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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


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