| Roll No………………… | |
| Total No. of Questions— 8] | [Total No. of Printed Pages—2 |
| Time Allowed : 3 Hours | Maximum Marks : 100 |
| ABC | |
| Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued. | |
| Answer Questions 1 and 2 and any four from the rest. | |
| Marks | |
| 1. | State with reasons your views on the following: | ||
| (a) | The auditor fails to obtain sufficient information to form an overall opinion by the matters contained in the financial statements. | 4 | |
| (b) | The Auditor does not agree with affirmation made in the financial statements. | 4 | |
| (c) | Ram and Hanuman Associates, Chartered Accountants in practice have been appointed as Statutory auditor of Krishna Ltd. for the accounting year 2002-2003. Mr Hanuman holds 100 equity shares of Shiva Ltd., a subsidiary company of Krishna Ltd. | 5 | |
| (d) | Mr. Rajendra, a fellow member of the Institute of Chartered Accountants of India, working as Manager of Shrivastav and Co., a Chartered Accountant firm, signed the audit report of Om Ltd. on behalf of Shrivastav & Co. | 5 | |
| 2. | As a Company Auditor how would you react to the following situations? | ||
| (a) | A publishing company undertook repair and overhauling of its machinery at a cost of Rs. 2.50 lakhs to maintain them in good condition and capitalised the amount as it is more than 25% of the original cost of the machinery. | 3 | |
| (b) | Inventories of a Car manufacturing company includes the value of items, required for the manufacture of a model which was removed from the production line five years back, at cost price. | 3 | |
| (c) | Interest on loan borrowed to purchase a machinery which has been installed two years back is still debited to Machinery Account. | 3 | |
| ABC | P.T.O. |
( 2 )
| ABC | Marks |
| (d) | Sale value of scrap items adjusted against Miscellaneous Expenditure | 3 | |
| (e) | Insurance claim of Rs. 2 Lakhs received stands included under Miscellaneous Income | 3 | |
| (f) | Rs. 5 Lakhs paid by a pharma company to the legal advisor defending the patent of a product treated as capital expenditure. | 3 | |
| 3. | Comment on the following: | ||
| (a) | "For initial audit engagements, the auditor should obtain sufficient appropriate audit evidence as per SAP-22". | 6 | |
| (b) | "Auditor's professional responsibilities are governed by basic principles which should be complied with whenever an audit is carried out". | 10 | |
| 4. | Explain the Internal controls in an EDP Environment. | 16 | |
| 5. | How will you vouch and/or verify the following? | ||
| (a) | Retirement Gratuity to Employees. | 4 | |
| (b) | Sale Proceeds of Junk Materials. | 4 | |
| (c) | Assets Abroad | 4 | |
| (d) | Patent Rights. | 4 | |
| 6. | Comment on the following: | ||
| (a) | "The audit firm should implement quality control policies and procedures". Explain. | 8 | |
| (b) | How will you conduct the audit of Incomplete Records? | 8 | |
| 7. | Explain the audit procedure for conducting the audit of a Non-governmental Organisation (NGO)? | 16 | |
| 8. | Write short notes on the following: | ||
| (a) | Buy Back of Own Securities. | 4 | |
| (b) | Audit Risk. | 4 | |
| (c) | Disclosure of Accounting Policies | 4 | |
| (d) | Option on Share Capital | 4 | |
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