Top 150 Question – MAY 2020 (OLD & NEW Course)

 150 Handpicked SUPERMOST IMPORTANT QUESTIONS from data base of 3500+ Questions.
 Why so important?
 These questions are very important as these have been selected scientifically and not on the basis of mere
judgement. Following process formed the basis of selection: -
o 1st Step -
We selected those question which have been repeated for more than 7 times in our database of
3500+ questions.

o 2nd Step -
Then we made a list of all question that were from
- MTP & RTP – 2018 & 2019

o 3rd Step –
Questions identified in Step 1 + Step 2 were merged together, questions which were asked in 2018 &
2019 Exams were deleted

This gave us 150+ questions which as per us are very important from viewpoint of MAY-2020 exams.

These questions are relevant for both old & new, but it doesn’t cover questions from vouching, verification
& edp please cover pm questions for these chapters.

 Note: -
 SA wise approach to teach Inter / IPCC audit
There are 2 ways of teaching CA Inter Audit and both approaches are famous and followed by
many professors.
8 out of 13 chapters (new course) are based on standards on auditing same is case with old course.
o 1st Approach is to teach SA wise and cover chapters along with it
o 2nd Approach is to teach chapters as framed by ICAI.

We follow 1st approach as it is more logical and concepts become easy to understand and apply, we
have used it for past 12 years and it has been giving rich dividends. Following SA chapter
mapping will make things easy for you and to correlate with ICAI module chapters.

SA
Chapter Number & Name (New Course) Which SAs & Chapters as per Our Notes ?
Based ?
Chapter 1: SA 200 / SA 210 / SA 220 & SQC 1 / SA Intro
Yes
Nature, Objective and Scope of Audit / Concepts on Auditing
Chapter 2: Yes SA 220 & SQC 1 / SA 300 / SA 315 / SA 320
Audit Strategy, Audit Planning and Audit / ASPP
Programme
Chapter 3: SA 230 / SA 330 / SA 500 / SA 501 /SA
Audit Documentation and Audit Evidence Yes 505/SA 510/SA 550 / SA 560/ SA 570 / SA
580/ Concepts on Auditing
Chapter 4: SA 315 / SA 320 / SA 330 / SA 610 / Internal
Risk Assessment and Internal Control Control System /Co Audit / Concepts on
Yes
Auditing
Chapter 5:
Yes SA 240 / Co Audit
Fraud and Responsibilities of the Auditor
in this Regard
Chapter 6:
Audit in an Automated Environment No AAE
 Chapter 7: Yes SA 530
Audit Sampling
Chapter 8: Yes SA 520
Analytical Procedures
Chapter 9:
No AIFS
Audit of Items of Financial Statements
Chapter 10: No Co Audit I / SA 299 / SA 705
The Company Audit
Chapter 11: Yes SA 700/ SA 701/ SA 705/ SA 706
Audit Report
Chapter 12: No AUDIT OF BANK
Audit of Banks
Chapter 13: Audit of Different Entities / Govt Audit/ Co-
Audit of Different Types of Entities No
Operative Society Audit

 Students who have PARAM Question Bank

o With the ULTIMATE -ALL IN ONE “PARAM QUESTION BANK” students already get a edge as these
questions are already covered in PARAM , student just have to go through the CNO’s given in the
attached file .
o Students can just mark the CNO’s while studying from PARAM and use these top 150 question for
last minute revision.
o We believe that the Appropriate Headings , Breakup of Answer , Rearranging the flow of answers ,
Shortcuts , Examples and Author’s note for contradictory and tricky answers given in PARAM would
make your reading easy and fast.
 Students who do not have ULTIMATE -ALL IN ONE “PARAM Question Bank”
o A file of questions is attached below, you can see the questions from it and can search it from
- the institute database of SM/PM/RTP/MTP of last 4 years or
- from any other question bank student is referring.
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WISH YOU ALL THE BEST FOR YOUR MAY 2020 EXAMS.
 Old / Repetat
CNO Topics Concept Headings Questions
New ions
“The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements.
Overall Objective & Purpose- This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared,
200.01 SA 200 Both 7
Auditor doing audit of FST in all material respects, in accordance with an applicable financial reporting framework.”. Explain stating the
objectives of audit as per SA 200.
Absolute VS Reasonable Distinguish between absolute and reasonable assurance. Identify the type of assurance that is expected in an
200.03 SA 200 Both 2
Assurance audit of the financial statements, clearly outlining the reasons to justify your point of view.
Inherent limitations of Audit-
200.09 SA 200 Both 7 The process of auditing is such that it suffers from certain limitations Discuss.
Master Answer
Timeliness of Financial The matter of difficulty, time, or cost involved is not in itself a valid basis for the auditor to omit an audit
200.15 SA 200 Both 1 Reporting and the Balance procedure for which there is no alternative or to be satisfied with audit evidence that is less than persuasive.
between Benefit and Cost Explain.
Prerequisites or fundamental In order to achieve the objectives of the accountancy profession, professional accountants have to observe a
200.21 SA 200 Both 2
principles number of prerequisites or fundamental principles Explain
Engagement Letter - Master
210.03 SA 210 Both 3 State the purpose of a ‘Letter of Engagement’.
Answer-Purpose & Contents
“It is not mandatory to send a new engagement letter in recurring audit, but sometimes it becomes mandatory to
210.05 SA 210 Both 4 Revision of Engagement Letter
send new letter”. Explain those situations where new engagement letter is to be sent.
Quality Control element (In The firm’s system of quality control should include policies and procedures addressing each and
220.01 SA 220 Both 1
short) every element of system of quality control. State those elements.
Acceptance & Continuance-
“The auditor should obtain information considered necessary in the circumstances before accepting an
Information assists the auditor-
220.06 SA 220 Both 7 engagement with a new client.” Explain. Also mention any four information which assists the auditor in accepting
accepting and continuing
and continuing of relationship with the client as per SA 220.
relationship with the client

The firm should establish policies and procedures designed to provide it with reasonable assurance that the
monitoring compliance with policies and procedures relating to the system of quality control are relevant, adequate, operating effectively and
220.08 SA 220 Both 1 quality control policiesand complied with in practice. Such policies and procedures should include an ongoing consideration and evaluation
procedures - Purpose of the firm’s system of quality control, including a periodic inspection of a selection of completed engagements.
Explain in the above context the purpose of monitoring compliance with quality control policies and procedures.

Audit Documentation- Master Audit documentation provides evidence of the auditor’s basis for a conclusion about the achievement of the
230.01 SA 230 Both 8 Answer-Meaning, Nature and overall objectives of the auditor and evidence that the audit was planned and performed in accordance with SAs
Purpose and applicable legal and regulatory requirements. Explain stating clearly purpose of audit documentation.
Working Papers (Master Audit Working Papers are the record of audit procedures performed, relevant audit evidence obtained, and
230.03 SA 230 Both 7
Answer) conclusions the auditor reached. Explain stating meaning and advantages of working papers.
Judging the Significance of a Judging the significance of a matter requires an objective analysis of the facts and circumstances. Documentation
230.19 SA 230 Both 1 Matter & Which is important of the professional judgments made, where significant, serves to explain the auditor’s conclusions and to
for Documentation reinforce the quality of the judgment. Explain with the help of examples.
Although fraud is a broad legal concept, for the purposes of the SAs, the auditor is concerned with fraud that
240.01 SA 240 Both 2 Definition & Types of Fraud
causes a material misstatement in the financial statements. Explain.
 “Fraudulent financial reporting involves intentional misstatements including omissions of amounts or disclosures
240.03 SA 240 Both 8 Fraudulent Financial Reporting
in financial statements to deceive financial statement users." Discuss.
Detection of manipulation of accounts with a view to presenting a false state of affairs is a task requiring great
240.05 SA 240 Both 1 Manipulation of Accounts
tact and intelligence. Explain stating clearly how this type of fraud is generally committed.
Definition & Types of Fraud-
240.07 SA 240 Both 4 Misappropriation Difficult to “Fraud in the form of misappropriation of goods is still more difficult to detect.” Explain.
Detect
Explain how would you deal as an auditor if, as a result of a misstatement resulting from fraud or suspected
Exceptional Cirmcumstances-
240.21 SA 240 Both 2 fraud, you encounter exceptional circumstances that bring into question your ability to continue performing the
Challenging Ability to Continue
audit.
240.25 SA 240 Both 2 Defalcation of Cash- Ways Discuss the different ways in which defalcation of cash may take place.
250.01 SA 250 Both 8 Indicators of Non Compilance Matters indicating auditor about non-compliance of laws & regulations by management
Joint Audit-Advantages-
299.01 SA 299 Both 3 Explain the concept of joint audit. Discuss its advantage and disadvantage.
Disadvantages
Responsibility- Co-ordination
299.05 SA 299 Both 7 between Joint Auditors- Master In Joint Audit, Each Joint Auditor is responsible only for the work allocated to him.
Answer
ASPP & Overall Audit Plan- Factors for M & Co. was appointed as auditor of IGI Ltd. As an auditor what are the factors that would be considered in the
300.01 Both 2
SA 300 Developments development of overall audit plan?
ASPP & Factors for establishing Overall
300.03 Both 4 Discuss the factors the auditor will consider while establishing the overall strategy.
SA 300 Audit Strategy
ASPP & Overall Audit Strategy -- For The auditor T of Hand Fab Ltd is worried as to management of key resources to be employed to conduct audit.
300.07 Both 3
SA 300 Resources Management Required How the audit strategy would be helpful to the auditor?
ASPP & Audit Planning -- Not a Discrete
300.11 Both 4 Planning is not a discrete phase of an audit, but rather a continual and iterative process. Discuss.
SA 300 Phase
ASPP & Overall Audit Strategy--
300.15 Both 2 The establishment of the overall audit strategy and the detailed audit plan are closely inter-related. Explain.
SA 300 Relationship with Audit Plan
ASPP & Modification of the overall As a result of unexpected events, changes in conditions, or the audit evidence obtained from the results of audit
300.17 Both 1
SA 300 audit strategy and audit plan procedures, the auditor may need to modify the overall audit strategy and audit plan. Explain.
The utility of the audit programme can be retained and enhanced only by keeping the programme and also the
ASPP &
300.25 Both 2 Audit Program (Periodic Review) client’s operations and internal control under periodic review so that inadequacies or redundancies of the
SA 300
programme may be removed Discuss stating clearly the advantages of an audit programme.
The assessment of risks is a matter of professional judgment. Explain stating clearly what is not included in Audit
315.05 SA 315 Both 1 RMM & Audit Risk- Exclusion
Risk?
In performing an audit of financial statements, the auditor should have or obtain knowledge of the business.
Understanding Entity & its
315.07 SA 315 Both 7 Explain in the light of SA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding
Environment
the Entity and its Environment.
Combined assessment of the The SAs do not ordinarily refer to inherent risk and control risk separately, but rather to a combined assessment
315.13 SA 315 Both 2
“risks of material misstatement of the “risks of material misstatement”. Explain.
 The auditor shall identify and assess the risks of material misstatement at both levels to provide a basis for
Identify & Assess Risk of designing and performing further audit procedures. For the purpose of Identifying and assessing the risks of
315.15 SA 315 Both 1
Material Misstatement material misstatement the auditor shall Identify risks, assess the identified risks, relate the identified risks and
consider the likelihood of misstatement. Explain the above in detail.
“Risk of material misstatement at the assertion level for classes of transactions, account balances and disclosures
315.17 SA 315 Both 14 Assertions
need to be considered.” Explain stating the different categories of assertions used by the auditor.
As part of the risk assessment, the auditor shall determine whether any of the risks identified are, in the auditor’s
315.25 SA 315 Both 9 Significant Risk judgment, a significant risk. In exercising judgment as to which risks are significant risks, state the factors which
shall be considered by the auditor. Explain the above in context of SA-315.
Risk Assessment – Analytical Discuss what is included in risk assessment procedures to obtain audit evidence about the design and
315.31 SA 315 Both 4
Procedures implementation of relevant controls.
320.01 SA 320 Both 7 Materiality Concept of ‘Materiality’.
Materiality for the financial statements as a whole may need to be revised as a result of a change
320.07 SA 320 Both 2 Revision of Materiality
in circumstances that occurred during the audit. Explain wi th the help of example.
TOC & Preliminary Risk Based on the results of the tests of control, the auditor should evaluate whether the internal controls are
330.11 SA 330 Both 2
Assessment of Controls designed and operating as contemplated in the preliminary assessment of control risk. Analyse and Explain.
Specific inquiries by auditor
The auditor R of GR and Co., a firm of Chartered Accountants is conducting audit of B Industries Ltd. State the
330.13 SA 330 Both 3 when deviations from controls
specific inquiries by auditor when when deviations from controls are detected
are detected
Audit evidence includes both information contained in the accounting records underlying the financial
500.01 SA 500 Both 7 Audit Evidence
statements and other information. Discuss
Audit Evidence- Related Audit evidence is necessary to support the auditor’s opinion and report. It is cumulative in nature and is primarily
500.03 SA 500 Both 2 Matters/Features/ obtained from audit procedures performed during the course of the audit. Most of the auditor’s work in forming
charectoristics the auditor’s opinion consists of obtaining and evaluating audit evidence. Explain
“Even when information to be used as audit evidence is obtained from sources external to the entity,
500.09 SA 500 Both 12 Factors affecting reliability circumstances may exist that could affect its reliability”. Explain. Also state generalisations about the reliability of
audit evidence.
Evaluating work of “The management has obtained a certificate from an actuary regarding provision of gratuity payable to
500.13 SA 500 Both 6
Management's Expert employees”. Comment as an auditor.
Timeliness of Financial The matter of difficulty, time, or cost involved is not in itself a valid basis for the auditor to omit an audit
501.13 SA 501 Both 1 Reporting and the Balance procedure for which there is no alternative or to be satisfied with audit evidence that is less than persuasive.
between Benefit and Cost Explain.
External Confirmation- External confirmation procedures frequently are relevant when addressing assertions associated with account
505.03 SA 505 Both 7
Examples- Area balances and their elements, but need not be restricted to these items. Explain.
Analytical Procedures- Master Analytical procedures use comparisons and relationships to assess whether account balances or other data
520.01 SA 520 Both 8
Answer appear reasonable. Explain stating the purpose of analytical procedures with examples.
Analytical Procedures- Factor Substantive analytical procedures are generally more applicable to large volumes of transactions that tend to be
520.05 SA 520 Both 2
affecting Suitability- Volume predictable over time. Explain.
If analytical procedures performed in accordance with SA 520 identify fluctuations or relationships that are
Analytical Procedures
520.09 SA 520 Both 1 inconsistent with other relevant information or that differ from expected values by a significant amount, explain
(Investigating results)
how would the auditor investigate such differences.
 The auditor is faced with sampling risk in both tests of control and substantive procedures. Comment on this
530.01 SA 530 Both 7 Sampling Risk
statement with reference to SA 530 on Audit Sampling.
Statistical and Non Statistical Whatever may be the approach non-statistical or statistical sampling, the sample must be representative. Discuss
530.07 SA 530 Both 1
Sampling explaining Statistical and Non Statistical sampling approaches.
Methods of Sampling- Master
530.11 SA 530 Both 12 Cluster sampling is less effective than random sampling.
Answer
Selection has been done on a In cases where audit sample selection has been done on a random basis, no statistical process for selection of
530.13 SA 530 Both 4
random basis samples needs to be followed.
The auditor is required to project misstatements for the population to obtain a broad view of the scale of
530.15 SA 530 Both 1 Projecting Misstatments
misstatement. Explain
The auditor shall evaluate the results of the sample and whether the use of audit sampling has provided a
530.17 SA 530 Both 1 Evaluating Resuts of Sampling
reasonable basis for conclusions about the population that has been tested. Analyse and explain.
XYZ Ltd is engaged in trading of electronic goods and having huge accounts receivables. For
analysing the whole accounts receivables, auditor wanted to use sampling technique. In
Stratified sampling and Value considering the characteristics of the population from which the sample will be drawn, the auditor
530.19 SA 530 Both 2
weighted Sampling determines that stratification or value-weighted selection technique is appropriate. SA 530 provides
guidance to the auditor on the use of stratification and value-weighted sampling techniques. Advise
the audit or in accordance with SA 530.
Extent of Checking On a
530.21 SA 530 Both 2 Discuss the factors that should be considered for deciding upon the extent of checking on a sampling plan.
Sampling Basis
There is a growing realisation that the traditional approach to audit is economically wasteful because all efforts
530.23 SA 530 Both 1 Sampling- Traditional Approach
are directed to check all transactions without exception. Explain
There are specific accounting and disclosure requirements for related party relationships, transactions and
550.03 SA 550 Both 1 Responsibilty of Auditor balances to enable users of the financial statements to understand their nature and effects on the financial
statements. Analyse and explain stating the responsibility of auditor in this regard.
Transactions outside normal What auditor shall do after the identification of significant related party transactions outside the entity’s normal
550.05 SA 550 Both 5
course of business course of business?
Mr. D is a director of X Ltd. and Y Ltd. On 30th June, 2015, Mr. D resigned from directorship of Y Ltd. X Ltd. sold
Disclosure of related party in
550.07 SA 550 Both 3 goods to Y Ltd., during the entire year at the same price and conditions as to any other customer. X Ltd. discloses
notes to accounts
only the sales for the first quarter ending 30th June, 2015 as related party transactions.
Events occurring between the
date of the financial statements “The auditors should consider the effect of subsequent events on the financial statement and on
560.03 SA 560 Both 8
and the date of the auditor’s auditor’s report”– Comment according to SA 560.
report
Objectives of Auditor Regarding On the basis of which assumption the financial statements of a company are prepared. Explain. Also describe the
570.01 SA 570 Both 2
Going Concern objectives of the auditor regarding going concern.
Events & Conditions Creating
570.03 SA 570 Both 5 "Operating Conditions" that may cast doubt about going concern assumption.
Significant Doubt
Objective of Written
580.03 SA 580 Both 1 Explain clearly objective of the auditor regarding written representation.
Representation
 Internal audit-Meaning , scope,
610.01 SA 610 Both 2 Explain the activities of the Internal Audit function.
objectives
In order to form the audit opinion as required by SA 700, the auditor shall conclude as to whether the auditor has
obtained reasonable assurance about whether the financial statements as a whole are free from material
700.03 SA 700 Both 2 Objectives & Framing Opinon
misstatement, whether due to fraud or error. Explain the conclusions that the auditor shall take into account.
Also explain the objective of auditor as per SA 700.
The Auditor is fully satisfied with the audit of an entity in respect of its systems and procedures and wants to
700.07 SA 700 Both 4 Unqualified Opinion
issue a report without any hesitation. What type of opinion can be give and state give reasoning.
The auditor’s report shall include a section, directly following the Opinion section, with the heading “Basis for
700.11 SA 700 Both 2 Basis for Opinion Para
Opinion”. Explain what is included in this “Basis for Opinion” section.
Auditors Report - Management The auditor’s report shall include a section with a heading “Responsibilities of Management for the Financial
700.13 SA 700 Both 3 Responsibilities for the Statements.” SA 200 explains the premise, relating to the responsibilities of management and, where
Financial Statements appropriate, those charged with governance, on which an audit in accordance with SAs is conducted. Explain
The auditor evaluated, in respect of T Ltd., whether the financial statements are prepared in accordance with the
requirements of the applicable financial reporting framework.
Qualitative Aspects of
700.17 SA 700 Both 1 Auditor’s evaluation included consideration of the qualitative aspects of the entity’s accounting practices,
accounting Practices
including indicators of possible bias in management’s judgments.
Advise the qualitative aspects of the entity’s accounting practices.
Communicating Key Audit Matter is not a substitute for disclosure in the Financial Statements rather
Is KAM substitute of Disclosure
701.03 SA 701 Both 2 Communicating key audit matters in the auditor’s report is in the context of the Auditor having formed an
in FST
opinion on the financial statements as a whole. Analyse.
706.01 SA 706 Both 4 EMP- Master Answer Define Emphasis of Matter Paragraph and how it should be disclosed in the Independent Auditor's Report?
The nature of the comparative information that is presented in an entity’s financial statements depends on the
requirements of the applicable financial reporting framework. There are two different broad approaches to the
Definition of Comparative, 2
710.03 SA 710 Both 1 auditor’s reporting responsibilities in respect of such comparative information: corresponding figures and
Approaches & Differences
comparative financial statements. Explain clearly stating the essential audit reporting differences between the
approaches. Also define comparative information and audit procedures regarding comparative information.

Reference to Comparatives in When corresponding figures are presented, the auditor’s opinion shall not refer to the corresponding figures
710.05 SA 710 Both 2
Corresponding Figures Approach except in some circumstances. Explain those circumstances.
ASPP & The auditor shall document the overall audit strategy, the audit plan, and any significant changes made during
300. 27 Both 1 Audit Plan (Documentation)
SA 300 the audit engagement to the overall audit strategy or the audit plan, and the reasons for such changes. Explain.
Automated Environments
AAE.01 AAE New 1 Explain the meaning of automated environment. Also discuss the key features of an automated environment.
(Meaning and Key Features)
Principals of Automated The fundamental principle of an automated environment is the ability to carry out business with less manual
AAE.05 AAE New 2
Environment intervention and more system driven.
Briefly mention three reasons why IT should be considered relevant to an audit of financial statements.
AAE.10 AAE New 3 Relevance of IT
Describe how risks in IT systems, if not mitigated, could have an impact on audit
AAE.25 AAE New 2 IT Risks (Impact)
 Testing Methods in Automated
AAE.35 AAE New 3 Discuss the different ways testing is performed in an automated environment
Environment
In today’s digital age when companies rely on more and more on IT systems and networks to operate business,
AAE.40 AAE New 1 Uses of Data Analytics the amount of data and information that exists in these systems is enormous. Explain stating uses of Data
analytics.
ADE.01 ADE Both 14 Audit of Hospital- Special Points Advise any five special points in an audit of hospital.
Audit of Educational Institute-
ADE.15 ADE Both 14 Mention any eight special steps involved in conducting the audit of an Educational Institution?
Special Points
BPL Ltd. is running a “RAGHU PALACE CINEMA.” Your firm of Chartered Accountants has been appointed to get its
accounts audited. Assistant appointed on the job to conduct audit asks the audit in charge as to how to go about
ADE.35 ADE Both 3 Audit of Cinema Hall
conducting an audit and seeks your guidance on it. Keeping in view the above you are required to explain to the
assistant special steps (any five) involved in the Audit of Cinema.
Audit of Cinema Hall-audit
ADE.40 ADE Both 2 programme IF Owned by a Draft an audit programme to audit the receipts of a cinema theatre owned by a partnership firm.
partnership firm.
Draft an Audit Programme to audit the accounts of a Recreation Club with facilities for indoor games and in-
ADE.45 ADE Both 4 Audit of Club-Special Points
house eating.
Audit of Partnership Firm-
ADE.55 ADE Both 7 Discuss the matters which should be specially considered in the audit of accounts of a partnership.
Special Points
Audit of Partnership Firm
ADE.60 ADE Both 3 State six important advantages of audit of accounts of a Partnership firm.
(Advantages)
Audit of Partnership Firm-
What special steps will you take into consideration in auditing the receipts from entry fees of an amusement
ADE.65 ADE Both 3 Receipts from entry fees of an
park? Mention any four points specific to the issue.
amusement park
An NGO operating in Delhi had collected large scale donations for Tsunami victims. The donations so collected
were sent to different NGOs operating in Tamil Nadu for relief operations. This NGO operating in Delhi has
Audit of an NGO (Receipts & appointed you to audit its accounts for the year in which it collected and remitted donations for Tsunami victims.
ADE.75 ADE Both 9
Remittances to Others) Draft audit programme for audit of receipts of donations and remittance of the collected amount to different
NGOs. Mention six points each, peculiar to the situation, which you will like to incorporate in your audit
programme for audit of said receipts and remittances of donations.
ADE.85 ADE Both 7 Assets on HP Machinery acquired under Hire-purchase system
AIFS.01 AIFS New 3 B/S (Capital Subsidy) Receipt of Capital subsidy
ABC Ltd. issued shares to its equity shareholders in the proportion of one bonus share for every four existing
AIFS.07 AIFS New 6 BS (Share Capital, Bonus Shares)
shares. As an auditor of the company, how would you verify this issue?
Any share issued by a company at a discounted price shall be void. Explain stating also the audit procedure in this
AIFS.11 AIFS New 11 B/S (Shares at Discount)
regard.
AIFS.13 AIFS New 8 BS (Securities Premium) A portion of Share Premium utilised to declare 40% dividend.
BS (Share Capital, Spliting of
AIFS.15 AIFS New 4 Splitting of one share of the face value of Rs 10 into 10 shares of Rs 1 each.
Shares)
Discuss the provisions of the Companies Act, 2013 with regard to issue of Sweat Equity Shares and auditor’s duty
AIFS.17 AIFS New 7 BS (Sweat Equity Shares)
in this regard.
 B/S( Reserve vs Provision &
AIFS.19 AIFS New 5 Distinguish between Reserves and Provisions.
Capital vs Revenue Reserve)
AIFS.21 AIFS New 3 B/S( Audit of Capital Reserve) Audit of Capital Reserve.
On going through the financial statements of ABC Ltd, its auditors Deepa Raj and Associates observed that
company has taken Loans from banks and financial institutions. Further, the audit team discusses the following
about Liabilities: “Liabilities are the financial obligations of an
enterprise other than owners’ funds. Liabilities include loans/ borrowings, trade payables and other current
AIFS.23 AIFS New 2 B/S (Borrowings Existence) liabilities, deferred payment credits and provisions.
Verification of liabilities is as important as that of assets, for, if any liability is omitted (or
understated) or over stated, the Balance Sheet would not show a true and fair view of the state of affairs of the
company.” Advise stating clearly the audit
procedures generally required to be undertaken for verification of existence of Borrowings.
AIFS.25 AIFS New 4 B/S (Borrowing) Borrowing from Banks.
Verification of liabilities is as important as that of assets, considering if any liability is omitted (or understated) or
B/S (Criteria for Classification as
AIFS.27 AIFS New 1 overstated, the Balance Sheet would not show a true and fair view of the state of affairs of the entity. Explain
Current Liability)
stating also criteria for a liability to be classified as current liability.
Liabilities include trade payables and other current liabilities, deferred payment credits and provisions.
Verification of liabilities is as important as that of assets, considering if any liability is omitted (or understated) or
AIFS.29 AIFS New 1 B/S (Trade Payable Existence) overstated, the Balance Sheet would not show a true and fair view of the state of affairs of the entity. Advise
stating clearly the audit procedure to establish the existence of trade payables and other current liabilities as at
the period-end.
B/S (Intagible Fixed Assets, Explain with examples the audit procedure to establish the existence of intangible fixed assets as at the period-
AIFS.35 AIFS New 2
Existence) end.
“Trade receivable are an essential part of any organisation's balance sheet. Often referred to as debtors, these
B/S (Trade Receivables, are monies which are owed to an organisation by a customer. The most common form of an account receivable is
AIFS.37 AIFS New 2 Compliance Proecedures of a sale made on credit, via an invoice, to a customer.” It is important to carry out compliance procedures in the
Sales) sales audit as part of the debtors’ audit procedure.
Verify to ensure that the system for receivables has the necessary features.
Explain the audit procedure to vouch/verify :
AIFS.55 AIFS New 1 P&L (Rent and Fuel expenses) (i) Rent expenses
(ii) Power and Fuel expenses
AIFS.61 AIFS New 2 P&L (Foreign Travel Expenses) Foreign Travel Expenses
AIFS.65 AIFS New 2 P&L (Sales on Approval) Goods sent out on Sale or Return basis
Audit Of Sec-72 Qualification &
Co- Disqualification of Briefly explain the provisions for qualification and appointment of
AOC.05 New 2
operative Auditor(Multi-State Co- Auditors under the Multi-State Co-operative Societies Act, 2002.
Societies operative Society)
 The engagement team of FRN & Co.- Auditors of Bank of Baroda held discussions to gain better understanding of
the bank and its environment, including internal control, and also to assess the potential for material
Bank misstatements of the financial statements. The discussion between the members of the engagement team and
BA.03 New 4 Engagement Team (Discussion)
Audit the audit engagement partner are being done on the susceptibility of the bank’s financial statements to material
misstatements. These discussions are ordinarily done at the planning stage of an audit. Analyse and Advise the
matters to be discussed in the engagement team discussion.
Advances generally constitute the major part of the assets of the bank. There are large number of borrowers to
whom variety of advances are granted. The audit of advances requires the major attention from the auditors. In
Bank carrying out audit of advances, the auditor is primarily concerned with obtaining evidence about, among other
BA.11 New 1 Audit of Advances
Audit points, the amounts included in balance sheet in respect of advances are outstanding at the date of the balance
sheet. Explain

Audit of Advances-Audit
Bank The auditor can obtain sufficient appropriate audit evidence about advances by study and evaluation of internal
BA.13 New 1 Evidence Appropriateness, NPA
Audit controls relating to advances. Explain in the context of Audit of Banks.
classification and provisioning
Your firm of Chartered Accountants has been appointed as the Auditor of two branches of OBC which are located
Bank Audit of Advances-Audit in the Industrial area. Considering that the location of the branches of bank in industrial area, these would be
BA.15 New 2
Audit evidence master answer advances oriented branches and audi t of advances would require the major attention of the auditors. Advise
how would you proceed to obtain evidence in respect of audit of advances.
The auditor should examine the efficacy of various internal controls over advances in case of Banks to determine
Bank
BA.17 New 3 Advances (Internal Control) the nature, timing and extent of his substantive procedures. Explain what is included in the internal controls over
Audit
advances.
In the case of a nationalised bank, the auditor is required to make a report to the Central Government. The
Bank Auditor's Report (Matters
BA.21 New 1 report of auditors of State Bank of India is also to be made to the Central Government and is almost identical to
Audit Required by Law)
the auditor’s report in the case of a nationalised bank. Explain what would the auditor state in his report.
“If an accounting professional, whether in the course of internal or external audit or in the process of institutional
audit finds anything susceptible to be fraud or fraudulent activity or act of excess power or smells any foul play in
Bank
BA.23 New 1 Fraud Reporting (Regulator) any transaction, he should refer the matter to the regulator. Any deliberate failure on the part of the auditor
Audit
should render himself liable for action”. Analyse and explain the above RBI Circular regarding liability of
accounting and auditing profession.
CARO. 01 CARO Both 8 Applicability (Theory) CARO, 2016 applies to all companies. Discuss.
CARO (Applicabilty - Private Ashu Pvt. Ltd. has fully paid capital and reserves of ` 50 lakh. During the year, the company had borrowed ` 70
CARO. 03 CARO Both 2
Company) lakh each from a bank and a financial institution independently. It has the turnover of ` 900 lakh.
CARO. 07 CARO Both 3 Cl 1 (Theory) Discuss the reporting requirements regarding Fixed Assets under CARO, 2016.
Discuss the matters to be included in the auditor's report regarding fixed assets and inventories as per CARO,
CARO. 09 CARO Both 3 Cl 1 & Cl 2 (Theory)
2016.
State the matters to be included in the auditor's report as per CARO, 2016 regarding-
CARO. 11 CARO Both 2 Cl 1 & 7 - Requirements (i) Fixed Assets
(ii) statutory dues
 Discuss the matters to be included in the auditor's report regarding statutory dues
CARO. 17 CARO Both 1 Cl 7 & 8 and repayment of loans or borrowing to a financial institution, bank, Government or
dues to debenture holders as per CARO, 2016.
State the matters to be included in the auditor's report as per CARO, 2016 regarding -
CARO. 21 CARO Both 3 Cl 8 & 10 - Requirements (i) Default in repayment of loans or borrowing to a financial institution, bank etc.
(ii) Fraud by the company or on the Company by its officers or employees
State the matters to be included in the auditor's report as per CARO, 2016, regarding: (i)
CARO. 25 CARO Both 3 Cl 9 & 14 - Requirements
Private Placement of Preferential Issues. (ii) Utilisation of IPO and further public offer.
Cl 10- Scope of auditor’s
The scope of auditor’s inquiry under clause (x) of paragraph 3 of Companies (Auditor’s Report) Order, 2016 is
CARO.27 CARO Both 2 Responsibility w.r.t fraud-
restricted to frauds ‘noticed or reported’ during the year. Explain.
Master Answer
The provisions in the matter of books of account which a company is required to maintain are contained in
Company Section 128- Books of Account-
Co.Acc. 01 Both 1 section 128 of the Companies Act, 2013. In the above context, explain clearly the meaning of Books of Account as
Audit II Meaning
contained in the Companies Act, 2013.
Company Sec-128 -Books in Electronic
Co.Acc. 10 Both 5 “A company may keep books of account or other relevant papers in electronic mode”. Explain.
Audit II Form
Company Discuss the provisions of Section 134 of the Companies Act, 2013 regarding the authentication of financial
Co.Acc. 25 Both 3 Sec-134- Authentication of FST
Audit II statements.
“An audit is independent examination of financial information of any entity, whether profit oriented
Concepts or not, and irrespective of its size or legal form, when such an examination is conducted with a
Audit & Related Concepts
COA. 01 in Both 3 view to expressing an opinion thereon.”
(Definition)
Auditing Explain stating clearly how the person conducting this task should take care to ensure that financial
statements would not mislead anybody.
Concepts
Audit & Related Concepts Discuss the following:
COA. 05 in Both 7
(Advantages of Audit) Advantages of independent audit.
Auditing
Concepts
COA. 09 in Both 2 Auditing and Law The relationship between auditing and law is very close one.
Auditing
Concepts
Auditing and Behavioural
COA. 15 in Both 3 The discipline of behavioural science is closely linked with the subject of auditing.
Science.
Auditing
Concepts
COA. 21 in Both 11 Surprise Checks An element of surprise can significantly improve the audit effectiveness. Explain.
Auditing
Concepts
Examination in Depth implies examination of a few selected transactions from the beginning to the end through
COA. 23 in Both 7 Examination in Depth
the entire flow of the transaction Explain
Auditing
Concepts
“The auditor should possess specific knowledge of accountancy, auditing, taxation, etc. which are acquired by
COA. 27 in Both 6 Qualities of an Auditor
him during the course of his theoretical education”. Explain stating briefly the qualities of Auditors
Auditing
 Concepts Provisions giving concrete
“The Companies Act, 2013 has enacted specific provisions to give concrete shape to concept of Auditor’s
COA. 29 in Both 3 shape to Auditor’s
Independence”. Explain.
Auditing Independence
Concepts The Chartered Accountant has a responsibility to remain independent by taking into account the context in which
threats to independence and
COA. 35 in Both 1 they practice, the threats to independence and the safeguards available to eliminate the threats.
the safeguards available
Auditing In the above context, explain the guiding principles.
Concepts
Audit of Limited Company
COA. 41 in Both 2 What are the special considerations in an audit of a Limited Company?
Special Consideration
Auditing
Concepts
A junior accountant of a limited company has not separated transactions of one period from those in the ensuing
COA. 43 in Both 3 Cut-off Arrangement
period. As an Auditor, state the correct procedure to be followed and the areas in which it can be applied.
Auditing
Concepts
Test Check in System Based In a system based audit, test checking approach provides a good base for the auditor to form his opinion on the
COA. 51 in Both 3
Audit financial statement. Give your comments.
Auditing
Sec-177-Appointment of
Where a company is required to constitute an Audit Committee, all appointments of an auditor under this section
Company Auditor- if Audit Committee
CoAud. 03 Both 1 shall be made after taking into account the recommendations of such committee. Explain stating also the class of
Audit I exists- Applicable to specified
companies required to constitute Audit Committee.
company
Section 139(1) of the Companies Act, 2013 provides that every company shall, at
Company
CoAud. 05 Both 1 Sec-139 (1) Tenure of Auditor the first annual general meeting appoint an auditor who shall hold office till the
Audit I
conclusion of its sixth annual general meeting.
Company Sec-139(1)-Procedure for Explain the manner and procedure of selection and appointment of auditors as per Rule 3 of Companies (Audit
CoAud. 11 Both 1
Audit I appointmnet and Auditors) Rules, 2014
Company Sec-139(2) -Applicability of
CoAud. 13 Both 8 “Provisions regarding rotation of auditors affect only specific class of companies”. Discuss.
Audit I Rotation
Company Sec-139 & Rule 6- Manner of
CoAud. 15 Both 3 State the manner of rotation of auditors on expiry of their term.
Audit I Rotation
Company Sec-139(6) - First Auditor - NGC - Managing Director of Pigeon Ltd. himself wants to appoint CA. Champ, a practicing Chartered Accountant, as first
CoAud. 19 Both 5
Audit I MD Appoints Auditor auditor of the company.
Company Sec-139(7) First Auditor - GC
CoAud. 23 Both 9 The first auditor of Bhartiya Petrol Ltd., a Government company, was appointed by the Board of Directors.
Audit I Case Appointed by BOD
Company Sec-139 (8) -Casual Vacancy Discuss the following:
CoAud. 27 Both 7
Audit I (Theory) Filling of a casual vacancy of auditor in respect of a company audit.
Mr. A was appointed auditor of AAS Ltd. by Board to fill the casual vacancy that arose due to death of the auditor
Company Sec-139 (8) -Casual Vacancy
CoAud. 33 Both 2 originally appointed in AGM. Subsequently, Mr. A also resigned on health grounds during the tenure of
Audit I Mutliple Resignations
appointment. The Board filled this vacancy by appointing you through duly passed Board resolution. Comment.
Company Sec-140 (1) & Rule 7- Removal ABC Company Ltd. removed its First Auditor before the expiry of his term without obtaining approval of the
CoAud. 39 Both 8
Audit I before Expiry of term Central Government.
 Sec-140 (1) - Removal before
Company Why Central Government permission is required, when the auditors are to be removed before expiry of their
CoAud. 41 Both 2 and after tenure- difference in
Audit I term, but the same is not needed when the auditors are changed after expiry of their term?
provision-Reason
Company Sec-141(3) Disqualification of Under sub-section (3) of section 141 of the Companies Act, 2013 along with Rule 10 of the Companies (Audit and
CoAud. 51 Both 1
Audit I Auditor-Master Answer Auditors) Rules, 2014, state the persons who shall not be eligible for appointment as an auditor of a company
Company Sec-141(3) Disqualification - Mr. A, a practicing Chartered Accountant, is holding securities of XYZ Ltd. having face value of ` 900. Whether Mr.
CoAud. 53 Both 9
Audit I Security held by CA A is qualified for appointment as an auditor of XYZ Ltd.?
M/s BC & Co. is an Audit Firm having partners Mr. B and Mr. C, and Mr. A the relative of Mr. C, is holding
Company Sec-141(3) Disqualification -
CoAud. 55 Both 11 securities of MWF Ltd. having face value of ` 1,01,000. Whether M/s BC & Co. is qualified from being appointed as
Audit I Security held by relative of CA
an auditor of MWF Ltd.?
Company Sec-141 Disqualification/
CoAud. 57 Both 10 Ceiling on number of audits in a company to be accepted by an auditor.
Audit I Celling Limit-(theory)
Company Sec-141 (3) Disqualification- ‘B’ owes Rs 5,01,000 to ‘C’ Ltd., of which he is an auditor. Is his appointment valid? Will it make any difference, if
CoAud. 59 Both 7
Audit I Indebtedness the advance is taken for meeting-out travelling expenses?
Sec-141(3) & Sec-144. A person shall not be eligible for appointment as an auditor of a company where subsidiary or associate company
Company
CoAud. 61 Both 7 Disqualification - Prohibited or any other form of entity is engaged as on the date of appointment in consulting and specialized services as
Audit I
Services Investment Banking provided in Sec.144. Explain.
Company
CoAud. 63 Both 3 Sec-143(1)- Inquiry By Auditor Audit enquiry w.r.t. Companies Act, 2013.
Audit I
“T he remuneration of the auditor of a company shall be fixed in its general meeting or in such
Company Sec-142-Remuneration of the
CoAud. 64 Both 2 manner as may be determined therein.” Explain with reference to provisions of the Companies Act,
Audit I auditor
2013.
Sec-143 (1)- Duty to Report-
Company The auditor of Trilok Ltd. did not report on the matters specified in sub-section (1) of Section 143 of the
CoAud. 65 Both 5 Enquiry under- non reporting
Audit I Companies Act, 2013, as he was satisfied that no comment is required.
on matters- Satisfied
“The auditor’s report shall also state the observations or comments of the auditors on financial transactions or
Company Sec-143 (3)- Matters to be
CoAud. 70 Both 5 matters which have any adverse effect on the functioning of the company.” Discuss with relevance to Companies
Audit I incorporated in audit Report-
Act, 2013.
According to Companies Act, 2013, the person appointed as an auditor of the company shall sign the auditor's
Company
CoAud. 78 Both 2 Sec-145 signing of report. report in accordance with the relevant provisions of the Act. Explain clearly the relevant provisions relating to
Audit I
signing of report.
Company Right to report to the members The auditor shall make a report to the members of the company on the accounts examined by him. Explain with
CoAud. 83 Both 2
Audit I of the company reference to relevant provisions of the Companies Act, 2013.
Governm
GA. 01 Both 10 Duties of CAG Explain in detail the duties of Comptroller and Auditor General of India
ent Audit
Governm
GA. 15 Both 6 Propriety Audit Audit against the propriety seeks to ensure that expenditure confirms to certain principles.
ent Audit
Governm Audit of the accounts of stores and inventories has been developed as a part of expenditure audit with reference
GA. 25 Both 5 Audit of Stores
ent Audit to the duties and responsibilities entrusted to C&AG. Discuss.
 Governm
GA. 40 Both 2 Powers of CAG Briefly explain the powers of C&AG in connection with the performance of his duties.
ent Audit
Governm
GA. 45 Both 4 Audit of Local Bodies-Objectives State the important objectives of local body’s audit.
ent Audit
ICS.01 ICS Both 1 Purpose of Internal Control Explain the purpose of Internal Control.
Control Enviornment
A satisfactory control environment is not an absolute deterrent to fraud although it may help reduce the risk of
ICS.05 ICS Both 7 (Satisfactory) Positive but not
fraud. Explain
absolute deterent to fraud.
ICS.13 ICS Both 2 IT Risks Explain the specific risks to an entity’s internal control posed by IT.
So far as the auditor is concerned, the examination and evaluation of the internal control system is an
indispensable part of the overall audit programme. The auditor needs reasonable assurance that the accounting
Benefits of Evaluation of
ICS.31 ICS Both 1 system is adequate and that all the accounting information which should be recorded has in fact been recorded.
Internal Controls
Internal control normally contributes to such assurance. Explain stating clearly the benefits of evaluation of
internal control to the auditor.
ICS.33 ICS Both 1 Benefits of IT Controls Explain how does IT benefits an entity’s internal control.
In a medium size trading organisation the accountant was given additional responsibility of making recoveries
from the trade receivables. On one occasion, when an insurance claim of ` 45,000 was received, he credited the
ICS.39 ICS Both 3 Weakness in ICS (Case Study)
same to the account of a trade receivable and misappropriated the cash which he had recovered from the said
trade receivable. Pinpoint weaknesses in the internal control system which led to this situation. Comment.
Formulation of audit
programme after satisfactory
The auditor can formulate his entire audit programme only after he has had a satisfactory understanding of the
ICS.41 ICS Both 2 understanding of the I.C
internal control systems and their actual operation. Analyse and explain.
systems and their actual
operation
Statements and Guidance Discuss the following:
SAIntro.05 SA Intro Both 7
Notes of ICAI Statements and Guidance Notes of ICAI- whether mandatory or recommendatory?
Standards collectively known as the Engagements Standards issued by AASB under the authority of the council of
SAIntro.07 SA Intro Both 2 Types of Standards
ICAI – Discuss.