Advanced Auditing, Assurance and Professional Ethics - May 2022

Associates, Chartered Accountants, is a partnership firm having 3 partners CA P, CA Q and CAR. PQR & Associates are appointed as Statutory Auditors of ABC Limited, a listed entity for the financial year 2021-22 and CA P is appointed as Engagement Partner for the audit of ABC Limited. Before issuing the Audit Report of ABC Limited, CA P asked CA R to perform Engagement Quality Control Review and is of the view that his responsibility will be reduced after…

(a) Mr. K has been appointed as statutory auditor of SK Limited for issuing an audit opinion on financial statements and internal controls over financial reporting (ICFR) for the year ended March 31, 2022 under the Companies Act, 2013. Guide Mr. K to prepare a checklist in the form of questions for testing internal control over cash and bank balances. When forming an opinion on ICFR is it necessary for Mr. K to test the transactions only at the balance…

M/s PQR Auto, a partnership firm, is engaged in manufacture of automobile spare parts having factory at Surat. CA S was appointed as the Tax Auditor of M/s PQR Auto for the Assessment Year 2022-2023. While carrying out the Tax Audit under section 44AB of the Income-tax Act, 1961. CA S observed following: (i) Interest of 750,000 paid to Vendor X who was registered under MSME Act, 2006. (ii) Interest payment 710,000 was incurred in relation to earning exempt interest…

(a) Comment on the following in the light of certificate of compliance of conditions of Corporate Governance to be issued under SEBI (LODR) Regulations 2015, for a Listed Company (one among the top 1000 listed companies) where the Board consists of 20 directors with a Non-executive director as its Chairman and further- PAPER - 3: ADVANCED AUDITING AND PROFESSIONAL ETHICS 11 (i) One Non-executive Director has attained the age of 70 years; (ii) One of the Directors is a Director…

(a) You have been appointed as an auditor of Safe Life Insurance Company Limited. During the course of audit you come across several cases of lapsed policies. Management is flooded with complaints from Agents and Life Assured regarding Policy lapses and Revival. The policy lapsation is tracked over the PMS software. You are requested by the Management to explain in clear terms about Policy lapses and Revival. Also state your role (b) In exercise of the powers conferred by clauses…

(a) CAH was appointed as a Statutory Auditor of MNL Limited, a listed company, which has three subsidiaries namely M Ltd., N Ltd., L Ltd. and also 15 branches across India. Auditors are duly appointed for the subsidiaries and branches as well. With regard to the determination of materiality during the audit of consolidated financial statements, what should be the considerations of CA H? How he should deal in his report if there are observations (for instance modification and/or emphasis…