Audit Lesson 1

Gurpreet was of the view that audited financial statements are not a guarantee

against probable wrong doings in financial matters of companies. What kind

of assurance does audit of financial statements provide?

• It provides reasonable assurance meaning a moderate level of assurance

• It provides reasonable assurance meaning a low level of assurance.

• It provides reasonable assurance meaning a high level of assurance.

• It provides reasonable assurance meaning an absolute level of assurance.

When is Thalapathy Vijay's movie Leo releasing?

• October 18, 2023

• October 22, 2023

• October 19, 2023

• October 13, 2023

Rohit added that auditor can force an employee of the company to provide him

required information and documents. Can he do so?

• Yes, he can do so. It is necessary to obtain audit evidence.

• Yes, he can do so. There are express rights given to him in this respect.

• No, he cannot do so. He can only request for providing him with necessary

  information and documents. But it cannot be forced by him.

• No, he cannot do so. He has no right of seeking information and

  documents. Therefore, question of forcing does not arise

Ali had listened in one of the classes that audit covers all aspects of an entity

and concluded that each and every transaction of entity is verified by auditor. Goreti also seemed to be in agreement with him but she was of the view that besides this, it also meant that audit should be so organized to cover all areas of an entity. Which of following statements is appropriate in this regard?

• Only view of Ali is correct.

• Only view of Goreti is correct.

• Views of both Ali and Goreti are correct

• Views of both Ali and Goreti are incorrect.

All of them also discussed about benefits of auditing. Which of the following is

not a likely benefit of auditing?

• Since auditing is connected to future events, audited information can be

  easily relied upon by users.

• Errors or frauds may be discovered during audit.

• Government authorities can make use of audited accounts for different

  purposes.

• It can help in bringing out deficiencies in maintenance of financial

  records.

Goreti told her friends that she had read a news report about how a company

had misled its auditors by producing some fabricated documents. Which of

following statements seems to be appropriate in this regard?

• It was wrong on the part of auditor to rely upon fabricated documents.

  He must have discovered it as the same falls within the scope of his duties.

• Although it was wrong on the part of auditor to rely upon fabricated

  documents, he cannot do anything in the matter. He has to report on the

  basis of documents provided to him. He has no duty in this regard.

• Auditor has to conduct audit by exercising professional skill. But he is not

  an expert in discovering genuineness of documents. Hence, management

  consisting of dishonest persons may have led him to rely upon fabricated

  documents deliberately.

• Management cannot mislead auditor due to high level of knowledge and

  expertise possessed by him. The above is an outlier case-one of the rare

  odd cases.

The management of company has engaged CA P to issue a duly signed report

for half year. They have also requested him to prepare financial statements. Which of the following standards, if any, issued by ICAI are

relevant for CA P?

• Standards on Review Engagements

• Standards on Auditing

• Standards on Related Services

• There are no standards for issuing report in such situation.

Which of the following statements is MOST APRROPRIATE if management is asking CA P to prepare financial statements

• CA P can assist management in preparation of financial statements of

  the company. However, issue of a report in such a case is outside the

  scope of work.

• CA P can assist management in preparation of financial statements of

  the company and he can issue an audit report.

• CA P can assist management in preparation of financial statements of

  the company and he can issue a compilation report in this respect.

• The responsibility of preparation of financial statement is of company’s

  management. CA P cannot assist management in preparation of financial

  statements of the company. However, he can issue a review report.

When CA P, is required to issue a signed financial statements for half

year identify the MOST

APPROPRIATE statement:

• Standard on Quality control (SQC 1) is not applicable as CA P cannot

  issue audit report.

• Standard on Quality Control (SQC 1) is not applicable as CA P cannot

  issue review report.

• Standard on Quality Control (SQC 1) is applicable in such type of

  engagement.

• Standard on Quality Control (SQC 1) is not applicable as CA P is barred

  from issuing any report in such type of engagement.

The banker of company has also requested for projected financial statements

for coming years along with a report from CA regarding these projections to

consider request of management. Which of the following standards issued by

ICAI are relevant for CA P in such a situation, if any?

• Standards on Review Engagements

• There are no standards for issuing such type of reports.

• Standards on Related Services

• Standards on Assurance Engagements