RISE PREMIER SCHOOL OF ACCOUNTANCY

Section: C-1
Subject: Audit & Assurance Total Marks: 20
Teacher: Sir Nosherwan Ali Abbas Khawaja Time allowed: 30 Minutes

Test-01
Syllabus: Chapter 1: 1.1,1.2, 1.3, 1.4, 1.5, 2.1, Date: April 5th, 2023
2.2, 2.3, 3.1, 3.3, 4, 4.6 and 5

Name: Rise ID:

Instructions: Attempt all question

Questions 1:
Haris & Company, Chartered Accountants was appointed as the auditor of Cactus (Private) Limited
(CPL) for the year ending 31 December 2021. Haris, the only audit partner of Haris & Company,
passed away on 5 September 2021. No other auditor has yet been appointed by CPL.

Required:
State the requirements of the Companies Act, 2017 for the appointment of auditor in the above
situation. (4
Marks)

Questions 2:
Amjad is the chief executive and major shareholder of a newly incorporated private limited company.
He has offered your firm to be the first external auditor of the company. During a meeting, he was of
the viewpoint that statutory audit exists because it has been legally mandated and it does not add
value to business. However, he believes that audit helps in finding all major frauds within the
company.

Required:
Discuss how you will respond to the viewpoints of Amjad regarding the audit of financial
statements. (7
Marks)

Question 3:
Distinguish between absolute and reasonable assurance. Identify the type of assurance that is
expected in an audit of the financial statements, clearly outlining the reasons to justify your point of
view along with why auditor can not give absolute assurance.

Required: Advise the concerned partners/managers with respect to the above matters.
(9
Marks)