Page 141 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
IV. “With reference to para 4, in such a situation CA M shall express a :
(a). A Disclaimer Opinion
(b). A qualified opinion
(c). A qualified opinion or an adverse opinion in accordance with SA 705
(d). An unmodified opinion
V. In respect to subject matter mentioned in Para 5, what procedures should Auditor perform to
identify such events?

Statement 1: Obtain an understanding of any procedures management has established as well as
Inquiry with Management and those charged with governance procedures for identification of
such subsequent events.

Statement 2: Inspection of Minutes of the meetings of the entity’s owners, management and
those charged with governance that have been held after the date of the financial statements
and inquiring about the matters discussed at any such meetings for which minutes are not yet
available.

Statement 3: The Auditor should not read the entity’s latest subsequent interim financial
statements, if any.

(a). Only Statement 1 is correct
(b). Only Statement 2 is correct
(c). Both Statements 1 and 2 are correct
(d). Only Statement 3 is correct

53 (N21M)
Mars Ltd. is a public limited Company incorporated during the previous financial year 2019-20. R S Shah
& Associates have been appointed as the Auditors of the Company.

Para 1
Its Authorized Capital was Rs. 75 Lacs. Subsequently it increased its Share Capital. They issued Shares at
a premium of Rs.25/- per share. The Company has transferred the amount received as premium to the
Securities Premium Account.

Para 2
CA R recommended his Engagement Team to prepare an Audit Strategy as well as Audit plan for efficient
conduct of audit. He advised to the team that they should include a series of verification procedures to
be applied to Financial Statements of the Company for accomplishing the Audit objectives. CA R
illustrated to his team the relationship between Audit strategy as well as Audit plan.

Para 3

Encompassed by a huge clientele, one of the Auditee firm was a LLP. It was in the name of Mangaldeep
Geotech LLP. They conducted the business in a very efficient way but had allotted only the Audit and
the Income Tax work to CA R S Shah & Associates. The Partners of the LLP were capable enough but
however inadvertently bypassed the ROC Compliances. They had no knowledge about the Compliances
and its related penalties. Thus they approached CA R S Shah and Associates for their guidance. They
were completely clueless as to filing of Annual Return with ROC.

Para 4
R S Shah and Associates have been appointed as Auditors of a large Enterprise namely Search Results
Ltd. Considering the overhaul required in the Organization’s Risk Management, Directors of the listed
companies braced the subject of Internal Financial Control with much seriousness and rigor. The dawn
of the Financial Year lays down the daunting task of establishing and implementing Internal Financial
Control in an Enterprise.

Para 5

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