Order of Study: 

1) Chapter 7 – Company Audit – I 
2) Chapter 8 – Company Audit – II 
3) Chapter 9 – Special Audit 
4) Chapter 1 – Nature of Auditing 
5) Chapter 2 – Basic Concepts of Auditing 
6) Chapter 3 – Preparation for an audit 


7) Chapter 5 – Vouching (Remember main important common points) 

8) Chapter 6 – Verification (Remember main important common points) 

9) Chapter 4 – Internal Control 

Approximate time required to complete – 20-25 days. (3-4hrs a day) 

Approximate time required to revise – 4-7 days. (3-4 hrs a day) 


Important Questions: 
1. NATURE OF AUDITING 
. Basic Principles governing an audit 
. Auditors responsibility to consider fraud and error. 
. Inherent limitations of an audit. 
. Adv of an independent audit. 
. Qualities of a good auditor. 
. Diff. Between auditing, accounting & Investigation. 
. Dist between audit principles and audit techniques. 
. General purpose financial statements 
. Events which increase the risk of fraud or error leading to material misstatement. 
. What do you understand by auditing? Explain objectives, merits, demerits. 
. Types of errors and frauds and responsibility of auditor. 
. Work performed by others. 
. Limitation of Scope. 
2. BASIC CONCEPTS OF AUDITING 
. Reliabilty of audit evidence. 
. Methods of obtaining audit evidence. 
. Concept of materiality. 
. Disclosure of accounting policies. 
. Fundamental accounting assumptions. 
. Surprise checks. 
. Extra Ordinary items 
. Independence of auditor. 
. True & Fair view Financial Statement 
. Continuous audit. Adv & Dis adv. 
. B/s Audit. 
. Interim audit v/s Continous audit. 
. Going concern. 
. Compliance Procedure, Substantive procedure, Comp v/s Subst procedure. 

3. PREPARATION FOR AN AUDIT 
. Auditors engagement. 
. Audit working papers. 
. Stratified random sampling. Adv of statistical sampling 
. Audit risk – Components of Audit risk. 
. Relationship between components of audit: Inherent Risk, Control Risk & Detection 
Risk. 
. Relationship between materiality and audit risk. 
. Quality control from audit work. 
. Certificates from management. 
. Tolerable Error, Expected Error (Sampling) 
. Audit Note Book. 
. Test Check (Necessary Care) 
. Risks involved in statistical sampling. 
. Auditors lien. 
. Secret Reserve. 
. Audit programme. 
. Test check v/s Routine Checking. 
. Method of Selecting Sample. 
. Permanent audit file. 
4. INTERNAL CONTROL 
. Internal Control 
. Review and Testing of Internal Control. 
. Internal Control Questionnaire, Flow Chart. 
. Examination /Auditing in depth. 
. Computer Assissted audit techniques and how it improves efficiency of procedures. 
. General CIS controls and CIS Application controls. 
. Features of EDP environment. 
. Internal check v/s internal audit. 
. Audit trail 
. Inherant limitations of internal control. 
. Factors determining size of sample. 
. Audit risk. Components. 
. CIS – Benefits and problems. 

5. VOUCHING & 6. VERIFICATION 
Very important chapters. 
Go through compilation and remember important common points in all questions. 
7. COMPANY AUDIT – I (MOST IMPORTANT CHAPTER) 
. Disqualifications under section 226 
. Ceiling of audit. 
. Filling up of a casual vacancy. 
. Appointment of auditor by special resolution. 
. Re-appointment of auditors. 
. Auditors remuneration. 
. Removal of auditor. 
. Inquiry u/s 227 (1A) 
. Branch Audit (Exemptions) 
. Special Audit u/s 233A 
. CARO – Applicability & Exemptions. Condition for exemption for Pvt Ltd Co. 
. Qualified Opinion, Adverse Opinion, Disclaimer of Opinion. 
. Central govt. Power to appoint auditors. 
. Rights of Auditor. 
. Powers of a co. Auditor. 
. Cost Audit 
. Statutory Report u/s 165 (a) 
. Rights, Duties & Liabilities of auditor. 
. Bonus Share. 
. Auditors Report and different types. 
. Appointment of auditor – Special Resolution. 
. Who will appoint auditor if company fails to pass special resolution. 

8. COMPANY AUDIT – II 
. Shares issued for consideration other than cash 
. Sweat Equity shares 
. Option in share capital 
. Audit of debentures. 
. Buy Back 
. Items for which proper books of accounts should be maintained. Where these books 
should be maintained? 
. Special provisions when company has a branch. 
. Circumstance when proper books are not deemed to be kept. 
. Reduction of share capital. 
. Schedule Reqmnt Disclosure –(Share Capital, Fixed Assets,Cont. Liab, Misc Exp.etc.) 
9. SPECIAL AUDIT 
. Duties of C & AG. 
. Propriety audit. 
. Performance audit. 
. Audit of Government Cos. – Powers of C & AG. 
. Audit of NGO, Audit of receipts and payments. 
. Special steps in audit of Partnership firm. 
. Audit of Charitable institutions 
. Audit of Educational institutions. 
. Audit of Hospital 
. Audit of club. 
. Audit of Hotel 
. Independence of C & AG 
. Under Govt. Audit – 
o Audit against rules and order 
o Audit of sanctions 
o Audit against sanction of funds.