Advanced Auditing, Assurance and Professional Ethics - May 2023

(a) Joy Ltd. is an entertainment company which runs a circus and travels around the country to entertain the masses. The circus began losing its popularity over the past few years and attendance has reportedly dropped by as much as 75% in the current financial year. Animal rights activists continuously targeted the circus for its use of animal creatures like elephants in the show. The CEO noted that the audience seemed to be abandoning the circus due to their expanding…

(a) While conducting audit of PC Ltd., CA. T decided to use sampling technique to test the trade receivables at the planning stage. He directed his team members to divide the whole population of trade receivables balances to be tested in a few separate groups called ‘strata’. He directed to treat each stratum as if it was a separate population and divided the trade receivables balances of PC Ltd. for the Financial Year 2022 -23 into groups on the basis…

(a) As a part of the listing process, M/s Sun Ltd. prepared and issued its prospectus to the public. The top executives thought that pending litigation against the company (which would cause a cash outflow of ₹1.25 crores) may affect the demand for share applications. Due to this, they omitted the fact, for the well-being of the company. Mr. A, who was well aware of this matter had authorised himself to be named in the prospectus as a director. However…

(a) BETA Ltd is engaged in the Construction business since year 2001. The auditor understands that a thorough construction estimate is vital to the viability of any construction business and requested the information related to financing and operating estimated costs from the management to review the outcome of accounting estimates included in the prior period financial statements and their subsequent re-estimation for the purpose of current period. The management refused to provide the information to the auditor as it believed…

(a) MBP Ltd. is into the footwear manufacturing business and started its operations in the year 2015. For the last two financial years, the company's profit declined even when there was MBP Ltd. felt a need to assess how well their team is applying its strategies and resources. They appointed Mr. Pal to conduct the management audit with the objective of detecting and overcoming current managerial deficiencies. After completing the management audit, Mr. Pal is in the process of drafting…

Yarns Limited - a listed Company, having its registered office at Meerut is engaged in manufacturing of various types of yarns to be supplied to the textile mills. The Company has installed pollution control equipment for processing the pollutants so that before discharge of effluents outside factory, the level of pollution is kept at a level below the prescribed standard. The Company managed to get pollution clearance certificate by unfair means, while still there continues to be breach of pollution…