CA Inter Audit Lec 35 & 36 (SA 700)

700.4

An Audit report is:

• a) an opinion drawn on the entity’s financial statements to make sure that the records are true and correct representation of the transactions they claim to represent.

• b) an opinion drawn on the entity’s books of accounts to make sure that the records are true and fair representation of the transactions they claim to represent.

• c) an opinion drawn on the entity’s financial statements to make sure that the records are true and fair representation of the transactions they claim to represent.

• d) an opinion drawn on the entity’s books of accounts to make sure that the records are true and correct representation of the transactions they claim to represent.

700.1

CA. Goofy has been appointed as an auditor for audit of a complete set of financial statements of Dippy Ltd., a listed company. The financial statements of the company are prepared by the management in accordance with the Accounting Standards prescribed under section 133 of the Companies Act, 2013. However, the inventories are m is stated which is deemed to be material but not pervasive to the financial statements. Based on the audit evidence obtained, CA. Goofy has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with SA 570. Further, CA. Goofy is also aware of the fact that a qualified opinion would be appropriate due to a material misstatement of the Financial Statements. State what phrases should the auditor use while drafting such opinion paragraph?

• a) In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.

• b) In our opinion and to the best of our information and according to the explanations given to us, with the foregoing explanation, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.

• c) In our opinion and to the best of our information and according to the explanations given to us, subject to the misstatement regarding inventories, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.

• d) In our opinion and to the best of our information and according to the explanations given to us, with the explanation described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.

700.3

SA-700 requires the use of specific headings, which are intended to assist in making auditor’s reports that refer to audits that have been conducted in accordance with SAs more recognizable. Which of the following is that specific heading:

• a) Key audit matters

• b) Basis of opinion

• c) Date

• d) All of the above

700.7

The opinion section of the auditor’s report shall:

• a) Identify the entity whose financial statements have been audited;

• b) State that the financial statements have been audited;

• c) Identify the title of each statement comprising the financial statements;

• d) All of the above

700.9

Which of the following is FALSE regarding UDIN? (Unique document identification number)

• a) It is to be generated on UDIN portal.

• b) Its basic objective is to help ICAI in keeping and maintaining an online registry of different services provided by all of its members.

• c) It has to be generated and stated for each audit report signed by a Chartered Accountant.

• d) It has to be generated and stated for each certificate signed by a Chartered Accountant

Incs.48.3

Statement 1: While conducting an audit, it is obligatory for the auditor to apply sampling.

Statement 2: There may be sometimes where test checking or sampling may not be suitable.

• a) Only statement 1 is true

• b) Only statement 2 is true

• a) Both the statements are true

• d) None of the statements is true

Incs.58.2

When expressing an unmodified opinion on financial statements, SAM & Company used the following phrase:

“In our opinion, the accompanying financial statements give a true and fair view of […]

in accordance with [the applicable financial reporting framework].”

Which is the other phrase which is regarded as being equivalent to the above phrase and could also be used by SAM & Company?

• a) In our opinion, the accompanying financial statements give a true and correct view of […] in accordance with [the applicable financial reporting framework];

• b) In our opinion, the accompanying financial statements present correctly, in all material respects, […] in accordance with [the applicable financial reporting framework];

• c) In our opinion, the accompanying financial statements present fairly, in all material respects, […] in accordance with [the applicable financial reporting framework];

• d) In our opinion, the accompanying financial statements give a correct and fair view of […] in accordance with [the applicable financial reporting framework].

Incs.58.3

  Which of the following statements is not included in the section with the heading “Basis for Opinion” in the Auditor’s Report?

• a) Audit was conducted in accordance with the Accounting Standards.

• b) Auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.

• c) Description of the auditor’s responsibilities under the SAs.

• d) States whether the auditor believes that the audit evidence the auditor has obtained, is sufficient and appropriate to provide a basis for the auditor ’s opinion.