CA FINAL NEW COURSE
Advanced Auditing and Professional Ethics
TOP 50 Questions
Online Test Series for CA, CS & CMA Exams
Served more than 2 Lakh Students since 2014
GMTESTSERIES.COM®
, CA-FINAL
ADVANCED AUDITING & PROFESSIONAL ETHICS
TOP-50 QUESTIONS
Q-1
AKJ Ltd. is a small-sized 30 years old company having business of manufacturing of pipes.
Company has a plant based out of Dehradun and has their corporate office in Delhi. Recently
the company appointed new firm of Chartered Accountants as their statutory auditors.
The statutory auditors want to enter into an engagement letter with the company in respect of
their services but the management has contended that since the statutory audit is mandated by
law, engagement letter may not be required. Auditors did not agree to this and have shared a
format of engagement letter with the management for their reference before getting that
signed. In this respect management would like to understand that as per SA 210 (auditing
standard referred to by the auditors), if the agreed terms of the engagement shall be recorded
in an engagement letter or other suitable form of written agreement, what should be included
in terms of agreed audit engagement letter?
Q-2
M/s Honest Ltd. has entered into a transaction on 5th March, 2022, near year-end, whereby it
has agreed to pay Rs 5 lakhs per month to Mr. Y as annual retainer ship fee for "engineering
consultation". No amount was actually paid, but Rs 60 lakhs are provided in books of account as
on March 31, 2022. Your inquiry elicits a response that need-based consultation was obtained
round the year, but there is no documentary or other evidence of receipt of the service. As the
auditor of M/s Honest Limited, what would be your approach?
GMTESTSERIES.COM®
,Q-3
As an auditor of garment manufacturing company for the last five years you have observed that
new venture of online shopping has been added by the company during current year. As an
auditor what factors would be considered by you in formulating the audit strategy of the
company?
Q-4
CA. Dev, a recently qualified practicing Chartered Accountant got his first internal audit
assignment of a large manufacturing concern Growth Limited. As an internal auditor for Growth
Limited, CA. Dev is required to verify whether there are adequate records for identification and
value of Plant and Machinery, tools and dies and whether any of these items have become
obsolescent and not in use. Draft a suitable audit programme for the above.
Q-5
In the use of standardized Internal Control Questionnaire (ICQ), certain basic assumptions
about elements of a good internal control system are taken into account. List down few such
assumptions
Q-6
Audit planning is necessary to conduct an effective audit in an efficient and timely manner for
which purpose formulating an audit programme becomes an essential part of audit plan. Study
and evaluation of system of internal control and accounting procedures are important part of it.
As an auditor, discuss the features of examination of the system of internal control.
GMTESTSERIES.COM®
, Q-7
Write a short note on: Understanding and documenting automated environment.
Q-8
While evaluating the risks and controls at entity level, the Auditor should take cognizance of the
prevalent direct and indirect entity level controls operating in the entity. Explain what they
pertain to with few examples.
Q-9
Mr. X is a practicing Chartered Accountant. Mr. Y is a practicing Advocate representing matters
in the court of law. X and Y decided to help each other in the matters involving their
professional expertise. Accordingly, Mr. X recommends Mr. Y in all litigation matters in the
court of law and Y consults X in all matters relating to finance and other related matters, which
comes to him in arguing various cases. Consequently, they started sharing profits of their
professional work. Is Mr. X liable for professional misconduct?
Q-10
During the opening ceremony of a new branch office of CA. Young, his friend CA. Old
introduced CA Young, his friend and client Mr. Rich, the owner of an Export House whose
accounts had been audited by CA. Old for more than 15 years. After few days, Mr. Rich
approached CA. Young and offered a certification work which hitherto had been done by CA.
Old CA. Young undertook the work for a fee which was not less than fee charged by CA. Old in
earlier period. Comment whether CA. Young had done any professional misconduct.
GMTESTSERIES.COM®
Advanced Auditing and Professional Ethics
TOP 50 Questions
Online Test Series for CA, CS & CMA Exams
Served more than 2 Lakh Students since 2014
GMTESTSERIES.COM®
, CA-FINAL
ADVANCED AUDITING & PROFESSIONAL ETHICS
TOP-50 QUESTIONS
Q-1
AKJ Ltd. is a small-sized 30 years old company having business of manufacturing of pipes.
Company has a plant based out of Dehradun and has their corporate office in Delhi. Recently
the company appointed new firm of Chartered Accountants as their statutory auditors.
The statutory auditors want to enter into an engagement letter with the company in respect of
their services but the management has contended that since the statutory audit is mandated by
law, engagement letter may not be required. Auditors did not agree to this and have shared a
format of engagement letter with the management for their reference before getting that
signed. In this respect management would like to understand that as per SA 210 (auditing
standard referred to by the auditors), if the agreed terms of the engagement shall be recorded
in an engagement letter or other suitable form of written agreement, what should be included
in terms of agreed audit engagement letter?
Q-2
M/s Honest Ltd. has entered into a transaction on 5th March, 2022, near year-end, whereby it
has agreed to pay Rs 5 lakhs per month to Mr. Y as annual retainer ship fee for "engineering
consultation". No amount was actually paid, but Rs 60 lakhs are provided in books of account as
on March 31, 2022. Your inquiry elicits a response that need-based consultation was obtained
round the year, but there is no documentary or other evidence of receipt of the service. As the
auditor of M/s Honest Limited, what would be your approach?
GMTESTSERIES.COM®
,Q-3
As an auditor of garment manufacturing company for the last five years you have observed that
new venture of online shopping has been added by the company during current year. As an
auditor what factors would be considered by you in formulating the audit strategy of the
company?
Q-4
CA. Dev, a recently qualified practicing Chartered Accountant got his first internal audit
assignment of a large manufacturing concern Growth Limited. As an internal auditor for Growth
Limited, CA. Dev is required to verify whether there are adequate records for identification and
value of Plant and Machinery, tools and dies and whether any of these items have become
obsolescent and not in use. Draft a suitable audit programme for the above.
Q-5
In the use of standardized Internal Control Questionnaire (ICQ), certain basic assumptions
about elements of a good internal control system are taken into account. List down few such
assumptions
Q-6
Audit planning is necessary to conduct an effective audit in an efficient and timely manner for
which purpose formulating an audit programme becomes an essential part of audit plan. Study
and evaluation of system of internal control and accounting procedures are important part of it.
As an auditor, discuss the features of examination of the system of internal control.
GMTESTSERIES.COM®
, Q-7
Write a short note on: Understanding and documenting automated environment.
Q-8
While evaluating the risks and controls at entity level, the Auditor should take cognizance of the
prevalent direct and indirect entity level controls operating in the entity. Explain what they
pertain to with few examples.
Q-9
Mr. X is a practicing Chartered Accountant. Mr. Y is a practicing Advocate representing matters
in the court of law. X and Y decided to help each other in the matters involving their
professional expertise. Accordingly, Mr. X recommends Mr. Y in all litigation matters in the
court of law and Y consults X in all matters relating to finance and other related matters, which
comes to him in arguing various cases. Consequently, they started sharing profits of their
professional work. Is Mr. X liable for professional misconduct?
Q-10
During the opening ceremony of a new branch office of CA. Young, his friend CA. Old
introduced CA Young, his friend and client Mr. Rich, the owner of an Export House whose
accounts had been audited by CA. Old for more than 15 years. After few days, Mr. Rich
approached CA. Young and offered a certification work which hitherto had been done by CA.
Old CA. Young undertook the work for a fee which was not less than fee charged by CA. Old in
earlier period. Comment whether CA. Young had done any professional misconduct.
GMTESTSERIES.COM®
