Here is a model paper on Advanced Auditing for CA Final students
preparing for the forthcoming exams.
1. Give your views on the following:
(a) Alpha Ltd subscribes for 100,000 equity shares of Rs10 each of
Beta Ltd., of which Rs 7 is paid up at a total cost of Rs 7,00,000.
Alpha Ltd proposes to show the investments at the book value of Rs
1,000,000 and disclose the uncalled amount of Rs 3,00,000 as a current
liability.
(b) A power project in the construction stage raised funds for its
project through a public issue and placed a part of the funds in a
fixed deposit with a nationalszed bank. Interest on such fixed deposit
for the year ended 31.03.2011 is Rs7.000.000. The Assessing officer
proposes penalty against the company for not subjecting the Accounts
to tax audit u/s. 44AB
(c) A private limited Ccmpany promoted by the spouse and children of a
partner of a firm of Chartered Accountants is appointed as internal
auditors of a public limited company audited by the firm.
(d) A company calculates income tax payable by it for the Assessment
year 2011/12 at Rs 10.00 lakh. It
has TDS of Rs 3.00 lakh and paid Advance Tax of Rs 6.50 laks. How
would disclose it in the Financial Statements as on 31.03.2011?
2. Determine if the following circumstances constitute any
professional misconduct.
(a) A chartered accountant with a certificate of practice and employed
in a firm of chartered accountants takes up audit of branches of a
bank in his name.
(b) The spouse of a practising chartered accountant heads the credit
department of a private sector bank. The CA is assigned the job of
credit appraisal of applicants for loans.
(c) A CA opens offices at two localities of a city, which are 70 km
apart and heads both the offices.
(d) A CA operates a web site, which provides links to the Ministry of
Company Affairs, income-tax department and to a private sector bank
which facilitates direct payment of income tax and dues to the MCA
3. (a) How do you audit conversion of debentures in to equity?
(b) You are appointed at the Annual General Meeting as the statutory
auditor under Companies Act and also Tax audit under the Income-Tax
Act. How do you react?
(c) When you are appointed as the auditor in place of another auditor,
what points do you consider to avoid unpleasantness?
4. (a) What points do you consider while taking up audit of borrowers
of a bank?
(b) What are the special points to be considered in the audit of a
multi state co-operative society?
5. A manufacturer of cars is contemplating to set up a facility for
the manufacture of tyres for the cars. You are required to assess the
viability of the same and carry out a management audit. Prepare a
management audit questionnaire.
6. (a) Trade by a stock broker for himself poses a problem while
carrying out the audit of stock brokers. Comment.
(b) Due diligence audit is required only at the time of mergers and
acquisitions. Do you agree?
(c) You are appointed as auditor u/s. 142(2A) of the Income-Tax Act.
Whom do you report to? How is the audit fee determined and who pays
the same. Do you need to communicate to the statutory auditor of the
Company?
7. (a) What is energy audit? What are the aims and objectives of the same?
(b) A nationalised bank directs its branches to pay professional tax
on the receipt of notice from the Government. The bank contends that
it is not a prior period item. Do you agree? Give reasons.
(c) Discuss the role of the Insurance Regulatory and Development
Authority (IRDA) in the context of audit of insurance companies.
8. Write short notes on any four of the following
(a) Negative confirmations
(b) Management representation
(c) Subsequent events
(d) Audit estimates
(e) Form 3 CB
(The author is a Hyderabad-based chartered accountant.)
preparing for the forthcoming exams.
1. Give your views on the following:
(a) Alpha Ltd subscribes for 100,000 equity shares of Rs10 each of
Beta Ltd., of which Rs 7 is paid up at a total cost of Rs 7,00,000.
Alpha Ltd proposes to show the investments at the book value of Rs
1,000,000 and disclose the uncalled amount of Rs 3,00,000 as a current
liability.
(b) A power project in the construction stage raised funds for its
project through a public issue and placed a part of the funds in a
fixed deposit with a nationalszed bank. Interest on such fixed deposit
for the year ended 31.03.2011 is Rs7.000.000. The Assessing officer
proposes penalty against the company for not subjecting the Accounts
to tax audit u/s. 44AB
(c) A private limited Ccmpany promoted by the spouse and children of a
partner of a firm of Chartered Accountants is appointed as internal
auditors of a public limited company audited by the firm.
(d) A company calculates income tax payable by it for the Assessment
year 2011/12 at Rs 10.00 lakh. It
has TDS of Rs 3.00 lakh and paid Advance Tax of Rs 6.50 laks. How
would disclose it in the Financial Statements as on 31.03.2011?
2. Determine if the following circumstances constitute any
professional misconduct.
(a) A chartered accountant with a certificate of practice and employed
in a firm of chartered accountants takes up audit of branches of a
bank in his name.
(b) The spouse of a practising chartered accountant heads the credit
department of a private sector bank. The CA is assigned the job of
credit appraisal of applicants for loans.
(c) A CA opens offices at two localities of a city, which are 70 km
apart and heads both the offices.
(d) A CA operates a web site, which provides links to the Ministry of
Company Affairs, income-tax department and to a private sector bank
which facilitates direct payment of income tax and dues to the MCA
3. (a) How do you audit conversion of debentures in to equity?
(b) You are appointed at the Annual General Meeting as the statutory
auditor under Companies Act and also Tax audit under the Income-Tax
Act. How do you react?
(c) When you are appointed as the auditor in place of another auditor,
what points do you consider to avoid unpleasantness?
4. (a) What points do you consider while taking up audit of borrowers
of a bank?
(b) What are the special points to be considered in the audit of a
multi state co-operative society?
5. A manufacturer of cars is contemplating to set up a facility for
the manufacture of tyres for the cars. You are required to assess the
viability of the same and carry out a management audit. Prepare a
management audit questionnaire.
6. (a) Trade by a stock broker for himself poses a problem while
carrying out the audit of stock brokers. Comment.
(b) Due diligence audit is required only at the time of mergers and
acquisitions. Do you agree?
(c) You are appointed as auditor u/s. 142(2A) of the Income-Tax Act.
Whom do you report to? How is the audit fee determined and who pays
the same. Do you need to communicate to the statutory auditor of the
Company?
7. (a) What is energy audit? What are the aims and objectives of the same?
(b) A nationalised bank directs its branches to pay professional tax
on the receipt of notice from the Government. The bank contends that
it is not a prior period item. Do you agree? Give reasons.
(c) Discuss the role of the Insurance Regulatory and Development
Authority (IRDA) in the context of audit of insurance companies.
8. Write short notes on any four of the following
(a) Negative confirmations
(b) Management representation
(c) Subsequent events
(d) Audit estimates
(e) Form 3 CB
(The author is a Hyderabad-based chartered accountant.)
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