Practical Paper

Topics: Auditing, Audit, Financial audit Pages: 4 (1286 words) Published: September 15, 2013
Practice Paper by FCA Kamal Garg [www.kgma.in] 1. (a) As a Statutory Auditor, how would you deal with the following? Mr. Rajesh is appointed as the auditor of NOIDA Travels Ltd. with audit fees of Rs. 35,000. He purchased air ticket from Delhi to Kolkata and back for Rs. 18,000 from the client for his personal work and the amount remains unpaid at the end of the year as it is a general practice of the client to give credit to all. Mr. Rajesh claims that he does not incur any disqualification as contained in Section 226(3) of the Companies Act. Would your answer be different if his spouse’s brother would have purchased such ticket who is a director in the subsidiary of NOIDA Travels Ltd. Apex Ltd., a well reputed manufacturing public limited company has made a contribution of Rs. 2.5 lacs during the financial year ended 31.3.2013 to a political party for running, a school, situated in the village, where most of the workers of the company reside. It is admitted that the benefit of the school is mostly for the children of the workers of the company. The company has not made any profits in the last four years. Dark Ltd. has received a grant of Rs. 20 lacs under the Government's Subsidy Scheme for acquiring imported machinery for setting up, an oil exploration plant and the entire grant received is credited to Profit and Loss Statement. You notice a misstatement resulting from fraud or suspected fraud during the audit and conclude that it is not possible to continue the performance of audit. Comment on the following with reference to the Chartered Accountants Act, 1949 and schedules thereto: Mr. Rahul, a locally based Chartered Accountant, accepted the statutory audit of ABC Limited at a fee lower than that charged by the previous auditor, who was stationed in another town and had to spend a lot of money on travel for which he did not charge separately. He also communicated to previous auditor through registered post acknowledgement due mode and the previous auditor...
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