I
Revised Syllabus of M. Com. PART - II
Advanced Auditing-IV
Sr.No. Topics
1. Audit of Ledgers
General Considerations
Scrutiny of Ledgers of Assets, Personal, Revenue
Accounts.
2 The Company Audit
General consideration in a company audit
Special requirements of company audit
Audit report: Basic Elements of the Auditor’s Report,
Format of Audit
Report.(Including -Companies (Auditor’s Report) Order,
2003)
3. New Standards on Auditing (SAs)
SA 200 (Revised) :Overall Objectives of the Independent
Auditor and the Conduct of an Audit in Accordance with
Standards on Auditing
SA 210 (Revised): Agreeing the Terms of Audit
Engagements
SA 220 (Revised):Quality Control for an Audit of
Financial Statements
SA 230 (Revised): Audit Documentation
SA 240 (Revised): The Auditor’s Responsibilities
Relating to Fraud in an Audit of Financial Statements
SA 500 (Revised):Audit Evidence
SA 501 (Revised):Audit Evidence - Specific
Considerations for Selected Items
SA 505 (Revised): External Confirmations
SA 510 (Revised):Initial Audit Engagements—Opening
Balances
SA 610 (Revised):Using the Work of Internal Auditors
SA 200 A- Objective & scope of audit of Financial
Statement.
SA 300 Planning and Audit of Financial Audit
SA 520 Analytical Procedure
, II
4 Special Consideration in
Government audit
Miscellaneous audits
Audit of a sole trader
Audit of a firm
Audit of a small company
Audit of educational institutions
Audit of Hospital
Audit of Club
Audit of Hotels
Tax Audit
Audit of Insurance company
Audit of Banks
PATTERN OF QUESTION PAPER
Maximum Marks 100 Duration 3 Hours
No of questions to be asked 9
No of questions to be answered 6
Question No.01 Compulsory question 20 Marks
Question No.02 Compulsory Objective 16 Marks
Question No. 03 to Question No. 09 (Any 4) 16 Marks each
Notes:-
(1) From Question No. 03 to Question No.09 not more than one
question may be theory including short problems/questions.
(2) Student to answer any four out of Question No. 03 to
Question No.09 .
(3) Objective questions to be based on all topics and include
Inter alia questions like :-
(a) Multiple choice (b) Fill in the blanks
(c) Match the columns (d) True or False
, 1
1
AUDIT OF LEDGERS
Unit Structure
1.0 Objective
1.1 Steps Involved in the Audit of Ledgers
1.2 Audit of Bought Ledger
1.3 Audit of Sales Ledger
1.4 General Ledger
1.5 Practical Illustrations
1.6 Audit of Main Journal
1.7 Balance Sheet Audit
1.8 Summing Up
1.9 Questions for Exercise
1.0 OBJECTIVES
After studying the unit the students will be able:
To Provide Classified Financial Information
To Provide Check On Arithmetical Accuracy
To Help Ascertain Profit Or Loss
To Help Reveal The Financial Position
1.1 STEPS INVOLVED IN THE AUDIT OF LEDGERS
The audit of ledgers normally involves the following steps:
(i) Internal check - Test the quality of internal check-regarding
timely and correct entries in the ledger.
(ii) Opening balances - Trace the opening balances from previous
year's audited balance sheet. In case, the entity is getting its
accounts audited for the first time since inception or it was audited
in previous year by some other auditor, follow the procedures given
in AAS-22"Initial Engagements - Opening Balances "issued by
ICAI.
, 2
(iii) Postings - Check postings from cash book and other books of
prime entry (i.e., purchases book, sales book, journal, purchase
returns book, sales return book, bills receivable book, bill payable
book).
(iv) Control accounts - Total up the balances in the subsidiary
ledgers. Tally the totals with those in the control accounts.
(v) Verification of personal account balances - Verify
personal account balances with statements of account received
from the parties or by arranging direct confirmation. The procedure
of direct confirmation should be applied in the manner stated in
AAS-30 External Confirmations issued by ICAI.
(vi) Verification of Real accounts - The real account balances
should be verified by
physical verification (as in the case of cash and
investments),
checking the working papers of physical verification exercise
conducted by the management (as in the case of fixed
assets and inventories),
inspection of documents (as in the case of intangible assets
such as patents and trade marks), and
direct confirmation (as in the case of stocks lying with third
parties).
(vii) Scrutiny of individual accounts - Scrutinize individual
accounts. Examine the composition of balances. Examine age
analysis of various items outstanding.'
(viii) Totals - Check totals of ledger accounts, schedules of
balances, groupings etc.
(ix) Tracing into the final accounts - Trace the balances in
individual accounts on to the schedules, from thereon into the
groupings-and from the groupings into the final accounts.
( x ) Analytical Review - Examine the reasonability of balances by
applying analytical procedures e.g. comparison with opening
balances, debtors turnover ratio, creditors turnover ratio, current
ratio, fixed assets turnover ratio, working capital turnover ratio etc.
1.2 AUDIT OF BOUGHT LEDGER
Following is the procedure of the Audit the Bought Ledger
(Creditor's Ledger)
Revised Syllabus of M. Com. PART - II
Advanced Auditing-IV
Sr.No. Topics
1. Audit of Ledgers
General Considerations
Scrutiny of Ledgers of Assets, Personal, Revenue
Accounts.
2 The Company Audit
General consideration in a company audit
Special requirements of company audit
Audit report: Basic Elements of the Auditor’s Report,
Format of Audit
Report.(Including -Companies (Auditor’s Report) Order,
2003)
3. New Standards on Auditing (SAs)
SA 200 (Revised) :Overall Objectives of the Independent
Auditor and the Conduct of an Audit in Accordance with
Standards on Auditing
SA 210 (Revised): Agreeing the Terms of Audit
Engagements
SA 220 (Revised):Quality Control for an Audit of
Financial Statements
SA 230 (Revised): Audit Documentation
SA 240 (Revised): The Auditor’s Responsibilities
Relating to Fraud in an Audit of Financial Statements
SA 500 (Revised):Audit Evidence
SA 501 (Revised):Audit Evidence - Specific
Considerations for Selected Items
SA 505 (Revised): External Confirmations
SA 510 (Revised):Initial Audit Engagements—Opening
Balances
SA 610 (Revised):Using the Work of Internal Auditors
SA 200 A- Objective & scope of audit of Financial
Statement.
SA 300 Planning and Audit of Financial Audit
SA 520 Analytical Procedure
, II
4 Special Consideration in
Government audit
Miscellaneous audits
Audit of a sole trader
Audit of a firm
Audit of a small company
Audit of educational institutions
Audit of Hospital
Audit of Club
Audit of Hotels
Tax Audit
Audit of Insurance company
Audit of Banks
PATTERN OF QUESTION PAPER
Maximum Marks 100 Duration 3 Hours
No of questions to be asked 9
No of questions to be answered 6
Question No.01 Compulsory question 20 Marks
Question No.02 Compulsory Objective 16 Marks
Question No. 03 to Question No. 09 (Any 4) 16 Marks each
Notes:-
(1) From Question No. 03 to Question No.09 not more than one
question may be theory including short problems/questions.
(2) Student to answer any four out of Question No. 03 to
Question No.09 .
(3) Objective questions to be based on all topics and include
Inter alia questions like :-
(a) Multiple choice (b) Fill in the blanks
(c) Match the columns (d) True or False
, 1
1
AUDIT OF LEDGERS
Unit Structure
1.0 Objective
1.1 Steps Involved in the Audit of Ledgers
1.2 Audit of Bought Ledger
1.3 Audit of Sales Ledger
1.4 General Ledger
1.5 Practical Illustrations
1.6 Audit of Main Journal
1.7 Balance Sheet Audit
1.8 Summing Up
1.9 Questions for Exercise
1.0 OBJECTIVES
After studying the unit the students will be able:
To Provide Classified Financial Information
To Provide Check On Arithmetical Accuracy
To Help Ascertain Profit Or Loss
To Help Reveal The Financial Position
1.1 STEPS INVOLVED IN THE AUDIT OF LEDGERS
The audit of ledgers normally involves the following steps:
(i) Internal check - Test the quality of internal check-regarding
timely and correct entries in the ledger.
(ii) Opening balances - Trace the opening balances from previous
year's audited balance sheet. In case, the entity is getting its
accounts audited for the first time since inception or it was audited
in previous year by some other auditor, follow the procedures given
in AAS-22"Initial Engagements - Opening Balances "issued by
ICAI.
, 2
(iii) Postings - Check postings from cash book and other books of
prime entry (i.e., purchases book, sales book, journal, purchase
returns book, sales return book, bills receivable book, bill payable
book).
(iv) Control accounts - Total up the balances in the subsidiary
ledgers. Tally the totals with those in the control accounts.
(v) Verification of personal account balances - Verify
personal account balances with statements of account received
from the parties or by arranging direct confirmation. The procedure
of direct confirmation should be applied in the manner stated in
AAS-30 External Confirmations issued by ICAI.
(vi) Verification of Real accounts - The real account balances
should be verified by
physical verification (as in the case of cash and
investments),
checking the working papers of physical verification exercise
conducted by the management (as in the case of fixed
assets and inventories),
inspection of documents (as in the case of intangible assets
such as patents and trade marks), and
direct confirmation (as in the case of stocks lying with third
parties).
(vii) Scrutiny of individual accounts - Scrutinize individual
accounts. Examine the composition of balances. Examine age
analysis of various items outstanding.'
(viii) Totals - Check totals of ledger accounts, schedules of
balances, groupings etc.
(ix) Tracing into the final accounts - Trace the balances in
individual accounts on to the schedules, from thereon into the
groupings-and from the groupings into the final accounts.
( x ) Analytical Review - Examine the reasonability of balances by
applying analytical procedures e.g. comparison with opening
balances, debtors turnover ratio, creditors turnover ratio, current
ratio, fixed assets turnover ratio, working capital turnover ratio etc.
1.2 AUDIT OF BOUGHT LEDGER
Following is the procedure of the Audit the Bought Ledger
(Creditor's Ledger)
