

(b) Mr. A was appointed by H Ltd. to audit the PF trust maintained by the company. While conducting the audit he noticed that large amount of loans have been given out of the trust to the employer company in contravention of the rules of the PF trust. He had disclosed the irregularities to the trustees and to the company but not to the individual subscribers of the PF. When queried on his omission to disclose, he explained that he owed no duty to the individual members.(Refer Part I, Clause 5 & 6, Second Schedule, The audit report is made to trustees and it is for the trustees to forward that report to individual members)

(c) Mr. B was appointed as auditor of XYZ Ltd. in place of Mr. A. Mr. B had sent a letter of communication to Mr. A under certificate of posting and proceeds to conduct the audit. Mr. A makes a complaint to the Institute on the basis of non-receipt of communication. (Refer Part I, Clause 8, First Schedule)

(d) A Chartered Accountant firm pays share in the profits to a widow of its deceased partner. (Refer Part I, Clause 2, First Schedule)

3. (a) State the points in an investigation of frauds through suppliers ledger. (Refer Chapter 10)

(b) State the circumstances that may warrant the introduction of Cost Audit. (Refer Chapter 6)

(c) State your views on reference to an expert in the Auditor’s report (Refer AAS 9)

4. (a) State the internal controls in the area of Loans and Advances of Banks. (Refer Chapter 12)

(b) What shall comprise the auditor’s report of Mutual Funds. (Refer Chapter 18)

5. (a) State briefly the communication/ reporting requirements as per AAS 21 on non-compliance in an audit of financial statement:

(i) To the management

(ii) To the users of the auditor’s report on the financial statements.

(iii) To the regulatory and enforcement authorities (for all parts Refer AAS 21, Q. 4)

(b) State the reporting requirement regarding books of account (prescribed, maintained and examined), in Form No. 3CD of Tax Audit under Section 44AB of the Income Tax Act, 1961. (Refer Form 3CD Clause 9, Chapter 5)

6. (a) State the audit procedures for verification of outstanding premium and agents’ balances of General Insurance Companies. (Refer Chapter 13)

(b) When should an auditor make a disclaimer opinion in his Audit report? (Refer AAS 28)

(c) What are the general principles that propriety audit need to conform? (Refer Chapter 9)

7. (a) “When the computer information systems are significant, the auditor should obtain an understanding of the CIS environment and whether it may influence the assessment of inherent and control risk.” What factors an auditor has to consider in such risk assessment? (Refer AAS 29)

(b) In an operational audit performance evaluation, what factors can cause unsatisfactory production performance? (Refer Chapter 7)

8. Write short notes on any four of the following:

(a) Usefulness of careful and adequate audit planning. (Refer AAS 8)

(b) Verification of Margin Deposit Book in the audit of Members of Stock Exchanges. (Refer Chapter 19)

(c) Professional Negligence. (Refer Part I, Clause 7, Second Schedule)

(d) Purposes for which analytical procedures are used by auditors. (Refer AAS 14)

(e) Unqualified opinion in the context of the Auditor’s report. (Refer AAS 28)

(f) Assessing the reliability of Audit evidence. (Refer AAS 5)

Amendments applicable for November, 2009 examination

  1. AAS/ SA;
  2. SQC 1;
  3. Code of Ethics;
  4. Clause 49;
  5. NBFC;
  6. MSMED Act Reporting;
  7. Bank Audit

Important Topics for Advanced Auditing

  1. Appointment of Auditor by Special Resolution: Material date for 25% holding of subscribed share capital
  2. Audit of Branch Accounts
  3. Appointment of Special Auditor u/s 233A
  4. Audit Strategy
  5. Dividends and the related Rules on transfer of profits to reserves
  6. Final Dividend vs. Interim Dividend
  7. Corporate Form of Practice by CA
  8. New Disciplinary Mechanism
  9. Clause 5, 6, 7 and 8 of Part I, Schedule First
  10. Clause 7 and Clause 10 of Part I, Schedule Second
  11. Part IV and Part III of Schedule First and Schedule Second respectively
  12. Guidelines for website by CA
  13. Calculation of turnover u/s 44AB
  14. Clause 12A, 17, 21, 24, 27 and 32 of Form 3CD
  15. Audit of Public Trusts
  16. True and Fair cost of production
  17. Propriety Cost audit
  18. Management Audit and its objectives
  19. Financial Audit vs. Management Audit vs. Operational Audit vs. Internal Audit
  20. Types of Management Audit Reports
  21. Practical question on drafting Management Control Questionnaire (MCQ)
  22. Audit Trail
  23. Approaches to EDP Audit
  24. Service Bureau
  25. “The objective and scope of audit does not change in CIS environment.” Comment
  26. Propriety Audit and its types
  27. Propriety elements in CARO
  28. Investigation on behalf of incoming auditor
  29. Investigation for advancing loan
  30. Practical Question 4 from Chapter 10 (Question on Page 147 of the book)
  31. Due Diligence and contents of DDR report
  32. CARO applicability on Private Limited Companies
  33. Clauses of CARO dealing with: (i) End use of Funds, (ii) Section 301, (iii) Statutory Dues and (iv) Other Dues, (v) Frauds
  34. Classification of Investments by Banks
  35. Concurrent Audit
  36. AS 11, AS 17 and Banks
  37. NOSTRO and VOSTRO Accounts of Banks
  38. Solvency Margin
  39. Valuation of Investments by General Insurance Companies
  40. Reinsurance
  41. NBFC vs. Banks
  42. Classification of NBFC as per new guidelines of RBI
  43. Appointment of Auditor in Cooperative Societies
  44. Borrowings and Loans for Cooperative Societies
  45. Appropriation of Profits, Overdue Principal and Interest in case of Cooperative Societies
  46. Excise Audit 2000
  47. Accounting Aspects for Mutual Funds
  48. Whole Chapter on Members of Stock Exchanges, specially Margins, Circuit Breakers, Contract Notes, Types of Market in NEAT system, Limit Orders, Types of books and records
  49. New definition of Independent Directors under Clause 49
  50. CEO/ CFO certification under Clause 49
  51. Whistle Blower Policy
  52. Audit Committee
  53. Energy Audit and Environmental Audit
  54. Peer Review
  55. SOX
  56. Clause 41
  57. AAS 11, 26, 14, 15, 17, 23, 28, 29, 30 to 35
  58. Drafting of (i) Letter of Engagement and (ii) Management Representation Letter
  59. Guidance Notes: Independence of Auditors, Section 227(3)(e) and (f) reporting, Financial Information in Offer Document
  60. Practice Paper 3 and Practice Paper 5 of the Book

Contact CA Kamal Garg

Students may feel free to contact me at cakamalgarg@gmail.com

Learning Centers

Chennai: Mr. C K Balaji at 09840954207
Bangalore: Mr. K R Sreedhaeran at 09444162695
Ernakulam: Mr. Gopan B Menon at 09447170048

visit at www.sreeramcoachingpoint.com

Our Strategy

Over past few years, we have developed our class room guidance for students in a such a way that they will feel themselves motivated and confident enough to face the examination. It is said that half the battle is won if you are ready from heart and soul. At our class rooms, we follow the following pedagogy:
  1. Guiding the students what to write and how to write in Audit examination;
  2. Providing the priority of those chapters and topics that need to be prepared first;
  3. Preparing the students for AAS and SA in a "Never you Forget Style";
  4. Explaining the provisions of "Professional Ethics" with several illustrations;
  5. Coverage of Special Audits with practical examples;

All the above are covered through Power Point Presentations

Can 60+ be scored in Advanced Auditing for CA Final

Generally students do have the perception that Advanced Auditing being a theory paper makes it difficult to score even more than 50. But I am of the opinion that Advanced Auditing is basically a practical paper which tests the application of knowledge gained in accountancy, corporate and other laws and even in other subjects. I believe an earnest and strategically planned preparation of this paper can make students score even 60+. What is thus required is to chalk out a plan as to "What to Prepare and How to Prepare" and not "What we want to Prepare"

About CA Kamal Garg

  1. Guest speaker at NIRC of ICAI, New Delhi and CIRC of ICAI, Jaipur & NOIDA for GMCS
  2. Guest speaker for IFRS at IBC & PKG, Mumbai, the associate group of KPMG IFRS Training Institute
  3. Author of ‘Accounting Standards and IFRS’ published by Bharat Law House (BLH)
  4. Author of ‘Auditors’ Practice Manual’ published by BLH
  5. Author of ‘Handbook on Company’s Balance Sheet and Profit & Loss Account’ published by BLH
  6. Author of ‘Handbook on Internal Auditing’ published by BLH
  7. Author of the book on ‘Professional Approach to Advanced Auditing’ for CA (Final) studies published by BLH
  8. Author of the book on ‘Systematic Approach to Auditing’ for CA (PCC) studies published by BLH
  9. Author of the book on ‘Mercantile Laws’ for CA (CPT) published by BLH
  10. Contributed Gist of Accounting Standards and Auditing and Assurance Standards for Vol. 2 of Company Law published by BLH
  11. Contributed various articles for NIRC of ICAI Newsletter and a series of articles on ‘Delhi Value Added Tax (DVAT) – Taxation, Accounting and Auditing Aspects’ for the Journal Tax and Corporate Referencer (TCR)
  12. Contributed various articles on External Commercial Borrowings (ECB), Direct Taxes, Foreign Investments for TCR