The Hindu Business Line : Testing your auditing skills

a) After conducting the audit of a branch of a nationalised bank, the branch auditor purchases shares of this bank from the secondary market soon after releasing his audit report. (5 marks)

b) A company was producing chewing tobacco, which is banned by the Government. The company starts manufacturing energy drinks, but holds the machinery used for producing chewing tobacco and charges depreciation on this machinery. (4)

c) It is the practice of the company to price its issue of stores for production on LIFO basis. The company claims that the provisions of Accounting Standard 2 apply only to closing stock but has no applicability to pricing the issues to production. (5)

d) A company files papers with the Ministry of Company Affairs for change of its name and starts using the new name immediately thereafter. (4)

Q2: Examine if the following situations constitute professional misconduct:

a) During the course of audit of a couple of branches of a nationalised bank, an auditor finds that the NPA classification was not properly made. He writes to the Reserve Bank of India on this matter stating it is his responsibility to bring it to the regulatory authority. (5)

b) A member in practice joins a listed company as an independent professional director and also continues his practice. (4)

c) A member is the Director (Finance) for some of the private limited companies and he is appointed as auditor for other private limited companies having the same composition of shareholders and directors. (5)

d) A member signs a contract with a corporate educational institution to visit the institution for 15 days at a stretch and cover the auditing syllabus of CA examinations in 100 hours. (4)

Q3: (a) What are the requirements of tax audit in respect of deduction of tax at source? (6)

b) What is the list of books required to be maintained by stock brokers? (10)

Q4: (a) What are the possible situations (regarding attitudes of the management and workers) the auditor is likely to encounter in a management audit. (8)

b) What are the different types of reinsurance possible? (8)

Q5: (a) When is a computerised information systems environment said to exist? How does it impact the work of an auditor? (10)

b) What are the powers of the Comptroller and Auditor General (C&AG) in the audit of public sector undertakings. (6)

Q6: (a) What various points do you look in to while carrying out environment audit? (8)

b) What aspects are covered in a due diligence audit? (8)

Q7: How do concurrent audit, internal audit and operations audit differ from each other? (16)

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