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Thursday, October 4, 2012

7 Questions on Advanced Auditing for CA Final: Check your progress

7 Questions on Advanced Auditing for CA Final: Check your progress

Important Questions:

1. CA X was appointed as the auditor of ABC Limited for 2009-2010. Since he declined to accept the appointment, the Board of Directors appointed CA Y as the auditor in place of CA X, which was also accepted by CA Y. [Hint: Clause 9, Part I, First Schedule of the CA Act]

2. CA Z who is a leading Income Tax Pr
actitioner and consultant in Jaipur is also trading in derivatives [Hint: He is not rendering other services, this Sec 2(2)(iv) of CA Act not required. Discuss Clause 11, Part I, First Schedule on engagement in other occupation]

3. A Company’s net worth is eroded and creditors are unpaid due to liquidity constraints. The management represents to the statutory auditors that the promoter’s wife is expected to give an unsecured loan to meet the liquidity constraints and that negotiations are underway to secure large export orders [Hint: SA 570, CARO Clause 4(iii)]

4. Mr. Ram a relative of a Director was appointed as an auditor of the company. Comment [Hint: being relative not a disqualification u/s 226. Discuss Clause 4, Part I, Second Schedule of the CA Act]

5. Mr. X, director of ABC Limited made a purchase contract for Rs. 10,00,000 with the company. Comment [Hint: Section 301, Clause 4 (v) of CARO]

6. The audit report of P Limited for the year 2010-2011 contained a qualification regarding non-provision of doubtful debts. As the statutory auditor of the company for the year 2011-2012, how would you report, if:
(i) The company does not make provision for doubtful dents in 2011-2012.
(ii) The company makes adequate provision for doubtful debts in 2011-2012 [Hint: SA 540, SA 510, and SA 710]

7. While conducting the statutory audit of ABC Limited, you come across IOUs amounting to Rs. 2 crores as against a cash balance shown in the books at Rs. 2.10 crores. You also observe that despite similar high balances throughout the year, small amounts of Rs. 50,000 are withdrawn from the Bank to meet day to day expenses. Comment. [Hint: SA 240, CARO Clause 4 (vii), 4 (xxi), Section 227 (3) (e)]


  1. thank u very much sir for ur helping hand

  2. Thank you for useful information. I got some information from final subject