Page 405 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Case Study (News Paper Circulation)
Without Examination: A Chartered Accountant issued a certificate of circulation for a periodical without
examining the necessary details of how the circulation was maintained.
Documents Not Checked: The Chartered Accountant did not review financial records, bank statements, or
bank passbooks, Actual payment of printer's bills, number of copies sold and paid for.
Guilty: As a result of these actions, the Chartered Accountant was found guilty under Clause (8) Can also apply
clause 7) in the case of Registrar of Newspapers for India vs K. Rajinder Singh (1971).
Case Study (Certificate to IDBI Bank)
Certificate: A certificate is a written confirmation of the accuracy of the facts stated therein and does not involve
any estimate or opinion.
Limitations / Assumptions: A Chartered Accountant is required to clearly state his limitations/assumptions in
his certificates. In the said matter, the Respondent did not mention his limitation or assumptions in any of the
12 certificates.
The Respondent did not disclose any assumptions/limitations or the basis/papers relied upon by him while
issuing the certificates, misleading the IDBI Bank in approving the loan. The Respondent failed to exercise
diligence while issuing the Certificates.
Guilty: The Committee found the Respondent grossly negligent in conduct of his professional duties and guilty
under clause (7) and (8).
Case Study (Construction Firm)
Transaction: The Committee observed a land transaction between Shivdarshan Firm (a partnership firm) and
Siddheshwari Developers.
Incorrect Accounting: The transaction was incorrectly recorded in the books of Shivdarshan Construction, a
proprietary concern, instead of Shivdarshan Firm.
Not Reported: The Respondent, the auditor of Shivdarshan Construction, failed to report this discrepancy in
the audit report. The Respondent did not provide any evidence to justify their decision to not qualify the
appearance of a significant housing loan from Navsarjan Industrial Co. Op. Bank Ltd in the financial statements.
Guilty: The Committee found the Respondent guilty of professional misconduct under Clauses (6), (7), and (8)
of Part I of the Second Schedule to the Chartered Accountants Act, 1949. (Can also apply clause (5))
Case Study
Omission: The respondent failed to report on a bank account opened by a client in their capacity as a proprietor.
Discrepancies: The bank account had discrepancies, including a different account number and a different
capacity in which it was opened.
Audit Failure: The respondent should have had copies of the bank account to establish that it was opened and
operated under a proprietary name. The respondent's negligence affected their duties in auditing bank
transactions. The respondent also failed to obtain sufficient information for expressing an opinion.
Guilty: The respondent was found guilty of professional misconduct under Clauses (7) and (8) of Part I of the
Second Schedule to the Chartered Accountants Act 1949.

(CNO-PE.1620) CLAUSE 9
A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct if he.
Clause (9) Fails to invite attention to any material departure from the generally accepted procedure of audit
applicable to the circumstances.
Analysis
1.GAAS: The audit should be performed in accordance with the "generally accepted procedure of audit
applicable to the circumstances". What constitutes a "generally accepted audit procedure" is contingent on the
facts and circumstances of each case.
2. Report: If the auditor is unable to perform the audit following the accepted procedure, the report should
highlight the significant departures.

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