Gurukripa’s Guideline Answers for Nov 2015 Exams CA Inter (IPC) – Auditing & Assurance

Gurukripa’s Guideline Answers to Nov 2015 Exam Questions

CA Inter (IPC) Auditing and Assurance
Question No.1 is compulsory (4 × 5=20). Answer any 5 from remaining 6 Qns (16 × 5=80). [Any 4 out of 5 in Q.7]

Note: Page References given here are from “Padhuka’s Students’ Handbook on Auditing & Assurance”
Students’ may also refer to Padhuka’s Auditing & Assurance – A Ready Referencer for CA IPC, for quick revision.

Q Question Answer/Reference M
Discuss the following:
(a) With reference to SA–320 indicate the factors which
may affect the identification of an appropriate Refer: SA–320, Page 64, Point B.2
5
benchmark in determining Materiality for the Financial [See Page 66, Q.No.10, F – N 13 Qn.]
Statement as a whole.
(b) The Assertions used by Auditor to consider potential
Refer: SA–315, Page 59, Para A.103, Point B 5
1 misstatements about account balances at the period end.
(c) ‘P’ an Auditor decides not to send a new Audit
engagement letter to G Ltd every year. Whether he is right Refer: SA–210, Page 14, Point 6
5
in his approach? State the circumstances where sending [See Page 16, Q.No.9, N 11 Qn.]
New Engagement Letter, would be appropriate.
(d) State the principal aspects to be covered in an audit Refer: Page 1.11, Para 1.3.2
5
concerning Financial Statement of Account. [See Page 1.22, Q.No.38, M 94, M 96 Qn.]
State with reasons (in short) whether the following statements
are correct or incorrect: (Answer any eight)
(i) AB & Co. is an Audit Firm having Partners Mr. A and Mr. B
Incorrect.
Mr. C, the relative of Mr. B is holding Securities having
Refer: Page 10.1, Para 10.1.2, Point 1d 2
face value of ` 2,00,000 in XYZ Ltd. AB & Co. is qualified
for being appointed as an Auditor of XYZ Ltd.
(ii) Working Papers are property of Client, as it contains Incorrect.
2
Client’s information. Refer: Page 26, Point 5, 3b
(iii) The Auditor of a Limited Company wanted to refer to the
Auditor has right to refer Minutes Book
Minute Books during audit, but Board of Directors refused 2
[See Page 10.16, N 01, M 03, M 05 Qn.]
to show the Minute Books to the Auditors.
(iv) The Auditor has to report to Central Government within 90 Incorrect.
2
days of his knowledge of an offence involving fraud. Refer: Page 10.19, Para 10.3.6, Point 8
(v) Manner of rotation of Auditor will not be applicable to
2 Company A, which is having Paid Up Share Capital of ` 15
Incorrect. Refer: Page 10.10, Para 10.2.7 2
Crores and having Public Borrowing from Nationalized
Bank of ` 50 Crores because it is a Private Limited Company.
(vi) The Auditor should study the Memorandum and Articles of Incorrect. Refer: Page 12.4, Para 12.1.4,
2
Association to see the validity of his appointment. 12.1.5, [See Page 10.33, Q.No.8, M 10 Qn.]
(vii) Teeming and Lading is one of the techniques of inflating
Incorrect. Refer: Page 1.8, Para 1.2.7B 2
cash payments.
(viii) Managing Director of A Ltd himself appointed the First Invalid. Refer: Page 10.6, Para 10.2.1,
2
Auditor of the Company. [See Page 10.29, Illus.26, N 06 Qn.]
(ix) A Chartered Accountant holding securities of S Ltd having
Incorrect.
Face Value of ` 950 is qualified for appointment as an 2
Refer: Page 10.1, Para 10.1.2, Point 1d
Auditor of the Company.
(x) Mr. N, a Member of the Institute of Chartered Accountant
Incorrect. Refer: Page 10.1, Para 10.1.1,
of England and Wales, is qualified to be appointed as 2
[See Page 10.25, Illus.1, N 04 Qn.]
auditor of Indian Companies.
How will you vouch/ verify the following:
3 Refer: Page 6.6, Para 6.2.3
(a) Refund of General Insurance Premium Paid. 4
[See Q.No.13/Ch.6, N 91, M 95, N 99 Qn.]
 

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 Gurukripa’s Guideline Answers for Nov 2015 Exams CA Inter (IPC) – Auditing & Assurance

Q Question Answer/Reference M
Refer: Page 7.21, Para 7.4.7
(b) Payment of Taxes 4
[See Q.55/Ch.7, RTP, N 91, M 92, N 97 Qn.]
Refer: Page 6.4, Para 6.1.6,
(c) Sale Proceeds of Junk Material [See Q.No.6 / Ch.6, RTP, M 90, N 94, N 01, 4
N 02, M 08, M 09 Qn.]
Refer: Page 8.25, Para 8.5.4 to 8.5.7
(d) Intangible Assets 4
[See Q.62 to 66/Ch.8, Various Exams Qn.]
Refer: Page 49, SA–299,
(a) Mention the points /areas in which all the Joint Auditors
[See Q.No.5/SA–299, RTP, M 98, N 04, N 08, 6
are jointly and severally responsible.
M 09, M 12 Qn.]
(b) Mr. A was appointed Statutory Auditor of P Ltd but he was Refer: Page 83, SA–500,
not able to gather the sufficient audit evidences. Discuss [See Q.No.9 / SA–500, M 90, N 92, N 97, 6
4
how he should proceed to gather more audit evidences. M 11 Qn.]
Refer: Page 9.5, Para 9.3.1, [Also refer AS–29
Principles from Padhuka’s Accounting Book)
(c) Discuss the recognition principles of Contingent Liability. 4
[See Q.No.10,11 / Ch.9, N 94, M 98, M 04,
M 07 Qn.]
(a) Discuss about the provisions for removal of Auditor Refer: Page 10.12, Para 10.3.1,
6
before expiry of term. [See Q.No.20/Ch.10, N 90, N 93 Qn.]
(b) As the Statutory Auditor of A Ltd, you have observed that Refer: Page 6.10, Para 6.3.4, [This Para
the Gross Profit of the Company has decreased in pertains to increase in GP. Students may write
5 similar suitable points for decrease in GP.]
6
comparison to last years. Mention the possible factors
which may be responsible for decrease in Gross Profit. [See Q.No.23/Ch.6, N 99, N 04 Qn.]
(c) State the precautions to be taken to avoid the Refer: Page 1.15, Para 1.4.2, Point 4
4
disadvantage of a Continuous Audit. [See Q.No.47,48/Ch.1, M 13 Qn.]
Refer: Page 22, SA–230, Para A.2,
(a) The form, contents and extent of audit documents depends
[See Q.No.3 / SA–230, N 90, N 06, N 08, 4
on certain factors, Explain with reference to SA–230.
M 09 Qn.]
Refer: Page 68, SA–330, Para 8–11 & Page
(b) Why Tests of Control are performed? Also explain what
2.3, Para 2.1.7 for Tests of Controls 4
6 does they include.
[See Q.No.6,7/ SA–330]
(c) State the Standards issued by AASB which are collectively
Refer: Page 2, SA–Basics Point 5, RTP, M 12 4
known as Engagement Standards.
(d) State the factors which are to be considered in Refer: Page 3.9, Para 3.3.4, 3.3.5,
4
determining Materiality. [See Q.No.29,30/Ch.3, N 07, N 09 Qn.]
Write short notes on any four of the following:
Refer: Page 7.10, Para 7.2.7,
(a) Remuneration paid to Directors in case of a Public Limited
[See Q.No.27/Ch.7, N 92, N 93, M 97, M 99, 4
Company
N 03 N 09, N 13 Qn.]
Refer: Page 8.24, Para 8.5.2,
(b) Payment for Acquisition of Assets 4
[See Q.No.57/Ch.8, M 94 Qn.]
7 Refer: Page 166, SA–705, Para 7
(c) A Qualified Opinion 4
[See Q.No.9/Page 170, Various Exams Qn.]
Refer: Page 1.9, Para 1.2.7D, Also Refer SA–
(d) Fraudulent Financial Reporting 4
240. [See Q.No.29/Ch.1, N 91 Qn.]
Refer: Page 3.5, Para 3.1.10,
(e) Surprise Checks [See Q.No.14 to 18 / Ch.3, RTP M 05, M 08, 4
M 13 Qn.]

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