CA Inter Audit Lec 37 & 38 (SA 700)

700.8

Which of the following is not a Specific Evaluation by the Auditor:

• a) The financial statements adequately disclose the significant accounting policies selected and applied;

• b) The accounting policies selected and applied are consistent with the applicable financial reporting framework and are appropriate;

• c) The accounting estimates made by management are reasonable;

• d) The sufficient appropriate audit evidence has been obtained;

701.1

Which of the following is incorrect:

• a) Communicating key audit matters in the auditor’s report is not a substitute for disclosures in the financial statements that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation;

• b) Communicating key audit matters in the auditor’s report is not a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705 (Revised);

• c) Communicating key audit matters in the auditor’s report is not a substitute for reporting in accordance with SA 570 when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern;

• d) Communicating key audit matters in the auditor’s report is a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705 (Revised)

705.2

A company did not disclose accounting policies required to be disclosed under Schedule III or any other provisions of the Companies Act, 2013, the auditor should issue–

• a) a qualified opinion

• b) an adverse opinion

• c) a disclaimer of opinion

• d) emphasis of matter paragraph.

705.5

The auditor shall express ______ opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

• a) Adverse

• b) Qualified

• c) Disclaimer

• d) None of the above

705.6

Which of the following is not a type of modified opinion:

• a) qualified opinion

• b) adverse opinion

• c) disclaimer of opinion

• d) None of the above

705.7

Which of the following is correct:

• a) The auditor shall express a qualified opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

• b) The auditor shall express a disclaimer opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

• c) The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

• d) The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements

Incs.31.5

Also, Sigma Ltd received a grant of ₹50 lakhs under the PM Make in India Subsidy Scheme for acquiring machinery for setting up new plant. The entire grant received was credited to Profit and Loss Account.

Mr Ram and Mr Sham (two partners of ARG & Associates) differ on an audit point relating to audit of Sigma Ltd. Mr Ram is of the view that it will attract qualification however Mr Sham disagreed with his opinion.

"Communicating key audit matters in the auditor’s report is

• a) not a substitute for disclosures in the financial statements that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation.

• b) a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705.

• c) a substitute for reporting in accordance with SA 570 when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern;

• d) a separate opinion on individual matters."

Incs.14.4

         " When the Auditor, after conclusion of an Audit exercise, is of the opinion that there are material misstatements in the Financial Statements, but they are not pervasive, then what should an Auditor do?

• a) Issue Unmodified Opinion

• b) Issue Qualified Opinion

• c)Issue Disclaimer of Opinion

• d) Mention it in Emphasis of Matter Paragraph"

Incs.14.5

" When the Auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework, Auditor shall give:

• a) Modified Opinion

• b) Qualified Opinion

• c) Disclaimer of Opinion

• d) Unmodified Opinion"

Incs.14.1

During the Audit of M/s Persistent & Co, Mr A found out that the Firm has changed the method of Depreciation from WDV to SLM but has not given the retrospective effect. Mr A has calculated the Difference of Depreciation, but M/s Persistent & Co has stated that they don’t want to change the Financial Statements and if Auditor persists they may give the effect in the next Financial Year.

      " In case of M/s Persistent & Company, what would be an ideal Audit Opinion?

• a) Unmodified

• b) Qualified

• c) Adverse

• d) Disclaimer