Full Text Transcript
Pt'E MAY2010
- IPce
GQOUPI PAPFR 2
AUDITING AND ASSURANCIr GROUP.IIPAPER.S
AUDITINGANDASSURANCE
Roll No...............................
Total No. of Questions-8] [Total No. of Printed Pages-7
4
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Time Allowed-3 Hours Maximum Marks~lOO
KVS
Answers to questions are to be given only in English except in the case of candidates
who have opted for Hindi medium. If a candidate who has not opted for Hindi
medium, answers in Hindi, his answers in Hindi will not be valued.
Answer all questions.
Marks
1. State with reasons (in short) whether the following statements are True or 10x2
False: =20
(i) While conducting audit of Government Companies, the auditors are paid their
Professional Fees as prescribed by the Government.
(ii) The auditor compares entries in the books of accounts with vouchers and if
two agrees, his work is done.
(iii) Confirmations received by the auditor directly from third parties are conclusive
evidence in support of a transaction.
(iv) Audit Committee is to be formed by each and every company and the auditor
has no compulsion to attend the meeting of the. .Audit Committee.
(v) A company can not declare dividends without providing for depreciation.
(vi) When an auditor identifies a Misstatement resulting from fraud, it is his
responsibility to communicate it to the regulatory and enforcement authorities
apart frpm those charged with governance.
(vii) The auditor should study the Memorandum and Articles of Association to see
the validity of his appointment.
(viii) A special resolution is required by company to authorise issue of shares at
discount.
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(if) The Investments made by the 'company in Government Securities like NSC,
Government Bonds, etc. should be kept in'personal custody ofFinancial Controller
of the Company. . ..
(x) The company in which 15% of subscribed capital is held by State Financial
Corporation and 10% of Subscribed capital is held by General Insurance Co.,
the appointment of auditor can be done by passing a general resolution at
annual general meeting.
2. Comment on the following situations:
(a) MT. Y was appointed as an auditor of PQR Ltd. for the year ended 31.3.2009 6
at Annual General Meeting held on 16.08.2008. Mr. Y has been indebted to
the company for sum of Rs. 10,000 as on 1.4.2008, the opening date of accounting
year which has been subject to his audit. However, Mr. Y having come to
know that he might be appointed as auditor, he repaid the amount on 10.8.2008.
One of the shareholders, complains that the appointment of Mr. Y as an
auditor was invalid because he incurred disqualification U/S 226 of the
Companies Act, 1956.
(b) XYZ (Pvt.) Ltd. has paid up Capital and Reserves of Rs. 60 lacs and 6
secured Loans of Nationalised Banks having sanctioned limit of Rs. 28 lacs
and outstanding balance of Rs. 23 lacs. The turnover of the company is
5.10 crores for the year ended 31.3.2009. A customer returns goods worth
40 lacs on 2.4.2009, out of sales made during the year ended 31.3.2009.
The management of CO. is of the opinion that CARO, 2003 is not applicable
to the company.
(c) C Ltd. declared dividend amounting to Rs. 5 lacs out of~rofits for the year 8
ended 31.3.2009.
Subsequently, it was noticed that company had failed to make provisions for
Outstanding expanses ofRs. 7.80 lacs and Closing stockwas also over v.alued,
which was not reported by auditors of the company. Management of C Ltd.
helds auditors responsible for this situation.
3. A trader is worried that inspite of substantial increase in sales compared to earlier 10
year, there is considerable fall in Gross Profit after satisfying himself that sales
and expenses are correctly recorded and that the valuation of inventories is on
consistent basis, he wants to ensure that purchases have been'truthfully recorded.
How will you proceed with this assignment?
KVS
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4. (a) Discuss Internal Controls in a CIE;;Environment. 5
(b) Differentiate between 'Qualified report' and 'Adverse report'. 5
5. (a) Draft an audit programme for conducting audit of accounts of a Local.. 5 !
Body.
(b) 'The extent of audit procedure performed on corresponding figure is less 5
compared to audit of current period figures', reporting. Justify the
statement with regard to auditor's duties for reporting of comparatives under
AAS 25.
6. (a) 'Doing the audit in EDP environment is simpler since Trial Balance always 5
tallies.'
Analyse the statement critically.
(b) 'A Joint Auditor is not bound by the views of the majority of the joint auditors 5
regarding matters to be covered in the report.'
Justify this statement in the light of responsibilities of Joint Audit9rs under
AAS 12.
7. How would you vouch/verify the following? 5x2=10
(a) Reduction in Share Capital
(b) Receipt of Capital subsidy.
8. Write short notes on the following: 5x2=10
(a) Substantive Procedures
(b) Audit Working Papers.
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KVS Marks
(Hindi Version)
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t rn ~
~ "W~~ en) '<9"I~ct>r~~~I'~ ~ mvrq~ ~ ~ 3tTI-m-B~ ~ %I
~ mvrq~ ~ ~ ~ ~
~ "W8:TT2~1T %, -B ~ %,
"ill~ ~ -B ~ Tfit ~ q1T ~~ict>'1 ~ m-m1
"Bcqrrn ~ ~ ~I
1. ~~ -BCfi"RUT ~ f ~ ~ ~ ~ r'1~r<.1r~d Cf)~ ~ ~ <TI~ : 10x2
=20
~
(i) 'tI~ct>I~~1 ~ d"it8JCf1q1T-qffi:~ (Professional Fees) ctt mcfiT{ &RT
Rmmr~~%1
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- (ii) 3#118JCf~1 ~ ~QI~ld "it ~ Cf>«fT "ill ~ Cfi11i~ m ~ % I
~ ~ ~ ~
(iii) 1:f~ !ITH"BTa.<T(Evidence) d"it~ r'1ulf<!.Jct>"BTa.<T(Conclusive
evidence) ~ %1
(iv) ~ ~ ~ en) d"it&JU~T (Audit Committee) GRRT~ % 3W: d"it8JCf1en)
~ ~ ~1(H<!.Jc~t> %1
. (v) ~ ~"'!rfCf~ (Provision for depreciation) ~ ~"ffi~ (D'ividend) ~ ~
~~%I
(vi) ~ 3iiIl8JCfe1n)~ Cfi11("F2raud) q1T1:fC~IT %"ill~ rq-p-iiC\I~~1 %~ ~
~
~~ 3tR 3tR r~<!.Jlr~d3TI~ct>I~<!C.JfIi'T(Regulatory and E~fo~cing Authorities)
~
Cfil:1
~ ~ ~ ~ ~ ~
(vii) CfiT:w:Rt 'tIc-GlllI'1 «\~IM<!.J~~~ 3.to"(jFf<!.J~CIf'iT(Memorandum
~ ~
and Articles of Association) %1
m
(viii) " 1R 3tm ~ Rrf1:R(Issue of Shares at discount) ~ ~ ~ q1T~ >r«rfCf
.
~
(Special resolution) ~ % 1
(ix) ~ en)~ ~ ~ -w:R 'tI~ct>I.n<TI~8J "9fu~ (Government Securities)
~ (Investments)-~'tIIfct> NSC, 'tI~ct>I~~1 etc., ~ r'1<!.J.-:;->(jFcitn>ancial
Controller) ctt r'1~I~I'11(Custody) -B~ I
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~ m If'>1~~r--tl~<:1
(x) ~ r\J1t1ctJ3l1f~ 1~ (Subscribed Capital) Cf)T15%
..
t ~ .,
ctJIylhl1 3=1R10% ~ ~ ~.~~"i)'(--t~I iJ1-qm Cffi~~ cnT ~
*f'qTif ~ ~ (Ordinary resolution) if ~ ~ % I
2. f:p::;r ~ 1R 31tRT !,jrdrsl1~1 cx:rm ~ :
(a) Mr. Y, PQR Ltd. iJ131.3.2009 cfil~ m crrBcrt iJ1~ 16.8.2008 cnl ~ 6
*f'qTif .~~ ~ ~ ~ ~ IMr. Y 1.4.2008cnll0,000 ~. if ~ if ~ it,
m
(Indebted to company) ~ ~a:ruT crt cnT~~ fuf2T~ I~ \J111ctJl(1 1R ~
~ t
~ ~~ cnT if ~ Mr. Y 10,000 ~. 10.8.2008 cnl ~ cnl CfTW
~~~I
~ it"lR ~ r~lctJl~dCfmIT% ~ Mr. YcnT ~~ cnT ~ cftq) ~ t ~
Cffi~
'I:ffiT 226 iJ1
~ ~
%I (Disqualified U/S 226).
(b) XYZ (Pvt.) Ltd. cnT ~~ i~ "ij2fT-B"T.f7(:P1aid up Capital and Reserves) 6
Rs. 60 lacs % 3=1R 3ffifa.-Rf ~ ~ ~~ ~Cfjif fW:IT% 3=1Rr\J1t1ctJlfui1R
t
Rs. 28 lacs %3=1R~ cnT~ -urn (Outstanding) Rs. 23 lacs 31.3.2009 cnl ~
m
~
crrB crt Cf)T3Wffl (Turnover) Rs. 5.10 % I~ ~ Rs. 40 lacs Cf.)T~
.
t ~
Cf11ruT(S~les Return) 2.4.2009 cnl Cfi«fT ~ ~ 2008-2009. if ll71T 2fT
.
~ iJ1 >rGr~ Cf)TlWRT %, ~ CARO cnT3l$r ~ ~ ~. ~ irTTTI
m
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(c) 31.3.2009 cnl ~ crrBcrt iJ1 C Ltd. :w:R 'ffi'q (Profit) if if 5 'C1T@~. 8
'fficqhr~ CfmIT% I .
~ ~
if 1faT"qffifT% ~ ~ ~ 7.80 'C1T@ (Out~tanding expenses)
<ifIG iJ1
Cf)T"\TICJ~ (Provisions) ~ ~ 3=1R'Rfcn Cf)T~~ictJ1 31f~ rC\~I~1 ll71T 2fT
(Over valued) I ~ ~~ :w:R ~rd~~1 if ~ ~ ~ ~ CfmITI 3TIf:
Cf)T
~ iJ1 ~~ ~ ~ (Situation) iJ1 ~ ~~ cnl r":1~~I( (Responsible)-
~~I
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KVS Marks.
~ ~ 10
3. ~. cX.tII.H(.Ti.1rader) ~ ~ % ~,~ (Sales) "Cfi1l1ft en: ~ "ffi'q(Gross
Profit) if "Cfi1l1Cftfilfr mm ~ I ~ ~ 3fu: ~ coT<ftcn-rn;~ ~ -rrrr~ (Recorded
..
correctly) 3fu: Wci1 Cf)T~~icf1'; ~ ~ ~ "B~;m ~ I ~ ~ ~ ~ ~..~
% 1ffi1 Cf)T~ (Purchase of Goods) ~ <ftcn -rn; "B ~ (Record) ~ -rrrr ~ I~ ~
~I
~ CfiTl1iFi ~
31rCf
~ 31P1~Tt?
4. (a) ~ m.~.~. ~ if 3.tI~Rcf1r.;~.-?tul(Internal Control in a CIS environment) 5
iFi~if~~1
(b) l1<TIm ftq)i (Qualified report) 3fu: 1J~B ft<iti (Adverse report) Cf)f ftritc:: 5
~I
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5. (a)' ~ r';cf1I~IiF' i~ iFi3#fi&11iJFTi (Audit of Accounts of a Local bodies) 5
3#fi&11JTcf11~st>1(1Audit programme) ~ I
(b) ,,~ 3#fi~ cnT~ ftq)i if ~ WB iFi 3tco1(Figures) coT ~ iFi~ ~ 5
WB iFi ~ iFi Ij,dlr~cf1 Cfili 3#fi&11JT~ (Audit procedure) CfWft .~ ~ I"
~
AAS 25 'On Comparatives' cnT~ if ~ ~ ~ Cf)~ CfiT~ (Justify
the Statement) I
6. (a) EDP ~ (Environment) if ~a:1UT ~ ~ %,~~. (Trial Balance) 5
~ ~
f1:R1w (Tallies) I
~
~ Cf)~ CfiT3-t1<.,j)-q';1 I
(b) 3#fi&11JfTtq)i if ~ ~ ~ ~ 3#fi~ iFi3T c I qm<:f -« ~ ~ ~ 3#fi~ 5
~m ~;m ~ ~ I
(Joint Auditor is not bound by opinion of majority of Joint Auditors)
~
AAS 12 cnT~ if ~ ~ 3#fi~ iFi d~H~If~("CijFi~ if ~ I
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~ 5x2=10
7. r;'p.--Ir~p.sld CI1T~\"1llj'1/~YIUI'1 (Vouching/v~rification) Cfil:Tt?
(a) ~ i,-m q:;)q)11~ (Reduction in Share Capital) I
4
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(b) 1-m ~ cnTmfu (Receipt of Capital subsidy) I
8. r~~r~r~9 'R m&ffi kl.ljrul~ifufum: 5x2=10
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(a) >W:rf~ (Substantive Procedures) I
(b) 3iiI18JUTct;1--r~ld>J115[(Audit working Papers) I
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