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CA IPCC : Question Paper (with Answers) - AUDITING & ASSURANCE May 2010

14 pages, 24 questions, 0 questions with responses, 0 total responses,

CA IPCC
Tilak Vidyalaya Higher Secondary School (TVHSS), Kallidaikurichi

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PAPER 6 : AUDITING AND ASSURANCE Answer all questions. Question 1 State with reasons (in short) whether the following statements are True or False: (i) While conducting audit of Government Companies, the auditors are paid their Professional Fees as prescribed by the Government. (ii) The auditor compares entries in the books of accounts with vouchers and if two agrees, his work is done. (iii) Confirmations received by the auditor directly from third parties are conclusive evidence in support of a transaction. (iv) Audit Committee is to be formed by each and every company and the auditor has no compulsion to attend the meeting of the Audit Committee. (v) A company can not declare dividends without providing for depreciation. (vi) When an auditor identifies a Misstatement resulting from fraud, it is his responsibility to communicate it to the regulatory and enforcement authorities apart, from those charged with governance. (vii) The auditor should study the Memorandum and Articles of Association to see the validity of his appointment. (viii) A special resolution is required by company to authorize issue of shares at discount. (ix) The Investments made by the company in Government Securities like NSC, Government Bonds, etc. should be kept in personal custody of Financial Controller of the Company. (x) The company in which 15% of subscribed capital is held by State Financial Corporation and 10% of Subscribed capital is held by General Insurance Co., the appointment of auditor can be done by passing a general resolution at annual general meeting. (10 x 2 = 20 Marks) Answer (i) False: As per section 224(8) of the Companies Act,1956 ,the fees of auditors of Government companies is fixed by the company in general meeting or in such a manner as the company in general meeting may determine. (ii) False: The totalling of entries in the books with vouchers shows fairness of financials statements. But auditor has to determine reliability of annual statement of accounts alongwith the truth and fairness. (iii) False: Confirmations received directly from the third parties by the auditor are more reliable but same cannot be treated as conclusive evidence. (iv) False: As per section 292A of the Companies Act, 1956, Audit committee is to be formed by every public company having paid up capital of Rs. 5 crores or more. It is the duty of the auditor to attend the meeting of the audit committee. The Institute of Chartered Accountants of India

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