For students preparing for the forthcoming CA-IPCC exams, here is a model paper on auditing.

1. State whether the following statements are true or false, giving reasons

1. Audit evidence in respect of estimates is less conclusive than other evidence

2. Vouching of payments is more difficult than vouching of receipts

3. Auditing in depth helps the auditor to evaluate effectiveness of internal control systems

4. Unearthing of frauds and errors is beyond the scope of an audit.

5. Test check and test audit are the same

6. An auditor is entitled to rely on the employees of the auditee.

7. Audit programme is not essential for audit of small companies.

8. Internal auditor of an entity cannot take up the tax audit of the same entity.

9. Audit against provisions is a part of audit of a company

10. Management representation merely serves the purpose of corroborating the available audit evidence.

2. A) Mr Kumar has bought goods worth Rs.1,500 from Hyderabad branch of a market chain. He is appointed as the branch auditor of Secunderabad branch. Can he accept the appointment? Advise him.

B) How is the audit of buy back of shares carried out?

C) What points are to be reported in CARO regarding fixed assets of a company?

D) Discuss the procedure for changing the auditor at the AGM.

3. A) What is the responsibility of the auditor regarding stock in trade and how is it discharged?

B) What precautions are to be taken while relying upon external confirmations?

4. A) What are the points to be considered by the auditor u/s 227(1A) of the Companies Act?

B) What are the rights of an auditor under the Companies Act?

5. How do you vouch/ verify any two of the following?

(a) prepaid expenditure (b) loose tools (c) patents

6. A) What special points do you consider in the audit of guest rooms in a star hotel?

B) What difficulties do you foresee during the audit of a non government organisation?

7. A) How is the C&AG appointed and what are his rights?

B) Why is it said that there is a loss of audit trail in case of computerised audits?

8. Write short notes on the following:

a) Auditor's lien; b) Management frauds; c) Relying upon an expert; and

d) Audit communications.

(The author is a Hyderabad-based chartered accountant.)

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