Page 115 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
(b). By Company in general meeting
(c). By Central Government
(d). By Comptroller & Auditor General of India"

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"M/s RGL has been appointed as auditors of New Indian Bank (a nationalised bank) for the Financial
year 2018-19 by its Board of Directors.

Appointment of M/s RGL has been challenged by a shareholder in the Bank’s Annual General Meeting
stating that the appointment should have been made by the shareholders in the bank’s AGM.

Their appointment as auditors of the bank throws some questions for the bank’s management. New
Indian bank has exposure to crop loans as many branches are located in the rural area. While conducting
the audit, the auditors are faced with the question of classification of non-performing advances.

Also, New Indian bank has lot of Credit cards issued to its clients, some of which are overdue for long.
While conducting the audit, the auditors came across various peculiarities relating to Bank Audits like
classification of NPA’s, reporting etc. to name a few.

On the basis of above facts, please suggest appropriate treatments in respective cases."
I. "As per the provisions of relevant enactments, please advise who can appoint auditors of a
Nationalised bank.

(a). Board of Directors of the Bank
(b). Reserve Bank of India
(c). Comptroller and Auditor General of India
(d). Central Government"
II. "The matters which the banks require their auditors to deal with in the Long Form Audit Report
is to be specified by
(a). Banking Regulation Act, 1949
(b). Central Government
(c). Comptroller and Auditor General of India
(d). Reserve Bank of India"
III. "The auditors should classify Credit card accounts as NPA, if ___________ amount due, as
mentioned in the credit card statement is not paid fully within ___________ days from next
statement date.
(a). Total, 90
(b). Minimum, 90
(c). Minimum, 30
(d). Minimum, 60
IV. "An agricultural advance is classified as NPA, if interest or principal is overdue for ________ in
case of short duration crops or if interest or principal is overdue for ________ in case of long
duration crops.
(a). One crop season, two crop season
(b). Two crop season, one crop season
(c). 90 days, 120 days
(d). 120 days, 90 days
V. "The bank is a consortium member of Cash Credit Facilities of Rs 100 crores to Bottle Limited.
Bank's own share is Rs 20 crores only. During the last two quarters against a debit of Rs 1.75
crores towards interest the credits in Bottle Ltd.’s account are to the tune of Rs 1.25 crores only.
The auditors have classified the account of Bottle Ltd as performing
(a). Incorrect, Bottle ltd is Non-Performing Asset (NPA)
(b). Correct, Bottle ltd is performing asset
(c). Bottle Ltd.’s classification is subjective
(d). None of the above."

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