Demystifying the myth around CA Final Audit paper


I have recently seen doubts of students across the country that they're not really clear with how to prepare for the Audit paper at CA Final level and due to this they end up scoring pretty less in this paper and sometimes students are not able to clear Group I because of this paper.

Before speaking on it, I would like to like to introduce myself, I am a recently qualified Chartered Accountant & I scored 67 in Audit, also I am a CFA(USA) Level II Candidate.

Coming back, it is pretty unfortunate that many of us had something to do with Audit during our articleship are facing tough time with this paper, this goes to show the divide between exams and practical life. All the 8 papers involve a different approach to excel, I feel those who have cleared their exams have not guided students properly with regards to preparation for this paper, many passouts are of the impression that just by studying from Practice Manual of the Old Course or Scanners along with some summary charts will be sufficient for Audit.

Issue is those giving such guidance might have cleared because of FR/SFM, as recently we have seen that students have been scoring exemptions quite easily in these two papers and just by scoring in 40's in Audit they're able to clear Group I, which to be honest is something which all of us have tried to do but it might not work for one and all, hence students who are to yet to appear for exams should consider such factors before taking a short cut route for their preparation. CA exams are pretty unpredictable and we should be prepared for the worst, unless we're prepared enough to score an exemption in all the papers we're taking a gamble because as per the trends, atleast 2 papers in a group would be extraordinarily difficult and since our preparation for Audit as it is not upto the mark, even before appearing for the exams we're in for a tough battle.

Since the November 2017 attempt, one can notice a drastic change in the way question paper is framed, they're not really asking repeated questions (i.e. questions from PM, RTP's, mocks etc.) in subjects like Audit, Law and Direct Tax, whereas if you see papers before November 2017 atleast 70-80% of the paper were been asked directly from such sources and hence a student didn't really had to stress on any analytical skills to score bare minimum 40 in Audit and for that matter in Direct Tax too which is an ocean in itself.  Due to this students were plainly interested in rote learning of whatever is given in the material which is being referred by them for their preparation without giving any thoughts about what exactly is the reason behind a particular section or a particular audit procedure for an examples, since they have been asking case study based questions in last few attempts and will be asking MCQ's from next attempt, it is imperative that students should focus on more on analytical side of the student, which to be honest makes the subject interesting too, though you would have to spend additional time preparing it. 

Advantage of all this is that you will be more familiar with technical terms and your interlinking skills will drastically improve because you're studying by giving due respect to the subject. They expect us to quote technical terms in the paper, know about various upcoming developments in the field of Audit say Internal Financial Controls (IFC) and Internal Financial Controls over Financial Reporting (IFCoFR) which was asked in November 2018 but not many were sure about it even though reference of IFC is given under Section 134, 143, 177 and Schedule IV of the Companies Act, 2013 also there is a separate Guidance Note for IFC which is applicable for exams. Also, they framed questions on Inter corporate loans, Examples where Analytical Procedures can be used under Review Engagements as per SAE 2410, Basic question on compliance of IndAS and Group financial statements, Reporting requirements on CARO/Companies Act regarding Fraud, Compliance under LODR regulations etc. If I add up all this it should be around 25-30 marks where analytical skills were tested and in the next attempt same thing will happen because MCQ's will test you conceptually.  To survive in the changing approach of ICAI towards the Audit paper it is imperative for students to brush up their analytical skills to answer all the twisted questions of Standards and Company Audit, luckily questions from all the other chapters are still pretty straight forwards for those who have studied from the Study Material.

Saying that you got to do this and that is pretty easy for me, I would like to share my strategy towards this subject. First of all I did a basic trend analysis to understand where I should focus more on since the curriculum is huge and I had to keep in mind that just reading it for the sake of it is not a big deal but being able to revise everything on the day of the exam and be in a position to answer things properly had to be my priority.


Part Content  Chapters Nov-18 May-18 Nov-17 May-17
A Ethics and Company Audit Ethics, Company Audit, Liabilites of Auditors, Audit Report, Audit Committee & Corporate Governance, Consolidation, Cost Audit. 52 42 34 57
B Other Audit Banks, Insurance, NBFC, Co-operative Societies, PSU's, Cost Audit  16 21 8 8
C Misc. Chapters Special Audit, Internal Mgmt Operational Audit, Investigation & Due Diligence, Peer Review, CIS Audit, Fiscal Laws 23 23 47 19
D Standards others Audit Strategy Planning Programming, Risk Assessment and Internal Controls, Special Audit techniques 4 8 0 27
E Part E - Standards and Guidance Notes - Audit Pronouncements textbook Application of SA's 20 26 16 9
F AS & Ind AS   5 0 15
Total     120 120

I have basically divided the subject into 6 parts as which can be seen from above. What I concluded is focusing just on Standards and ignoring Miscellaneous chapters might just not be the correct way to approach the subject. Thing with Miscellaneous chapters is questions asked on such topics are pretty straight forward and if you have referred the Study Material for the same, chances are high that you might score full marks in these questions. Personally, I zeroed on all the content which has been described in the pointer format in the Study Material, I copied the head point and the wrote the relevant content in my own language in a separate notebook (one can make a summary in the book itself if they don't have time to write things down), this helped me concise the miscellaneous portion easily, I noticed while going through past papers is that they straight away ask those questions which are covered in pointer format in the Study Material which are not already covered in the PM (this is the only hack I can give you). Also, they look out for few terms in your answers and not your language skills, hence if you have written that key word but your language might not be upto the mark, you will still get marks, hence you got to be really hands on with your content and basically those key words which summarizes the whole meaning of the sentence.

In an order of priority I started off with Professional Ethics, it is pretty straight forward and they have been asking case studies based on the content as specified in the Study Material, I wrote all the clauses along with their description separately and used read & revise them frequently, to score a perfect 4 in Ethics you got to write clause number as well as the description is I what I feel. Then I completed the Company Audit part from the Study Material and also did SA 700 series along with it because there is a separate chapter of Audit Report in the Company Audit section (I also did Accounts and Audit portion of Law too along with this), then came the Miscellaneous chapters, biggest headache is retain them, hence I preferred to write them down in a manner which I wrote above and used to again read and revise them. Post that I did other chapters of Standards like Planning etc and finally SA's then. I erred in my preparation for SA's hence I not discussing it, but making a summary of PM and referring VK Agarwal/Aarti Lahoti's textbook should be enough.

Problem with Standards is that you're not sure what might turn up in the exams, general trend is they ask 2-3 repeated questions from past attempts and 2-3 questions from the Auditing Pronouncements books (yes that fat one), that book contains the bare text of Standards and Guidance Notes, again whatever is mentioned in the pointer format and certain illustrations/examples in the Standards is what they target. For example, there was a question asking Examples where Analytical Procedures can be used under Review Engagements as per SAE 2410 is given under Page 675 of the book. Now you never know that whichever author's book you're referring would have all the required things from that Pronouncement, which to me is an unrealistic expectation because for 10-12 marks doing so much is really not worth it, it is better to focus more on Ethics, Miscellaneous and Other Audit part of the curriculum. Company Audit is an area where they would probably ask twisted questions but if you do it properly, it won't be much of an issue. Even if you're compromising a bit on Standards, you will still be in a decent enough position to attempt and score decent if you're covering Miscellaneous topics along with Ethics and Company Audit properly. One more tip which can be considered is making a summary of all the answers of SA's in the PM, so that on the day of the exam you can revise those in a matter of few hours along with your notes for the Standards, and maximum time can be given to topics which will help us in scoring. For AS and IndAS they have been asking basic application based questions which in most cases are covered while preparing for Financial Reporting paper. I have also observed that people leave CIS Audit and Bank Audit in option, I studied both these topics from the SM but to be honest, I just read Bank Audit but really didn't emphasised on it, I made a decision that I will write my own points assuming I am auditing a Bank and luckily they asked a simple question on Vostro accounts I believe and I was able to answer it, though not perfectly but enough to score a bare minimum 2 out 4, I did CIS Audit comprehensively from the SM because it ain't that big and questions again are directly framed on the content given in pointer format in the SM.

I am not advising you to leave Standards on a whole, all I am saying is we got to do smart study to understand what is to be done to get the right results, especially for those who are not able to clear their Group 1 just because of Audit or are unsure about how to prepare for Audit and have exams coming up. For those, you have time on their side and are willing to put in the desired efforts, they can read Standards from the Audit Pronouncements textbook and make their summary notes which can be referred when they go for study leaves to prepare for their exams.

I did self study for Audit and referred ICAI Study Material for Miscellaneous, Ethics, Company Audit and other chapters of Standards. For Standards, I would recommend Aarti Lahoti ma'am's textbook, that book is the closest thing to the Pronouncement textbook. I used to read my notes everyday for an hour or so because I am not someone who is good in memorizing stuff, alternatively you can prepare your own voice notes and hear them everyday but do not borrow anyone else's, everyone is different and you got to understand your level of preparation and then accordingly work on it. If you have already started studying for Audit, just compare your book once with the ICAI study material to ensure nothing is missing. Do not change your reference book now. 

Do remember that content is the king always, once you're hands on with it, won't be an issue going ahead. Let them test you either through MCQ's or descriptive type, you'll be alright. I have seen students stressing way too much about MCQ's which has diverted their attention from the fact that they should be focusing on understanding the content inorder to retain it rather than running like a headless chicken behind MCQ's. No one really knows, how will the MCQ's will be asked, hence students should not blindly rely on anyone and better up the ante as far as preparation is concerned.

A day before the exam, again I erred a bit in my preparation because I wasted a lot of time on Standards which to be honest didn't do a lot of favor and I had to compromise a bit on Miscellaneous chapters, hence whenever you're studying plan how will you revise everything on the day of the exam else all the efforts which you have taken during your study leaves would be futile. 

Now coming to 1:45 PM on the day of the exam, make sure you have read the paper in around 8-10 minutes, one can skip the Q1 and a separate question for Ethics while reading the paper for the first time, make your choice in next 2-3 minutes and then go for the Ethics question, if you feel you can attempt that all the questions of Ethics then start off with it and then do 2 questions which you feel you know the best. Like in all papers, it is imperative that you start off well, if not examiners will have e impression and scoring will be a difficult especially in Audit because it is a subjective paper examiners have right to award marks on their discretion, here you do not have a fixed and final answer on the basis on which you'll be evaluated, hence optimum care should be taken to start off well. Accordingly then go with the flow and attempt all the questions, at the end of day even a single mark matters in Audit hence we should try to attempt cent percent. 

Post all this do not discuss once you're out of the classroom, as I said Audit is a subjective paper and lot of depends how examiner evaluates your paper, hence it is advisable to get rid of all the baggage from Audit and start afresh for Law. 

New Course curriculum has some addition and deletion vis-a-vis the Old Course though basics are still the same, students can follow this approach if they're clueless. I'm available at abhijeetmohta95@gmail.com if anyone has specific or personalized query in their preparation

Disclaimer: I have written this article based on my own experience. I am not in favor or against anyone as I did my preparation on my own.

I have also attached my result for your reference below and I would be forever in peace with myself for all the efforts I took to prepare for Audit which ultimately helped in clearing this exam because a mediocre preparation in Audit and I would had possibly failed in both groups. 


Roll Number 373304
Name ABHIJEET A MOHTA
Group I
Financial Reporting 066
Strategic Financial Management 043
Advanced Auditing and Professional Ethics 067
Corporate and Allied Laws 048
Total 224
Result PASS
Group II
Advanced Management Accounting 050
Information Systems Control and Audit 050
Direct Tax Laws 056
Indirect Tax Laws 043
Total 199
Result PASS
Grand Total 423<

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Abhijeet Mohta 
on 07 February 2019
Published in Exams
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