1. As a Statutory Auditor, how would you deal with the following?
(a) The Balance Sheet of Meera Rescue Services Limited as at 31.03.2005 shows Revaluation Reserves amounting to Rs. 5 crores. The company incurred a loss of Rs. 4 crores during the year 2005-2006. The chief accountant of the company proposes to adjust the aforesaid loss against the Revaluation reserve.
(b) ABC Ltd. has taken a factory on operating lease at NOIDA. During the year 2005 it relocated its operations to Ghaziabad. However the old lease cannot be cancelled and it has to continue for the next few years. The old factory can also not be re-let to another user.
(c) XYZ Limited is in the business of making bricks. The company uses furnace to heat the bricks. During the year 2005-06, one furnace bursted due to high steam pressure. The company spent Rs. 2,60,000 to get the furnace in order. The Engineers said that the furnace can now work in the usual manner.
(d) Mr. Lal is the Director (Sales) in Hum-Tum Limited. He is drawing a monthly remuneration of Rs. 75,000 plus sales incentives of 10% on the sales made.
2. Comment on the following with reference to the Chartered Accountants Act, 1949 and Schedules thereto:
(a) The liability of audit fees of a company has been outstanding since last two years. This year after completing the audit, the auditor informs the secretary of the company over phone to bring the cheque of all the three years and take the delivery of the audit report. Discuss briefly the above statement in the context of the right of auditor to receive the remuneration.
(b) M/s Suraj and Co. are the Cost Auditors of Beauty Cosmetics Limited duly appointed u/s 233B of the Companies Act, 1956. Mr. Kiran, a chartered accountant is a part time employee of the M/s Suraj and Co. and accepts his appointment as a statutory auditor u/s 224 of the Companies Act, 1956, of Beauty Cosmetics Limited.
(c) Mr. L has charged a fee for representing his client in an Income Tax Appeal based on the expected relief to his client as a result of the appeal.
(d) Mr. Rahim is a practicing Chartered Accountant. He does not maintain the books of accounts.
3. Answer the following:
(a) What do you understand by Audit Risk? What is the relationship between different types of Audit Risks?
(b) What is your understanding about the term “Audit of Indirect Taxes”? Explain the steps involved in the indirect tax audit.
4. Answer the following:
(a) What are the matters that should be included in the Auditor’s Report on NBFC?
(b) Mr. Rahul (Director – Finance) of M/s XYZ Limited, approached to Good Bank Limited with a request to avail loan for the import of machinery costing Rs. 80 lacs. The Bank appointed you to investigate whether it is worthwhile to give loan to the company. What steps would you follow in this regard?
5. Answer the following:
(a) “There is no need to report in thick type or italics such matters which do not have any effect on the financial statements.” Comment.
(b) What are the different kinds of Internal Controls that should be considered by the auditor to determine the nature, timing and extent of his audit procedures in an EDP audit?
6. Answer the following:
(a) What steps should be followed by the auditor to verify the donations made by the bank?
(b) State the provisions regarding the management expenses in the context of general insurance business.
7. Answer the following:
(a) What are the provisions as regards remuneration of auditor? Mr. A is an auditor of a company. He was paid Rs. 45,000 towards his remuneration (comprising Rs. 25,000 as audit fees, including service tax; Rs. 10,000 towards preparing and filing Form 8, 13 regarding registration of charges and Rs. 10,000 as other charges). How would you disclose this remuneration in the Profit and Loss Account?
(b) What are the requirements of CARO, 2003 as regards the internal audit system?
8. Write short notes on any four of the following:
(a) Audit Committee.
(b) Propriety Elements of CARO, 2003.
(c) Special Report to the Registrar of Co-operative Societies.
(d) Key Management Personnel.
(a) The Balance Sheet of Meera Rescue Services Limited as at 31.03.2005 shows Revaluation Reserves amounting to Rs. 5 crores. The company incurred a loss of Rs. 4 crores during the year 2005-2006. The chief accountant of the company proposes to adjust the aforesaid loss against the Revaluation reserve.
(b) ABC Ltd. has taken a factory on operating lease at NOIDA. During the year 2005 it relocated its operations to Ghaziabad. However the old lease cannot be cancelled and it has to continue for the next few years. The old factory can also not be re-let to another user.
(c) XYZ Limited is in the business of making bricks. The company uses furnace to heat the bricks. During the year 2005-06, one furnace bursted due to high steam pressure. The company spent Rs. 2,60,000 to get the furnace in order. The Engineers said that the furnace can now work in the usual manner.
(d) Mr. Lal is the Director (Sales) in Hum-Tum Limited. He is drawing a monthly remuneration of Rs. 75,000 plus sales incentives of 10% on the sales made.
2. Comment on the following with reference to the Chartered Accountants Act, 1949 and Schedules thereto:
(a) The liability of audit fees of a company has been outstanding since last two years. This year after completing the audit, the auditor informs the secretary of the company over phone to bring the cheque of all the three years and take the delivery of the audit report. Discuss briefly the above statement in the context of the right of auditor to receive the remuneration.
(b) M/s Suraj and Co. are the Cost Auditors of Beauty Cosmetics Limited duly appointed u/s 233B of the Companies Act, 1956. Mr. Kiran, a chartered accountant is a part time employee of the M/s Suraj and Co. and accepts his appointment as a statutory auditor u/s 224 of the Companies Act, 1956, of Beauty Cosmetics Limited.
(c) Mr. L has charged a fee for representing his client in an Income Tax Appeal based on the expected relief to his client as a result of the appeal.
(d) Mr. Rahim is a practicing Chartered Accountant. He does not maintain the books of accounts.
3. Answer the following:
(a) What do you understand by Audit Risk? What is the relationship between different types of Audit Risks?
(b) What is your understanding about the term “Audit of Indirect Taxes”? Explain the steps involved in the indirect tax audit.
4. Answer the following:
(a) What are the matters that should be included in the Auditor’s Report on NBFC?
(b) Mr. Rahul (Director – Finance) of M/s XYZ Limited, approached to Good Bank Limited with a request to avail loan for the import of machinery costing Rs. 80 lacs. The Bank appointed you to investigate whether it is worthwhile to give loan to the company. What steps would you follow in this regard?
5. Answer the following:
(a) “There is no need to report in thick type or italics such matters which do not have any effect on the financial statements.” Comment.
(b) What are the different kinds of Internal Controls that should be considered by the auditor to determine the nature, timing and extent of his audit procedures in an EDP audit?
6. Answer the following:
(a) What steps should be followed by the auditor to verify the donations made by the bank?
(b) State the provisions regarding the management expenses in the context of general insurance business.
7. Answer the following:
(a) What are the provisions as regards remuneration of auditor? Mr. A is an auditor of a company. He was paid Rs. 45,000 towards his remuneration (comprising Rs. 25,000 as audit fees, including service tax; Rs. 10,000 towards preparing and filing Form 8, 13 regarding registration of charges and Rs. 10,000 as other charges). How would you disclose this remuneration in the Profit and Loss Account?
(b) What are the requirements of CARO, 2003 as regards the internal audit system?
8. Write short notes on any four of the following:
(a) Audit Committee.
(b) Propriety Elements of CARO, 2003.
(c) Special Report to the Registrar of Co-operative Societies.
(d) Key Management Personnel.
(e) Rolling Settlement.
SIR NOW CARO 2003 IS NOT APPLICABLE BUT CARO 2005 IS APPLICABLE
ReplyDeleteSIR PLZ POST THE DETAILED ANSWERS AS NEW SA ARE APPLICABLE
THANKING U IN ANTICIPATION.
Although its CARO 2005, still we call it as CARO 2003 because thats as amended
ReplyDeleteTHANKS FOR REPLYING SIR
ReplyDeleteBUT SIR PLZ POST ANSWER FOR ABOVE PAPER ALSO SIR PUT SOME IMP TOPICS AND TIPS AS NOW ALL QUESTIONS ARE COMPULSORY
PLZ SIR HELP US.