Suggested hints: november 2012 advanced auditing examination

Question

Suggested Hints

1 (a)

Refer AS 4 and SA 570

1 (b)

Refer SA 250

1 (c)

Refer AS 4 (AS now overrides Revised Schedule VI. So even if Revised Schedule VI don’t require it, still the proposed dividend need to be provided for in books because of requirements of AS 4)

1 (d)

Refer AS 9 in Subject of Financial Reporting

2 (a)

Refer Code of Ethics for Sale of Goodwill

2 (b)

Refer Section 27 of CA Act, 1949 (as amended)

2 (c)

Refer Code of Ethics for presence of substantial interest of the Member in the entity (Most of the relations as covered under the Companies Act may not fall within the purview of AS 18. For instance, while the brother or sister of individual falls within the meaning of relative under AS 18, the spouse of an brother or sister of such individual does not fall within the purview of AS 18)

2 (d)

Refer Section 226. Disqualification attracted even if debt is owed in normal course of business. Audit fees cannot be adjusted in this manner as this will result in impairment of independence by virtue of self interest and self review threat. [Vodafone Telephone Bill case study orally discussed in the class]

3 (a)

Refer SA 315, 330, 520 and 450 (discussion about analytical procedures and test of details of transactions required)

3 (b)

General Question. Discuss Clause 8 & 9 of Part I First Schedule plus relevant provisions of Co. Act like Section 226, 224(1B) etc.

4 (a)

Refer Chapter on EDP Audit

4 (b)

Refer SA 705

5 (a) (i)

Refer Chapter on CARO [CARO applicable as the private company is a subsidiary of public company being body corporate in India by virtue of section 4(7) of the Co. Act] {Case Study orally discussed in the class}

5 (a) (ii)

Refer Clause 4 (xi)  and (xvi) of CARO on Term Loan

5 (b)

Refer SA 550

6 (a)

Refer Chapter on Due Diligence and Investigation

6 (b)

Refer Form 3CD in Chapter on Tax Audit

6 (c)

Refer Study Material of Financial Reporting

7 (a)

Refer Guidance Note on Audit of Consolidated Financial Statements

7 (b)

Refer Section 227(1A) of the Co. Act

7 (c)

Refer Chapter on Audit of Members of Stock Exchange

7 (d)

Refer Chapter on Other Aspects

7 (e)

Refer Chapter on Audit of PSU