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company audit questions.......

CA Sukriti Jain (Senior, EY) (1184 Points)

10 March 2011

Q.1 the auditors are being insisted by the management to hand over the letters of confirmation of balance of debtor & creditor,received by the auditor.comment.

Q.2 as per SA 200A, one of the objectives of audit is to detect fraud.say true/false.

Q.3 in case of audit of partnerhip & sole proprietorship, the auditors duties are determined purely by the contract b/w him & the client? T/F?

Q.4 A CA who is a subscriber to the MOA of the company,can be its auditor for any assessment years?T/F?

Q.5 The financial controller of A.ltd refuses to provide for proposed dividends in the books of accounts for the year ended ___.on the ground that it is pending approvl of sh.h. @ AGM tobe held after 5 months. comment.

plz try to answer these question as soon as possible.

waiting or the replies..........

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5 Replies

CA Sukriti Jain (Senior, EY) (1184 Points)
Replied 10 March 2011

what do we mean by cut off procedures ?

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(Guest)

2)False: As per SA 200A, objective of an audit is to express an opinion on financial statements to help the users of the financial statements to determine the true and fair view.

3)True: No basic legal requirement for audit. So, auditor’s duties and rights are a matter of contract

5)Normally, the dividend is proposed first by Board before adoption of the accounts in AGM. It is the shareholders in AGM who may approve the dividend proposed by BOD.

It is also correct that as on the date of balance sheet or

subsequent to it, but before approval of the financial statements in AGM, the dividend

declaration is a contingent one.

But according to AS-4, Contingencies and Events occurring after the Balance Sheet date,

even though certain events occur after balance sheet date, they are included/provided in

the accounts because of their special nature or statutory requirement. Schedule VI to the

Indian Companies Act, 1956 requires disclosure of proposed dividend specifically.

According to AS-4, the proposed dividend pertaining to the period covered by the

financial statements, should be included in the financial statements although they are

declared after the approval of the accounts.

In the circumstances, applying the above provisions, the contention of the Financial

controller of AS Ltd. is wrong. Hence proposed dividend should be provided in the

books of accounts for the year ended , as the same is a statutory requirement

of the law.

CA. ANKUR JAIN (CA.....) (2800 Points)
Replied 10 March 2011

1. I think this question is from SA of documentation

you can elobrate this line

"Working papers are the auditors property, he is not liable to give that to management however on his will he may provide the same to management but he should give proper attention to his future obligations"