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Preparation Strategies for Auditing & Assurance - IPCC Paper 6

Anurag 
on 01 October 2013

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Instead of giving you a blanket statement “Study hard” etc, I though would give you more strategic insights. There is no assurance that the strategy I enumerate would necessarily work for you in the Auditing paper. However given my past experience of coaching students and authoring Auditing Mantras for CA IPCC, it is likely to have a reasonable degree of success.

The trickiest of the lot are the 34 Standards of Auditing (SAs) and the 10 Guidance Notes.  ICAI allocated 3 questions fetching 18 marks to it in May’13.  Of this two questions of 8 marks were in the Compulsory segment and one was in the optional part. The problem with SAs is that they appear too esoteric in nature. At the CA-IPCC level, the student has never worked in the practical domain and hence trying to decipher concepts like ‘Auditing Accounting Estimates, including fair value accounting estimates and related disclosures’ as enumerated in SA 540 or Engagement Quality Control etc go tangent off the student’s cerebrum and cerebellum. Each Standard is a maze of ideas. And then there are 34 of them- SA 200s, 500s, 600s and 700s. Thus voluminous as well

But given the importance the examiners are attaching to these, it is imperative that the student focuses on them. There is a two pronged strategy. One is to go through the 10 hours of my E-Learning lectures on the Board of Studies Portal of ICAI http://studentslms.icai.org/. The other is to generate block diagrams that capture the essence of the SA. This will enable to at least write something instead of going completely blank. I have listed them in the book ‘Auditing Mantras for CA IPCC’. Since you might not have access to the hard copy of the book, you can have a look at some at http://www.auditingmantras.com/. I have also made available a downloadable file which contains five standards at https://www.caclubindia.com/.

Then the focus should be on Company Audit -I and II. The Practice Manual mentions an average of 6 marks each from these chapters. There are a lot of case studies that can be asked from here, especially in the segment pertaining to Auditor’s qualifications, appointment, removal, retirement, Branch Auditors etc. Try to remember the clauses as well. Mentioning 227(3) (e) always creates a good impression, though it may not necessarily fetch more marks. First write the relevant provision and then your great opinion on the case, so that even if your interpretation goes wrong, you may fetch a mark or two on the interpretation.  Also understand how you would qualify audit reports in specific situations. It is really important to go through numerous case studies on this chapter. They are available in ICAI’s Practice Manual as well as Auditing Mantras.

The other is CARO. I often encourage my students to remember each and every clause as it helps you to not only answer questions specific to CARO but also often make references to it in your answers on Vouching and Verification. Focus on the applicability clauses as well. Sometimes they simply test whether you know that the Turnover threshold of Rs 5 cr. includes sale of goods as well as rendering of Services.

In Company Audit-II, you must be through with relevant provisions of the Companies Act for shares forfeiture, buyback, re-issue, reduction etc. The audit procedures would revolve around these statutory provisions only

Coming to Vouching and Verification (average of 6 marks and 5marks) coupled with Special Audit (average of 6 marks). Don’t ever try to mug up the points. You will be swamped by the magnitude of information that needs to be memorized. Again conceptual clarity needs to be instilled into your grey cells. You must try to visualize how you would logically proceed to audit a cinema or hospital. Block diagrams that capture the essence of this would again be handy and have been immensely useful for my IPCC students, especially for revision on the examination eve. Mention any relevant statutory provision to fetch decent marks. For instance, a reference to AS-13 would add a lot of sheen to your answer to how to verify Investments.

The chapters: -Nature of Auditing, Basic concepts in auditing and Preparation of an audit; again should be taken as another segment. Again it is important to get into the underlying concepts, rather than trying to memorize by rote. See the diagram pertaining to concepts of Sampling at http://www.auditingmantras.com/. Often ICAI has asked strange questions such as ‘Drafting an Engagement Letter’ in it’s entirely. Be careful on that front.

Internal Control is a very logical chapter. Try to get some senior who is undergoing article-ship to explain concepts like Computer Assisted Audit Techniques (CAAT) and Black Block vis a vis White Box approach.  Else you will land up being super confused

Finally it is important to go through the 15 year Scanner. It not only helps you understand the mark –wise distribution across chapters but also understand the answering pattern which ICAI expects.

Apart from ICAI’s Study material and Practice Manual, you could have a look at my book ‘Auditing Mantras for CA IPCC’. It is a Smart Learning Solution, striking the fine balance between detail and brevity as the CA-IPCC student has to cover a wide array of seven subjects in a short span of time. You student will find it useful to understand the concepts in the initial phase, as well as perform multiple revisions

Writing the Audit paper is also an art as eventually, no matter how much you study, you end up framing a lot of logical gupshup. So students are all beaming with smiles when they come out of the exam hall. The examiner is also used to it. He has been battling it since centuries

About the Author

CA. Anurag Singal is a graduate from St Xavier’s College, Kolkata. He secured All India Rank 22 and 25 in CA Final and CA PE-II respectively. He has authored the book ‘Auditing Mantras for CA IPCC’ http://www.auditingmantras.com/. He can be contacted at anurag@ auditingmantras.com


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