AUDIT Flashcards
SA 200
Overall Objectives of Independent Auditor and Conduct of Audit in accordance with standards of auditing. OOIA CASA
Section 8 of CA Act 1949
Disabilities for purpose of membership.
Section 2(2)(iv) of CA Act 1949
Permitting a CAiP to render entire range of Management, Consultancy and other Services.
Section 2(2) of CA Act 1949
Member deemed to be in practice.
Section 27 of CA Act 1949
Branch Office
Clause 1 of part 1 of Schedule 1
Other person use his name as CA
Clause 2 of part 1 of Schedule 1
Pays or agree to pay or allows directly or indirectly and share com bro as part of his professional business to any person other than partner, retired partner, legal heir of deceased partner or other as may be prescribed for rendering such services from time to time in or outside India.
Clause 3 of part 1 of Schedule 1
Accepts or agree to accept any share of profit from any person other than member of ICAI.
Clause 4 of part 1 of Schedule 1
Engages into partnership in or outside India with any person other than CAiP, member of any prof body, qualification accepted by CG or council or resident who for his residence abroad is registered under section 4(1)(v).
Clause 5 of part 1 of Schedule 1
Secures through service of person other than employee of such CA, not his partner, or means not open to CA any professional Business.
Clause 6 of part 1 of Schedule 1
Solicits clients or professional work through CAPI or any other means.
Clause 7 of part 1 of Schedule 1
Advertises his professional attainments or services or use any designation other than CA on letter heads, sign board, visiting cards, professional docs unless it is degree of university recog by law or CG or title of membership of institute recog by CG or council.
Clause 8 of part 1 of Schedule 1
Communicate with previous auditor if certificate of restriction of certificate issued.
Clause 9 of part 1 of Schedule 1
Accepts as appointment of auditor without ascertaining compliance with section 225.
Clause 10 of part 1 of Schedule 1
charges or agree to charge, Accepts or agree to accept payment in respect of his prof business in form of % based, or part of profit or contingent upon findings.
Clause 11 of part 1 of Schedule 1
Engages in business other than CA unless permitted by council.
Clause 12 of part 1 of Schedule 1
Allows a person other than member in practice or member who is not partner to sign on his behalf
Clause 1 of part 2 of Schedule 1
Pays or agree to pay, directly or indirectly part of any share in his emoluments of employment undertaken by him.
Clause 2 of part 2 of Schedule 1
Accepts or agree to accept any part of fees or profit from a lawyer or CA or broker engaged by co., person, agent, customer os such co. person firm. by way of commission or gratification.
Clause 1 of part 3 of Schedule 1
Acts as fellow when he is not.
Clause 2 of part 3 of Schedule 1
Fails to provide info or any requirements made by DD, DC, BD, quality review board or AA.
Clause 3 of part 3 of Schedule 1
While inviting professional work from another CA or while responding to tender or while advertising through a write up or anything as per Clause (6) and (7) of Part 1 gives info knowing to be false.
Clause 1 of part 4 of Schedule 1
Is held guilty by civil or criminal court for offense punishable as imprisonment for a period not exceeding 6 months.
Clause 2 of part 4 of Schedule 1
In opinion to Council, brings disrepute to the profession or institute whether or not by action relating to his professional work
Clause 1 of part 1 of Schedule 2
Discloses info acquired in his professional capacity to any person other than client without his permission or otherwise than required by law in force
Clause 2 of part 1 of Schedule 2
Certifies or submits any report on examination of FS unless such examination or reports are made by him, his partner, his employee or another CAiP.
Clause 3 of part 1 of Schedule 2
Permits his name or his firm to be used in connection with an estimate of earning contingent upon future earning which leads to belief in accuracy of forecast.
Clause 4 of part 1 of Schedule 2
Expresses an opinion on FS of any business or enterprise in which he, his partner, firm has substantial interest.
Clause 5 of part 1 of Schedule 2
Failure to disclose a material fact known to him in FS but disclosure of which was necessary for not misleading the FS where he is concerned in professional caqpacity.
Clause 6 of part 1 of Schedule 2
Failure to report a MM known to him.
Clause 7 of part 1 of Schedule 2
Does not exercise due diligence or is grossly negligent in conduct of professional duties.
Clause 8 of part 1 of Schedule 2
Fails to obtain sufficient information which is necessary to express an opinion or its exception is material to express an opinion.
Clause 9 of part 1 of Schedule 2
Fails to invite attention to any material departure from GAPA applicable.
Clause 10 of part 1 of Schedule 2
Fails to keep the money of his client except fees or remuneration or money expected to be spent in separate bank account or use of such money for purpose which they are intended to.
Clause 1 of part 2 of Schedule 2
Contravenes provisions, regulations and guidelines.
Clause 2 of part 2 of Schedule 2
Employee of firm, company or person discloses confidential information acquired in course of his employment except as required by law.
Clause 3 of part 2 of Schedule 2
Includes in statement, info, returns or form submitted to council, ICAI, DD, BD, DC, quality review board or AA known to be false.
Clause 4 of part 2 of Schedule 2
Defalcates or embezzles money received in his professional capacity.
Clause 1 of part 3 of Schedule 2
Member of institute whether in practice or not held guilty if convicted by criminal or civil court for offense leading to imprisonment for more than 6 months.
Section 139 Companies Act, 2013
Appointment of Auditor
Section 140 Companies Act, 2013
Removal of Auditor
Section 141 Companies Act, 2013
Eligibility and Disqualification of Auditor
Section 142 Companies Act, 2013
Remuneration of Auditor
Section 143 Companies Act, 2013
Powers of Auditor
Section 144 Companies Act, 2013
Auditor not to render certain services -
BAIN Financial Management
Section 145 Companies Act, 2013
Sign the audit report
Section 146 Companies Act, 2013
Duty to attend the AGM
Section 147 Companies Act, 2013
Penalty
Section 148 Companies Act, 2013
Cost Audit
Section 177 Companies Act, 2013
Audit Committee
SA 210
Agreeing the terms of Audit Engagement
SA 220
Quality control for an audit of FS
SA 230
Audit Documentation
SA 240
Auditor Responsibility relating to fraud
CARO Clauses
PIL 185 DC SIR IF NRI/NRC/RGC Q
PPE, Inventory, LIGS, 185-186, Deposits, Cost records , Statutory dues, income disclosure, repayment of loan, IPO-FPO, Fraud, Nidhi Company, Related party, internal audit, Non cash txn, RBI, cash loss, retiring stat auditor, going concern, CSR, qualification of CFS.
SA 700
Forming an opinion and reporting on FS
SA 701
Communicating key audit matters in independent auditor report
SA 705
Modifications to opinion in report
SA 706
Emphasis of matter paragraph and other matter paragraph
SA 710
Comparative Info - Corresponding figures and comparative FS
SA 720
Auditor responsibility in relation to other info
SA 600
Using the work of other auditor
SA 610
Using the work of Internal auditor
SA 620
Using the work of auditor expert
- Evaluating Integrity of client
SQC 1
- Reputed rahul Proposed riya, pata chala Nature kharab hai, Aggressive, ML, Attitude kharab hai, jo bada Inappropriate hai – Business reputation, proposed appt of auditor, Nature of ops., Attitude towards IC, aggressive towards fees, ML, Inappropriate limitation.
- In case of familiarity threat for FS of listed entities, EP should be rotated atleast once in
SQC 1
7 years
- Engagement documentation to be made in ______ and retain till ______
SQC 1
60 days after audit report and retain till 7 years.
- Professional Skepticism is necessary
SA 200
OOI – Overlooking, Over generalizing, Inappropriate Assump.
- What info is req by EP to conclude whether to accept client engg.
SA 220
SECI – Significant matters, Ethical req., Competent to perform, Integrity of TCWG
- Techniques of Fraud
SA 240
Ma Mi Mi – Manipulation, Misrepresentation or omission, Misapplication
- Management Override of controls
SA 240
Significant FACTS – Significant alter or unusual txn, Fictitious entries, Inapp assumption, complex txn, txn and event omit, stealing assets + concealing facts.
- When to use Negative confirmation
SA 505
Low-low-large-aware – Low ROMM, Low exception rate, Large population of small homogenous txn, auditor not aware of circumstances of recipient to disregard.
- Auditor shall when designing SAP
SA 520
– SARE - Suitability of SAP, Amount of difference, Reliability of data – Source/comparability/nature and relevance/controls over prep, Expectation of recorded amt
- Sampling techniques
SA 530
BHURS – Block selection, haphazard sampling, Unit method sampling, random, Systematic.
Discipline approach applied, level of competence, extent to which org status support obj of IA.
SA 610
DISCO Objectivity – Discipline approach applied, level of competence, extent to which org status support obj of IA.
- Factors determining KAM
SA 701
Significant JRT – Judgements, Risk, Events/txn.
- Principles of PSU Audit
PSU Audit
EPQ AAM CD – Ethics/Independence, Prof skepticism, Quality control, audit risk, audit team mgmt., materiality, communication, documentation.
- Understanding entity for performance auditPSU AUDIT
POLIcE documents MAP– Policy docs, legislative docs, entity docs, media coverage, academic and special research, past audits.
- Audit approach for performance audit
PSU AUDIT
3 Analysis + Case study + Survey + Existing data – Quantitative, procedural, result analysis, case study, survey, existing data
- C&AG shall hold office for a period of
PSU AUDIT
6 years or 65 years of age (earlier).
- Chapter 9 – Limit for appointment as statutory auditor where he accepts any other work – fees more than stat audit
PROFESSIONAL ETHICS
Govt co., PSU, listed co., unlisted public co. – TO > 50 cr.
- Professional resource as per networking
PROFESSIONAL ETHICS
CAPATT – Common system, audit methodology, partner and staff, audit manuals, technical dept., training courses.
- Guidance on ceiling on Non audit fees for network is
PROFESSIONAL ETHICS
3 times fee payable for stat audit.
- Appeal by member or DD for disciplinary action
PROFESSIONAL ETHICS
90 days with AA
- Applicability of PR certificate phase 2 –
PEER REVIEW
Unlisted public co. – PUSC >= 500cr TO >= 1000cr Loan >= 500cr and PU rendering attestation service having more than 5 partners.
- Eg of area as per QR report in accordance with SQC-1
QUALITY REVIEW
10 PEq maarkar Monitor se 2 baar Confirmation lo, Trained hai bhai – Policies and procedure, EQCR timely, Monitor system of QC, confirmation – independence annually, confirmation – independence before acceptance, education and training programme.
- Services not to be rendered Sec-144
COMPANY AUDIT
BAIN Financial Management – Book keeping, Actuarial, Investment advisory/banking, Internal audit, financial info system/outsource service, Mgmt service.
- Sec-139(2) rotation of auditor applicable to –
COMPANY AUDIT
– listed entity, public unlisted co. – PUSC >= 10cr Loan >= 50cr, Private co. – PUSC >= 50cr
- Audit Committee applicable to –
COMPANY AUDIT
Listed co., public co – PUSC >= 10cr TO >= 100cr Loan > 50cr.
Duties of auditor to enquire on certain matters Sec-143
COMPANY AUDIT
- abcdef – advances and loans, books of co., co. not being inv co sold < pur price, loans shown as deposit, personal expense, for cash.
- Duties of auditor to report Sec-143
COMPANY AUDIT
One gun, two shoe, three tree, four door, five knife, six vicks, seven heaven, eight date, nine wine, ten hen – obtain info, proper books kept, branch reports, BS P/L check, FS comply with AS, Obs. Or comments, director disqualified?, qualification/reservation or adverse remark, IFC adequate?, Murgi ke 6 ande
- NFRA Applicability –
COMPANY AUDIT
Listed co., Unlisted public co. – PUSC >= 500cr TO >= 1000cr Loan >= 500cr, insurance/banking co. engaged in elec., Any BC by CG, BC reg, o/s India having Income/NW > 20%.
- LLP Audit condition
COMPANY AUDIT
TO >= 40L AND Contribution >= 25L.
- Clauses –
CARO 2020
PIL 185 DC SIR IF NRI NRC RGC Q – PPE, Inventory, LIGS, Sec.185-186, Deposits, Cost Records, Statutory dues, Income disclosure, Repayment of loan, IPO/FPO, Fraud Nidhi Co., Related Party, Internal Audit, Non cash txn, RBI, cash loss, Resignation of Stat auditor, going concern, CSR, Qualification of Consol FS.
- Applicability to every co. except
CARO 2020
BSSI Pvt. Ltd. – Banking co., Sec-8 co., small/OPC co., Insurance co., Pvt. – PUSC +RS <= 1cr TO <= 10cr Loan Borrowing <= 1cr.
- Objectives and scope of IA
INTERNAL AUDIT
MERRI Governance – Risk mgmt., Examination of financial info, review of op., review of compliance, IC, governance establishment on ethics.
- Applicability
INTERNAL AUDIT
Listed entity, unlisted public co. – D >= 25cr P >= 50cr L >= 100cr T>= 200cr, Private co. - L >= 100cr T>= 200cr.
- Scope includes review of
INTERNAL AUDIT
ICC ROUA – IC system, Custodian and safeguard of assets, Compliance of policies, Reliability relevance of info, review of org structure, utilization of resources, accomplishment of obj.
- Key elements of IA Report –
INTERNAL AUDIT
– SOA ne SOI ke Nature ki Obs. nikali and Correct action liya – Scope obj approach, Stds on IA, Nature of assurance, key obs., corrective action
- Organising the Management audit
MANAGEMENT AUDIT
– D LAST Frequency – Devising statement of policy, Location of audit function within entity, Allocation of staff, Staff training, Time and other aspects, Frequency.
- Solution to behavioral problems –
MANAGEMENT AUDIT
Maxi Maxi Mini Inform – Maxi constructive benefit, Maxi service in all areas, mini interference, keep responsible informed.
- Qualities of operational auditor –
OPERATIONAL AUDIT
Collabo ka auditor bada Inquisitive tha, Who,why,how puchta tha, har cheez ko Business frame mai fit karta tha in Feeling of Giving help and succeed kar jata tha – Collaborative and constructive rather than fault finding, More inquisitive, Ask who-why-how of everything, evaluate whether everything fits in business frame and policy, succeed in giving feeling of help through constructive criticism.
- Difference between Financial and Operational Audit
OPERATIONAL AUDIT
PARE – Purpose, Area, Reporting, End Task.
- Difference between forensic and other audits
FORENSIC ACCOUNTING
OTP VOA – Objectives, techniques, period, verification of stock, off balance sheet items, adverse finding.
- Process of forensic accounting
ID Obtain karo, Analyse karo, report ko court ko do – Initialisation, develop plan, Obtain relevant evidence, Analysis, Reporting, court proceeding.
- Forensic accounting techniques
FORENSIC AUDITING
Gas par GST aur Cst Caat ke Data Laboratory mai bhejdo – Generalised audit software, general audit techniques, Statistical and mathematical techniques, technology based digital forensics, Common software tools, Computerised assisted audit tools, Data mining techniques, Laboratory analysis of physical and electronic devices.
- Benefits of Planning an audit
Audit Planning
POSDC – Timely solution of potential problems, proper organization of audit engg, selection of audit team, direction and supervision, coordination in work of auditors.
- Planning includes need to consider matters as
Audit planning
SA 250 – 320 – 520 – 620 – 315 – Regulatory framework understanding, materiality, analytical procedures, involve experts, RAP performance.
- Benefits of overall audit strategy
Audit planning
Kitne, Kaise, kab, Kaun dekhega – Allocation of qty of resources, employment of qualitative resources, timing of deployment, mgmt. of resources.
- Key phases in audit execution
Audit planning
ERTR – Execution plan, risk control evaluation, testing, reporting.
- Objectives of IC
SA 315
SCoRE – Safeguarding of assets, compliance with law, Reliability of FR, Effectiveness and efficiency of operations.
- Auditor shall obtain understanding of following
SA 315
FABRIN ki quality – review of Financial performance, selection of Accounting policies, business risk, Relevant Industry/regulatory factors, Nature of entity.
- Significant risk that require special audit consideration
SA 315
Complex FROD – Complex txn, risk is of fraud, risk of related party, risk of o/s normal course of business, degree of subjectivity in measurement of financial info/risk of economic changes or developments.
- When to retest controls – Factors
SA 330
3 Deficient and 2 Changes – Deficient control environment, Deficient general IT controls, deficient monitoring of controls, changes in personnel, changes in circumstances.
- How to know how much testing to be done
SA 330
RELEF – Relevance and reliability of audit evidence, expected rate of deviation, length of time, extent to which audit evidence is obtained from other controls, frequency.
- Difference between Investigation and Audit
Investigation
NOPQORS – Nature, Objective, Period, Observance of principle, Reporting, Scope.
- Steps for verification of assets and liabilities in BS of borrower furnished to bank
Investigation
FIT Investment hogi tabhi Secured and Insured feel karega warna Contingency rahegi – Fixed Assets, Inventory, Trade receivables, Investment, Secured and Unsecured loans, Insurance, Contingent liab.
- Fraud at operational level employees
Investigation
employee ko Expense reimbursement Commission nhi diya to unhone Tamper khokar Teem banai and Cash misappropriation ka fraud kiya – Expense reimbursement scheme, commission scheme, Tamper cheques/drafts, Teeming and lading, Cash misappropriation, payroll fraud/fraudulent disbursement/off book frauds.
- Classification of fraud by NBFC
NBFC Audit
Mis FUN mai Irregular Cheating kargyi – Misappropriation and criminal breach of trust, Fraudulent encashment, Unauthorised credit facility, Negligence and cash shortage, Irregularity in forex txn, Cheating and forgery.
- Review of Investments
Insurance audit
SOD SOP ki Policy Regulation Committee Control karta hai – SOD between mid/front/back office, review SOP as per IRDA, Review investment policy/accounting and valuation policy, Comply with investment regulations, scope and minute of investment committee, controls on insider trading/front running.
- Audit of Premium
Insurance audit
CARO IC – Collection of premium, advance prem., reporting to IRDA, other areas, Recognition of income, calculation of premium.
