CA Inter Audit Lec 21 & 22

505.5

Statement 1: A response that indicates a difference between information requested to be confirmed and information provided by confirming party is Negative Confirmation.

Statement 2: A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered is exception.

• a)  Statement 1 is correct

• b) Statement 2 is correct

• c) Both 1 & 2 are incorrect

• d) Both 1 & 2 are correct

505.3

A request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request is-

• a) Positive confirmation request

• b) Non-response

• c) Exception

• d) Negative confirmation request

Incs.03.3

If the management of Octopus Ltd. refuses to allow the auditor, to send the confirmation request to the debtors, the auditor should:-

• a) Withdraw from the engagement.

• b) Not listen at all to any requests of the management.

• c) Consider the management’s request for refusal and assess its validity and decide the nature, timing, extent of his audit procedures accordingly.

• d) Agree to management request and proceed with audit of other items of the financial statements.

Incs.03.5

        Statement 1: Confirmations as well as undelivered letters should be given/ returned to the auditor and not to the client

Statement 2: When no reply is received, the auditor should perform alternate procedures regarding the balances:-

• a) Only statement 1 is correct

• b) Only statement 2 is correct

• c) Both 1 & 2 are correct

• d) Both 1 & 2 are incorrect

Incs.24.3

"Negative confirmation requests require the third party to respond in the following cases :-

• a) If there is agreement

• b) If there is disagreement

• c) In both cases of agreement as well as disagreement

• d) None of the above."

510.1

If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor shall express :

• a) a disclaimer opinion

• b) a qualified opinion

• c) a qualified opinion or a disclaimer of opinion, as appropriate, in accordance with SA 705.

• d) unmodified opinion

510.2

If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances,

• a)  the auditor shall express a qualified opinion in accordance with SA 705.

• b) the auditor shall express a disclaimer of opinion in accordance with SA 705.

• c) the auditor shall express a qualified opinion or adverse opinion, as appropriate, in accordance with SA 705.

• d) the auditor shall express a qualified opinion or a disclaimer of opinion, as appropriate, in accordance with SA 705.

Incs.52.4

On further perusal of Opening Balances, it is essential to perceive that Accounting Policies have been consistently applied in the current period’s financial statements and whether any changes have been properly accounted for and disclosed. CA M assigned this duty to his article clerk. The Article clerk explained to CA M about how he had observed that Accounting policies were not consistently applied in relation to opening balances in accordance with the financial reporting framework or a change is not properly accounted or not adequately disclosed.

      “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