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Friday, May 30, 2014

Suggested Hints to Advanced Auditing and Professional Ethics – May 2014 Question Paper

Suggested Hints to Advanced Auditing and Professional Ethics – May 2014 Question Paper
Q. No.:
Suggested Hints
1 (a)
Refer AS 29, SA 620, SA 580 and SA 230
1 (b)
Refer SAE 3400 and Clause 3, Part 1, Second Schedule to the Chartered Accountants Act, 1949
1 (c)
Refer SA 240 (including consideration for withdrawal from engagement), SA 580, CARO [Clause 4(xxi)], Section 227(3)(e), SA 315, SA330 and SA 230
1 (d)
Refer SA 505, SA 450 and SA 230
2 (a)
Refer SAE 3400 and Clause 3, Part 1, Second Schedule to the Chartered Accountants Act, 1949
2 (b)
Refer Clause 1, Clause 12, Part 1, First Schedule to the Chartered Accountants Act, 1949
2 (c)
Refer Clause 3, Part II, Second Schedule to the Chartered Accountants Act, 1949
2 (d)
Refer Clause 1, Clause 3, Part 1, First Schedule to the Chartered Accountants Act, 1949 as well as Regulation 53A, 53B and 53C of Chartered Accountants Regulations, 1988
3 (a)
Refer Section 227 for auditor’s duty to consider Branch Audit Report alongwith Bracnh Audit and its exemption requirements u/s 228
3 (b)
Refer Section 292A of the Companies Act, 1956
3 (c)
Refer Companies (Transfer of Dividends to Reserves) Rules, 1975. If prescribed conditions are fulfilled then such a transfer is possible.
3 (d)
Refer Clause 1, Clause 7, Part 1,Second Schedule to the Chartered Accountants Act, 1949 alongwith Kingston Cotton Mills Company case.
4 (a) & (b)
Refer Clause 4(iii) and Clause 4(v) for drafting suitable CARO Reporting
4 (c)
Refer Guidance Note on Audit of Consolidated Financial Statements
5 (a)
Refer Chapter on Bank Audit for NPA norms for Agricultural Advances (Direct Question)
5 (b)
Refer Chapter on GIC Audit for verification of Outstanding Premium and Agents’ Balances (Direct Question)
5 (c)
General Question. The points that may be included could be verification of physical existence, examination of any existing charge on these stock and receivables, assessment of market value vis-à-vis amount of advances involved, stocks and receivables aging analysis, any litigation/ dispute going on in respect of these stocks and receivables, etc.
6 (a)
Refer CAG Questionnaire in the Chapter of PSU Audit
6 (b)
Its not out of the scope because operational audit is being carried out to ensure that all the management functions like planning, organizing, staffing, directing and controlling are working effectively and efficiently. Such kind of error is very much in scope because such an existence of error indicates that control system (controlling function) is not sound.
6 (c)
Refer Section 235 to 237 in Paper 4: Corporate and Allied Laws [Chapter: Inspection and Investigation]
6 (d)
Refer Chapter: Other Aspects [Areas not included are other than attestation services, such as:
(i)         Management Consultancy Engagements;
(ii)        Representation before various Authorities;
(iii)       Engagements to prepare tax returns or advising clients in taxation matters;
(iv)       Engagements solely to assist the client in preparing, or compiling information other than financial statements;
(v)        Testifying as an expert witness;
(vi)       Providing expert opinion on points of principle, such as Accounting Standards or the applicability of certain laws, on the basis of facts provided by the client
7 (a)
Refer Chapter on NBFC Audit [Direct Question]
7 (b)
Refer Chapter on CIS Audit and SA 315 [Direct Question]
7 (c)
Refer SA 315 and SA 330 [Direct Question]
7 (d)
Refer SA 315, SA 330 and SA 450 [Direct Question]
7 (e)
Refer SA 450 read with SA 530

Tuesday, April 1, 2014

Important Topics for Advanced Auditing, May 2014

Important Topics for Advanced Auditing, May 2014

1.            Appointment of Auditor by Special Resolution: Material date for 25% holding of subscribed share capital (see page 13 of the book)
2.            Audit of Branch Accounts and Exemption thereto (see page 13 & 14 of the book)
3.            Appointment of Special Auditor u/s 233A and/ vis-à-vis communication under Clause 8 Part I of First Schedule of Chartered Accountants Act, 1949 (as amended) (See class notes)
4.            Audit Strategy (Short Note) (see page 17 of the book)
5.            Dividends and the related Rules on transfer of profits to reserves (see class notes)
6.            Declaration of Dividend in the event of presence of past losses (section 205) (see class notes)
7.            Final Dividend vs. Interim Dividend (see class notes (+) page 22 of the book)
8.            Corporate Form of Practice by CA (Management Consultancy Company, i.e., MCC) (see class notes) and KYC Norms (page 76 of the Book)
9.            New Disciplinary Mechanism (Distinction b/w powers of Board of Discipline and Disciplinary Directorate) (see class notes)
10.        Clause 2, 3, 4, 5, 6, 7, 8, 9 and 12 of Part I, First Schedule (see class notes)
11.        Clause 7 and Clause 10 of Part I, Second Schedule (see class notes)
12.        Part IV and Part III of Schedule First and Schedule Second respectively (see class notes)
13.        Council General Guidelines 2008 under Code of Ethics (see class notes)
14.        Guidelines for Website by CA (see class notes)
15.        Calculation of Turnover u/s 44AB (see page 85 of the book)
16.        Clause 12A, 17, 17A, 18, 21, 22, 24, 27 and 32 of Form 3CD (see class notes)
17.        Audit of Public Trusts (see page 105 of the book)
18.        Cost Audit Applicability, Steps, True and Fair cost of production, Contents of Cost Audit Report (see pages 112 to 114 of the Book)
19.        Propriety Cost audit (see page 115 of the book)
20.        Management Audit and its objectives (see page 116 of the book)
21.        Financial Audit vs. Management Audit vs. Operational Audit vs. Internal Audit (see page 118 of the book)
22.        Types of Management Audit Reports (see page 119 of the book)
23.        Practical question on drafting Management Control Questionnaire (MCQ) (general question to be answered as per guidelines discussed for ‘Due Diligence’ Chapter)
24.        Audit Trail (see class notes)
25.        Approaches to EDP Audit (see class notes)
26.        Service Bureau/ BPO (see SA 402, SAE 3402) (see class notes)
27.        “The objective and scope of audit does not change in CIS environment.” Comment (see class notes)
28.        Propriety Audit and its types (specially objective and scope of PSU audit whether different from statutory audit and Section 619 Questionnaire) (see para 2 and 3 of chapter 9 of the book, pages 133 to 135)
29.        Propriety elements in CARO (see class notes)
30.        Investigation on behalf of Incoming Partner (General Question: see class notes for Due Diligence chapter)
31.        Investigation for Advancing Loan (General Question: see class notes for Due Diligence chapter)
32.        Section 217 requirements for Board of Directors explanation about statutory auditors’ adverse remarks (see class notes)
33.        Due Diligence and contents of DDR (Due Diligence Review) Report (see class notes)
34.        CARO applicability on Private Limited Companies (see class notes)
35.        Clauses of CARO specially dealing with: (i) End use of Funds and Company Trading in Shares, (ii) Section 301, (iii) Statutory Dues, (iv) Other Dues, (v) Term Loans, (vi) Internal Audit, (vii) Frauds, (viii) Sick Company, (ix) Fixed Assets, and (x) Inventories [(see class notes)]
36.        Classification of Investments by Banks and Non-performing Assets with NPA Exemptions [(see class notes)]
37.        Concurrent Audit, Corporate Debt Restructuring and Credit Card Operations in a Bank [(see class notes)]
38.        AS 11, AS 17 and Banks (see class notes)
39.        Donations made by Banks – RBI Requirements (see class notes)
40.        NOSTRO and VOSTRO Accounts of Banks (see class notes)
41.        Solvency Margin (see class notes)
42.        Valuation of Investments by General Insurance Companies (see page 233 of the book)
43.        Reinsurance, Contents of Management Report for GIC (see class notes)
44.        NBFC vs. Banks (see class notes)
45.        Classification of NBFC as per new guidelines of RBI (see class notes)
46.        Appointment of Auditor in Cooperative Societies and Books of Accounts to be maintained by Society (see class notes)
47.        Borrowings and Loans for Cooperative Societies (see class notes)
48.        Appropriation of Profits, Overdue Principal and Interest in case of Cooperative Societies (see class notes)
49.        Features of Indirect Tax Audit (see para 2 at page 270), Excise Audit 2000 (see page 271 of the book)
50.        Accounting Aspects for Mutual Funds (specially the treatment of Underwriting Commission and Unit Premium Reserve), Contents of Audit Report (see class notes)
51.        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, Proprietary Trading (Beneficiary Account) and Pool Trading (Pool Account), Contents of Audit Report (see class notes)
52.        SEBI Investigation for question 50 and 51 above (see class notes)
53.        New definition of Independent Directors under Clause 49 (see class notes)
54.        CEO/ CFO certification under Clause 49 (see class notes)
55.        Whistle Blower Policy under Clause 49 (see class notes)
56.        Audit Committee under Clause 49 (see class notes)
57.        Energy Audit and Environmental Audit (see markings under chapter 20)
58.        Peer Review (can a peer reviewer access the clients’ premises and books of accounts, etc.)  (see class notes)
59.        SOX (Clause 49 known as Indian SOX) (see class notes)
60.        Clause 41 (see class notes)
61.        SA 240, 315, 330, 500 & 501, 620, 580, 299, 520, 530, 570, 560, 540, 510, 710, 505, 700, 705, 720, SRS 4410, 4400, SRE 2400, SAE 3400, SA 800 series (see class notes)
62.        Drafting of (i) Letter of Engagement and (ii) Management Representation Letter (see class notes and page 551 for a very general reference only)
63.        Guidance Notes: Independence of Auditors, Section 227(3)(e) and (f) reporting, Financial Information in Offer Document (see page 527 of Book), Consolidation of Financial Statements (specially the concept of permanent consolidated adjustments and current consolidated adjustments), Revision of Audit Report (see class notes)
64.        Auditor’s Right to Lien (Short Note) (see page 8 of the book)
65.        Auditor’s Right to attend General Meeting (Section 231) (see class notes)
66.        Xerox copies of books of accounts vis-à-vis Auditor’s obligations (see SA 580)
67.        From Company Law: Short Note on XBRL Filing, Buy Back and Deposit Acceptance Rules (see class notes)
68.        May 2004, May 2013 Question Papers and Practice Paper

Accounting Standards (see Financial Reporting Syllabus) and Revised Schedule VI form the integral part of Advanced Auditing and Professional Ethics Paper