| 1. | (a) | Discuss with reasons, whether the following statements are ‘True’ or ‘False’ (Mere conclusion will not be sufficient). | 7x2 | |
| | | (i) | Where Joint Auditors are appointed, a Joint Auditor is responsible only for the work allotted to him. | | (0) |
| | | (ii) | A committee appointed by the Board of Directors should submit to the Board, a Report on the material changes and commitments, if any, affecting the financial position of the Company, occurring after the Balance Sheet date; such Report need not be laid before the Company in General Meeting. | | (0) |
| | | (iii) | As per Indian GAPP, R & D costs can be capitalized unconditionally. | | (0) |
| | | (iv) | Materiality is an important and relevant consideration for an auditor. | | (0) |
| | | (v) | The main objective of financial audit and cost audit is different and distinct. | | (0) |
| | | (vi) | The Auditor is responsible for preparation of financial statements of limited companies. | | (0) |
| | | (vii) | The overall objective and scope of audit do not change in EDP audit. | | (0) |
| | (b) | As the statutory auditor of a limited company, how will you deal with the following: | 3x2 | |
| | | (i) | A customer owed the company Rs. 2 lacs. In view of his difficult financial position, the company took delivery of a motor car belonging to him, on 27–02–2008. The market value of the car as on that date is not available now, as improvements have been made. Till the date of signing of the financial statements, the car has not been registered in the company’s name. The company has been using the car for official purposes from 1st March, 2008. | | (0) |
| | | (ii) | The company has adjusted the surplus arising on revaluation of fixed assets against brought forward business losses. | | (0) |
| 2. | (a) | State the circumstances in which a private limited company is exempt from the applicability of the Companies (Auditor’s Report) Order 2003 (CARO, 2003). | 4 | (0) |
| | (b) | At the Annual General Meeting of Z & Co. Ltd., X was appointed as the auditor for the current year, in the place of Y, the auditor for the previous year. X requested Y to give the working papers of the previous year—state your views. | 4 | (0) |
| | (c) | (i) | How can the work of an expert be evaluated by an auditor? | 4 | (0) |
| | | (ii) | What is the duty of the auditor if he is in disagreement with the views of an expert? | 4 | (0) |
| 3. | (a) | Why and how is internal audit necessary to the Management? | 6 | (0) |
| | (b) | Bring out the differences between Indian GAPP and USA’s GAPP in the following: | | |
| | | (i) | Pre–operative expenses; | 3 | (0) |
| | | (ii) | Foreign Currency transactions; | 4 | (0) |
| | | (iii) | Proforma information. | 3 | (0) |
| 4. | Write short notes on any four of the following: | 4x4 | |
| | (a) | Non–adjusting events; | | (0) |
| | (b) | Compliance Audit; | | (0) |
| | (c) | Developing the Audit Programme; | | (0) |
| | (d) | Corroborative Evidence; | | (0) |
| | (e) | ‘Walk through test’ in EDP Audit; | | (0) |
| | (f) | Flow charts. | | (0) |
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| 5. | As an auditor of a company, state your views with reasons on the following: | | |
| | (a) | Apple Ltd. requiring to maintain cost records contend that the statutory auditor need not report on non–maintenance of cost records as the provisions of cost audit are not applicable to the company. | 5 | (0) |
| | (b) | Sundry expenses such as printing, postage and local transport charges incurred during period of construction of a factory of a newly formed company, are proposed to be capitalised. | 4 | (0) |
| | (c) | The auditors of a company refuse to make their report on the Annual Accounts of a company before the related financial statements are signed on behalf of Board of Directors. | 4 | (0) |
| | (d) | Profit on revaluation of land and building was credited to Profit and Loss Account. | 3 | (0) |
| 6. | (a) | "Operational Audit is not different form Internal Audit. It is merely an extension of Internal Audit". —Discuss. | 8 | (0) |
| | (b) | What are the kinds of audit conducted in respect of Government Expenditure? | 5 | (0) |
| | (c) | Secretarial Audit is a Preemptive Audit. Briefly explain highlighting the need and objectives of Secretarial Audit. | 3 | (0) |
| 7. | (a) | How will you, as an auditor of a public limited company view the following items? | | |
| | | (i) | Profits prior to incorporation of the company; | 5 | (0) |
| | | (ii) | Created Goodwill. | 5 | (0) |
| | (b) | Discuss in brief, about the need for techniques of overall assessment of data while conducting ‘Balance Sheet Audit’. | 6 | (0) |
| 8. | (a) | Outline the important aspects involved in improving the Auditor–Auditee Relationship. | 8 | (0) |
| | (b) | Elucidate, how as an auditor should satisfy himself that all income arising from the following sources are duly received and accounted for: | | |
| | | (i) | Rental of several leased properties; | 4 | (0) |
| | | (ii) | Sale of scrap. | 4 | (0) |
