INTERMEDIATE – AUDIT

Chapter: The Company Audit, Nature Objective and Scope of Audit, Audit Strategy
Audit Planning and Programming.

Paper: Auditing and Assurance Marks: 50

SPC Receipt No: Time Allowed : 1.5 Hour
Test ID: 02361

PART A

MULTIPLE CHOICE QUESTIONS (10 X 1 Mark each)

1) Which of the following is eligible for appointment as auditor of company
a) Any Chartered Accountant
b) A Company whose all the directors are chartered accountants
c) Chartered Accountant holding valid certificate of practice
d) All of these

2) The auditor shall address audit report on the financial statement of company
a) To BoD of Company
b) To the Members of Company
c) To CG
d) To RoC

3) An individual is disqualified for appointment as auditor of co if he is indebtedness to co

a) Rs. 5,00,000
b) Exceeding Rs. 5,00,000
c) Exceeding Rs. 1,00,000
d) Any amount

4) Audit of which of the following companies is excluded from ceiling limit of audit
a) Government Companies
b) Private Limited Company having paid up share capital Rs 100 Crore or more
c) Audit of Public Companies
d) Dormant Companies

5) ADT-1 is filed with RoC within

a) Within 15 days of appointment of auditor
b) Within 30 days of appointment of auditor
c) Within 1 month of appointment of auditor
d) Within 60 days of appointment of auditor

6) Any auditor appointed to fill a casual vacancy shall hold office of auditor of company
a) Till conclusion of 6th AGM
b) Till conclusion of next AGM
c) Till he submits his audit report
d) None of these
7) refers to an attitude that includes a questioning mind, being alert to conditions which may
indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.
a) Professional skepticism
b) Professional Judgement
c) Integrity
d) Objectivity

8) In order to form the opinion, the auditor shall conclude as to whether the auditor has obtained
about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error.
a) reasonable assurance
b) absolute assurance
c) Limited assurance
d) None of the above

9) According to SA 210 “Agreeing the Terms of Audit Engagements”, The auditor shall agree the terms of the
audit engagement:
a) with management and those charged with governance, as appropriate.
b) with management
c) with those charged with governance
d) with management or those charged with governance, as appropriate.

10) In relation to completed engagements, procedures designed to provide evidence of compliance by

engagement teams with the firm’s quality control policies and procedures is known as :
(a) Monitoring
(b) Inspection
(c) Subsequent Audit procedures
(d) Compliance procedures

State with reasons (in short) whether the following statements are correct or incorrect: (5 X 1 Mark)
1) Specific disclosure is required of the fundamental accounting assumptions followed in the financial
statements.
2) The audit plan is more detailed than the overall audit strategy.
3) Planning is a discrete phase of an audit.
4) Director's relative can act as an auditor of the company.
5) If an LLP (Limited Liability Partnership Firm) is appointed as an auditor of a company, every partner of a firm
shall be authorized to act as an auditor.

PART B – THEORY

Q1) Engagement Partner CA Hitesh Kapur of Kapur and Associates wanted to develop an audit plan of
Sampurna Fabrics Ltd. Discuss the matters to be described in such an audit plan. Marks 5

Q2) Ram and Hanuman Associates, Chartered Accountants in practice have been appointed as Statutory
Auditor of Krishna Ltd. for the accounting year 2020-2021. Mr. Hanuman holds 100 equity shares of Shiva
Ltd., a subsidiary company of Krishna Ltd. Comment.
Marks 5
Q3) "CA. NM who is rendering management consultancy service to LA Ltd. wants to accept offer letter for
appointment as an auditor of the LA Ltd. for the next financial year." Discuss with reference to the provision
of the Companies Act, 2013. Marks 5

Q4) Both accounting and auditing are closely related with each other. Explain Marks 5

Q5) As per SA 220, “Quality Control for an Audit of Financial Statements” the auditor should obtain
information considered necessary in the circumstances before accepting an engagement with a new client,
when deciding whether to continue an existing engagement and when considering acceptance of a new
engagement with an existing client. Explain Marks 5

Q6) Managing Director of PQR Ltd. himself wants to appoint Shri Ganpati, a practicing Chartered Accountant,
as first auditor of the company. Comment on the proposed action of the Managing Director. Marks 5

Q7) State the advantages of audit of financial statements. Marks 5