wur Roll Total No, of Questions - 7 Time Allowed - 3 Hours Attempt all questions. 1. Asan auditor, give your opinion with explanations on the following cases: a> Ay Lid. sold the Mats to Ke Lig, for Rs. 30 lakhs on 30/10/2075 and gave 7 possession of the property to Ke Ltd, However, Malpot documentation and legal formalities are pending. Due to this, the company has not recorded the sale and has shown the amount received as an advance. The book value of the building is Rs. 25 lakhs as on Ashadh end 2076, by Agri Nepal Pvt. Ltd, has a business of agricultural farm. The Government of Xepal has provided grant of Rs. 10 lakhs against the bank guarantee with a ondition that the company has to export its product worth of Rs, $0_lakhs per year in next Wo fiscal year, Guide the accountant of the company for the accounting of the grant ) TCIN Pvt. Lid. has been fighting a legal case since last three years. ‘The legal team of the company has assured that company will win the case. During the year some new facts have developed and these facts are not in favor of the company. If the company loses the case it has to pay Rs. 25 lakhs to other party, The company has approached to you for dealing with the situation. A) You are the auditor of Nepal Fashion Pxt_Ltd. (the company) for the FY 2075/076. Total number of sharcholder of the company since financial year 2074/075 are 115 which includes 11 employees. 2. Give your comments on the following cases: A) Inland Expeditions Ltd, is a uavel company engaged in the trekking of tourists. Dara_and Associates has been appointed as the auditors to carry out its audit. ‘Auditorihinks that planning an audit would involve establishing the overall audit, strategy for the engagement_and developing an_audit_plan, Also, adequate planning benefits the audit of financial statements in several ways, » Mr. HKA, Chartered Accountants has used the expert's work on the audit of Biotech Company Ltd. In the audit report he wants to use the reference of the expert’s work. 2 The statutory auditor of Nara Pvt, Ltd. was not able to get the confirmation about the existence and value of certain_machineries. However, the management gave him a cenificate proving the existence and value of the machinery as appeared in the books of account. The auditor accepted it without carrying out_any further any finer! procedure and signed the audit report. d) Mrs, Y, a statutory auditor of MNP Ltd., wants to verify cash on hand on 31" Ashadh, 2076, The management informs auditor that it is not possible to co- operate, as cashier has been hospitalized. 3. Answer the following: 9 Explain the relationship between Materiality and Audit Risk. b)- What are the factors that may assist the auditor in determining whether external * confirmation procedures are to be performed as substantive audit procedures while responding the assessed risks? ¢) Explain the basic clements of an assurance engagement. WuI (4x5=20) (3x5=15) PT.O,Q 4. Answer'Comment on the following: (35"15) a) Gayatri Associates, Chartered Accountant has been appointed by Gandaki Bank Limited to provide merger consulting * whe The Banks has agreed to pay fee of Rs. Lerore if consultant can fix merset thany top 19 banks. Comment on this in the light of ICAN Code of Ethics by CA. Ram is he protiing Chartered ACEOUBLAN, proprietor of Ram & Associates Rajdhani Lu his e9-aalit client asked bis pinion regarding application of Nepal Financial Reporting Standards in certait nancial components. What will be the duty of CA. Ram in this situatio ©) What are the factors that could impair the firm's independence for the © engagements? 5. AnswerComment on the following: (+510) 3) Explain the procedures for appointment of auditor of corporate bodies holly / oaned by Government of Nepal, Provincial Government and Local Level b) CA. Ram Sharma is a partner of Ram & Shyam Associates; Chartered Accountants. CA, Ram is nominated in the Board of armatha Securities Ltd. as professi irector with effect from 30" Jestha 2074 for three years. Subsequently his firm has been appointed as auditor for the financial year 3075/76. Give your opinion on the validity of appointing his firm as auditor in line With the provision of Securities Act. 6,/ Write short notes on the following: (42.5910) a) Permanent Audit File b) Statistical Sampling in Auditing ¢) Uses of Negative External Confirmation Requests d) Objectivity in an Audit (2x5=10) Je Distinguish between: a) Audit and Investigation b) Test of Controls and Substantive Procedure Wul