Rohita & Co. Chartered Accountants, mainly into statutory audit and tax audit, has received an order in writing from the Central Government, in respect of one of its clients, to carry out an investigation. Rohita & Co. is contemplating getting the assistance of an expert with respect to certain matters. Can Rohita & Co. take the assistance of experts in pursuing the investigation? Choose the correct reasoning from the below?
(a) Yes, Rohita & Co. should consider whether the assistance of other experts like engineers, lawyers, etc. is necessary in the interest of a comprehensive and full proof examination of documents and information. (b) Yes, SA 620 – Using the work of experts, has a specific paragraph on using an expert’s assistance for investigation. (c) No, the objective of SA 620 is to use the work of expert for audit of historical financial statements and not for investigation purposes. (d) No, since investigation is analytical in nature and requires a thorough mind, capable of observing, collecting and evaluating facts, the usage of an expert will hinder the independence of the investigator
A small concern has approached CA. Ajeet Nath for audit of accounts for year 2024-25. It later on transpired that preparation of accounts of the concern was outsourced to a third party which was engaged in preparation of books of this concern on a cloud server and was also preparing financial statements. The discussion amongst partners regarding agreeing to audit engagement remained inconclusive. Which of the following statements is MOST APPROPRIATE regarding agreeing to audit engagement of small concern?
(a) The management is responsible for preparation of books and financial statements. If management is not willing to acknowledge it, audit engagement should not be accepted. (b) The third party has prepared the books and financial statements. It should be acknowledged by third party and then audit engagement should be accepted. (c) It is implied that management is responsible for preparation of books and financial statements. No express acknowledgment from management is necessary. Hence, audit engagement should be accepted. (d) The management as well as third party should acknowledge joint responsibility for preparation of books and financial statements. Only then, audit engagement should be accepted
M/s ABC & Associates are the statutory auditors of PQR Ltd. for the FY 2024-25. While conducting the audit, CA Aman, the engagement partner noticed the following: 1. Payments of various fines and penalties 2. Unusual cash payments 3. Payments to various government employees not supported by any document 4. Notices received from various regulatory authorities. 5. Heavy payments to legal counsels.
CA Aman should consider the above as indicative of:
CA. Arvind and CA. Deepak were jointly appointed as auditors of Pullcord Ltd. to ensure efficient audit and reporting, Arvind and Deepak took the following steps: (i) After identification and allocation of work among themselves, the work allocation document was signed by both of them. Since in any case they were jointly responsible, they did not think it necessary to inform those charged with governance about the allocation. (ii) They decided to obtain a common engagement letter since their appointment was common. (iii) Since their area of work was different, they decided to obtain a separate management representation letter so as not to mix up the matters.
Which of the above were not correct in view of SA 299?
CA Praveen is appointed by KSN Ltd. for the year 2024-25. While verifying payroll data of the company, it has come to his notice that provisions of law preventing employment of child labour are not being adhered to and company is employing child labour. The company also exports part of its turnover and matter has gone unnoticed in compliance audits carried out by agencies of overseas buyers. With respect to the auditor’s observation relating to the matter of child labour, which is the most appropriate course of action for him to proceed in this matter?
(a) CA Praveen should ignore the matter as it will not affect financial statements. (b) CA Praveen must report the matter to the concerned government department. (c) CA Praveen should obtain further information to evaluate the possible effect on financial statements. Besides, he should evaluate implications of non-compliance for audit risk assessment. (d) CA Praveen should express a modified opinion in the audit report
During the audit of Tripti Chemicals Ltd., the auditors, Dishu & Co., identified unusual fluctuations in revenue while performing analytical review procedures. Upon further inquiry, they detected a misstatement in revenue recognition, which appeared to have been intentionally made by senior finance personnel. Although management contended it was a one-time error, the auditors suspected of potential fraud. In accordance with the Standards on Auditing, what would be the most appropriate course of action for the auditor?
(a) Rely on management’s assurance and proceed with issuing an unmodified audit opinion. (b) Perform additional analytical procedures only if the misstatement is material. (c) Evaluate whether the misstatement indicates fraud, reassess the risk of material misstatement due to fraud, and consider implications for audit evidence and management representations. (d) Immediately withdraw from the audit engagement without performing further procedures.
ADM & Associates, a medium-sized audit firm, has recently been appointed as the statutory auditor of Muonic Ltd., a listed pharmaceutical company involved in complex global operations and intensive R&D activities. The audit is being led by CA Rajul, an engagement partner. The company was previously audited by a Big 4 firm, which withdrew citing limitations in audit scope. During planning, CA Rajul observes that while her team has good experience with standard manufacturing audits, they lack exposure to pharmaceutical sector audits, especially in relation to R&D accounting and global regulatory requirements. As per SQC 1, what is the most appropriate action for CA Rajul to take after assessing that her audit team lacks experience in pharma R&D?
SDC & Co., a firm of Chartered Accountants, has been auditing the financial statements of a listed company for the past several years. The same engagement partner has been associated with the audit for eight consecutive years. During an internal quality review, the firm also realised that it had not obtained written confirmation from its personnel regarding compliance with independence policies during the year. Which of the following statements is correct with respect to the requirements of Standard on Quality Control (SQC) 1 and the ICAI Code of Ethics?
(a) The engagement partner may continue indefinitely if the firm believes independence is not impaired. (b) The engagement partner should normally be rotated after a predefined period not exceeding seven years, and the firm should obtain annual written confirmation of compliance with independence policies from relevant personnel. (c) Written confirmation regarding independence is required only at the time of appointment of personnel and not annually. (d) Independence requirements apply only to partners of the firm and not to other personnel or experts engaged by the firm.
Mr. C, auditor of a listed company, DEX Limited, signed its audit report on 21.8.2024. The regulator called the audit file in connection with some proceedings on 20.7.2025. He submitted audit files in the form of editable Excel files without any security feature on 10.8.2025. It later transpired that the audit file was modified between 20.7.2025 and 10.8.2025 by deleting certain information and adding fresh information in its place.
Which of the following statements is likely to be correct in this regard?
(a) Audit file was required to be assembled by 21.8.2024. Modification in the audit file after 21.8.2024 was generally not permissible. (b) Audit file was required to be assembled by 21.8.2024. Modification in the audit file before 20.7.2025 was generally permissible. (c) Audit file was required to be assembled by 20.10.2024. Modification in the audit file before 20.7.2025 was generally permissible. (d) Audit file was required to be assembled by 20.10.2024. Modification in the audit file after 20.10.2024 was generally not permissible except in certain exceptional circumstances.
Bansal Arora & Co., a Chartered Accountants firm, is currently performing an audit for Wool Ltd., a sizable manufacturing company. Mr. Bhavesh Bansal, an experienced audit engagement partner, holds the responsibility of ensuring that the audit engagement aligns with the professional standards, adheres to regulatory requirements, and complies with the legal obligations. His duties encompass the overall supervision, direction, and the final issuance of the audit report. While conducting the audit, the engagement team encounters a complex issue pertaining to the valuation of the company's inventory. Within the team, there are differences of opinions on how to address this matter, resulting in a contentious situation. What is Mr. Bhavesh’s responsibility in this situation?
(a) Mr. Bhavesh shall adhere to the firm’s policies only for addressing and resolving differences of opinion. (b) Mr. Bhavesh should secure management’s representation concerning the valuation and proceed with further audit procedures. (c) Mr. Bhavesh should ensure that appropriate consultation occurs within the engagement team and, if necessary, with individuals at an appropriate level within or outside the firm. (d) Mr. Bhavesh should communicate the issue to the client's management for resolution.
CA Final Audit Classes by Neeraj Arora
Rohita & Co. Chartered Accountants, mainly into statutory audit and tax audit, has received an order in writing from the Central Government, in respect of one of its clients, to carry out an investigation. Rohita & Co. is contemplating getting the assistance of an expert with respect to certain matters. Can Rohita & Co. take the assistance of experts in pursuing the investigation? Choose the correct reasoning from the below?
(a) Yes, Rohita & Co. should consider whether the assistance of other experts like engineers, lawyers, etc. is necessary in the interest of a comprehensive and full proof examination of documents and information.
(b) Yes, SA 620 – Using the work of experts, has a specific paragraph on using an expert’s assistance for investigation.
(c) No, the objective of SA 620 is to use the work of expert for audit of historical financial statements and not for investigation purposes.
(d) No, since investigation is analytical in nature and requires a thorough mind, capable of observing, collecting and evaluating facts, the usage of an expert will hinder the independence of the investigator
18 hours ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
A small concern has approached CA. Ajeet Nath for audit of accounts for year 2024-25. It later on transpired that preparation of accounts of the concern was outsourced to a third party which was engaged in preparation of books of this concern on a cloud server and was also preparing financial statements. The discussion amongst partners regarding agreeing to audit engagement remained inconclusive. Which of the following statements is MOST APPROPRIATE regarding agreeing to audit engagement of small concern?
(a) The management is responsible for preparation of books and financial statements. If management is not willing to acknowledge it, audit engagement should not be accepted.
(b) The third party has prepared the books and financial statements. It should be acknowledged by third party and then audit engagement should be accepted.
(c) It is implied that management is responsible for preparation of books and financial statements. No express acknowledgment from management is necessary. Hence, audit engagement should be accepted.
(d) The management as well as third party should acknowledge joint responsibility for preparation of books and financial statements. Only then, audit engagement should be accepted
1 day ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
M/s ABC & Associates are the statutory auditors of PQR Ltd. for the FY 2024-25. While conducting the audit, CA Aman, the engagement partner noticed the following:
1. Payments of various fines and penalties
2. Unusual cash payments
3. Payments to various government employees not supported by any document
4. Notices received from various regulatory authorities.
5. Heavy payments to legal counsels.
CA Aman should consider the above as indicative of:
3 days ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
CA. Arvind and CA. Deepak were jointly appointed as auditors of Pullcord Ltd. to ensure efficient audit and reporting, Arvind and Deepak took the following steps:
(i) After identification and allocation of work among themselves, the work allocation document was signed by both of them. Since in any case they were jointly responsible, they did not think it necessary to inform those charged with governance about the allocation.
(ii) They decided to obtain a common engagement letter since their appointment was common.
(iii) Since their area of work was different, they decided to obtain a separate management representation letter so as not to mix up the matters.
Which of the above were not correct in view of SA 299?
4 days ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
CA Praveen is appointed by KSN Ltd. for the year 2024-25. While verifying payroll data of the company, it has come to his notice that provisions of law preventing employment of child labour are not being adhered to and company is employing child labour. The company also exports part of its turnover and matter has gone unnoticed in compliance audits carried out by agencies of overseas buyers. With respect to the auditor’s observation relating to the matter of child labour, which is the most appropriate course of action for him to proceed in this matter?
(a) CA Praveen should ignore the matter as it will not affect financial statements.
(b) CA Praveen must report the matter to the concerned government department.
(c) CA Praveen should obtain further information to evaluate the possible effect on financial statements. Besides, he should evaluate implications of non-compliance for audit risk assessment.
(d) CA Praveen should express a modified opinion in the audit report
5 days ago | [YT] | 1
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CA Final Audit Classes by Neeraj Arora
During the audit of Tripti Chemicals Ltd., the auditors, Dishu & Co., identified unusual fluctuations in revenue while performing analytical review procedures. Upon further inquiry, they detected a misstatement in revenue recognition, which appeared to have been intentionally made by senior finance personnel. Although management contended it was a one-time error, the auditors suspected of potential fraud. In accordance with the Standards on Auditing, what would be the most appropriate course of action for the auditor?
(a) Rely on management’s assurance and proceed with issuing an unmodified audit opinion.
(b) Perform additional analytical procedures only if the misstatement is material.
(c) Evaluate whether the misstatement indicates fraud, reassess the risk of material misstatement due to fraud, and consider implications for audit evidence and management representations.
(d) Immediately withdraw from the audit engagement without performing further procedures.
6 days ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
ADM & Associates, a medium-sized audit firm, has recently been appointed as the statutory auditor of Muonic Ltd., a listed pharmaceutical company involved in complex global operations and intensive R&D activities. The audit is being led by CA Rajul, an engagement partner. The company was previously audited by a Big 4 firm, which withdrew citing limitations in audit scope. During planning, CA Rajul observes that while her team has good experience with standard manufacturing audits, they lack exposure to pharmaceutical sector audits, especially in relation to R&D accounting and global regulatory requirements. As per SQC 1, what is the most appropriate action for CA Rajul to take after assessing that her audit team lacks experience in pharma R&D?
1 week ago | [YT] | 0
View 0 replies
CA Final Audit Classes by Neeraj Arora
SDC & Co., a firm of Chartered Accountants, has been auditing the financial statements of a listed company for the past several years. The same engagement partner has been associated with the audit for eight consecutive years. During an internal quality review, the firm also realised that it had not obtained written confirmation from its personnel regarding compliance with independence policies during the year. Which of the following statements is correct with respect to the requirements of Standard on Quality Control (SQC) 1 and the ICAI Code of Ethics?
(a) The engagement partner may continue indefinitely if the firm believes independence is not impaired.
(b) The engagement partner should normally be rotated after a predefined period not exceeding seven years, and the firm should obtain annual written confirmation of compliance with independence policies from relevant personnel.
(c) Written confirmation regarding independence is required only at the time of appointment of personnel and not annually.
(d) Independence requirements apply only to partners of the firm and not to other personnel or experts engaged by the firm.
1 week ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
Mr. C, auditor of a listed company, DEX Limited, signed its audit report on 21.8.2024. The regulator called the audit file in connection with some proceedings on 20.7.2025. He submitted audit files in the form of editable Excel files without any security feature on 10.8.2025. It later transpired that the audit file was modified between 20.7.2025 and 10.8.2025 by deleting certain information and adding fresh information in its place.
Which of the following statements is likely to be correct in this regard?
(a) Audit file was required to be assembled by 21.8.2024. Modification in the audit file after 21.8.2024 was generally not permissible.
(b) Audit file was required to be assembled by 21.8.2024. Modification in the audit file before 20.7.2025 was generally permissible.
(c) Audit file was required to be assembled by 20.10.2024. Modification in the audit file before 20.7.2025 was generally permissible.
(d) Audit file was required to be assembled by 20.10.2024. Modification in the audit file after 20.10.2024 was generally not permissible except in certain exceptional circumstances.
1 week ago | [YT] | 0
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CA Final Audit Classes by Neeraj Arora
Bansal Arora & Co., a Chartered Accountants firm, is currently performing an audit for Wool Ltd., a sizable manufacturing company. Mr. Bhavesh Bansal, an experienced audit engagement partner, holds the responsibility of ensuring that the audit engagement aligns with the professional standards, adheres to regulatory requirements, and complies with the legal obligations. His duties encompass the overall supervision, direction, and the final issuance of the audit report. While conducting the audit, the engagement team encounters a complex issue pertaining to the valuation of the company's inventory. Within the team, there are differences of opinions on how to address this matter, resulting in a contentious situation. What is Mr. Bhavesh’s responsibility in this situation?
(a) Mr. Bhavesh shall adhere to the firm’s policies only for addressing and resolving differences of opinion.
(b) Mr. Bhavesh should secure management’s representation concerning the valuation and proceed with further audit procedures.
(c) Mr. Bhavesh should ensure that appropriate consultation occurs within the engagement team and, if necessary, with individuals at an appropriate level within or outside the firm.
(d) Mr. Bhavesh should communicate the issue to the client's management for resolution.
1 week ago | [YT] | 0
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