Page 38 - CA Final PARAM Digital Book.

Part 4- SA 299

QNO No Division of Work Old Course - (N11E, PM17, M19E)
27.100 TITANIUM CNO - SA299.060
ABC & Co. and DEF & Co, Chartered Accountant firms were appointed as joint auditors of Good Health
Care Ltd. for 2009-10. A special audit was conducted during March 2011 and observed gross
understatement of Revenue.
The revenue aspects were looked after by DEF & Co, but there was no documentation for the division of
work between the joint auditors.
OR

Dice Ltd. appointed two CA firms MN & Associates and PQ & Co. as joint auditors for conducting audit for
the year ended 31st March 2019.
In the course of audit, it has been observed that there is a major understatement in the value of inventory
The inventory valuation % work was looked after by MN & Associates but there was no documentation
for the division of the work between the joint auditors. Comment on the above situation with regard to
responsibilities among joint auditors.
Answer Part I -- Relevant Standards & Laws
▪ SA 299 on, “Responsibility of Joint Auditors”

Part II -- Requirements of Relevant Standards & Laws
➢ Documentation for Division of Work between the Joint Auditors:
As per SA 299 “Responsibility of Joint Auditors”, where joint auditors Division of audit areas
are appointed, they should, by mutual discussion, divide the audit work
among themselves. By Mutual Discussion
1. Business Units
The division of work would usually be in terms of audit of identifiable 2 .Specified Areas.
units or specified areas. 3 .Assets or Liab.
4 .Inc or Exp
In some cases, due to the nature of the business of the entity under
audit, such a division of work may not be possible. In such situations,
the division of work may be with reference to items of assets or Common audit areas
liabilities or income or expenditure or with reference to periods of time.
Due to:
Certain areas of work, owing to their importance or owing to the nature 1. Their imp .
of the work involved, would not be divided and would be covered by all 2. Nature.
the joint auditors. Would not be divided
& Covered by all JA

The division of work among joint auditors as well as the areas of work to be covered by all of them
should be adequately documented and preferably communicated to the entity.

Further, each joint auditor is entitled to assume that the other joint auditors have carried out their
part of the audit work in accordance with the generally accepted audit procedures. It is not
necessary for a joint auditor to review the work performed by other joint auditors or perform any
tests in order to ascertain whether the work has actually been performed in such a manner.

Each joint auditor is entitled to rely upon the other joint auditors for bringing to his notice any
departure from generally accepted accounting principles or any material error noticed in the course
of the audit.

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