CA FINAL ADVANCED AUDITING AND PROFESSIONAL ETHICS - CHA

SR NO. QUESTION

1 SA 200 deals with____________

What are the benefits of Planning in an Audit of Financial Statements

1. Attention to Important areas

2 2.Timely resolution of Potential Problems
3.Proper Organisation and Management of Audit Engagement.
4.Proper Selection of Engagement Team
5.Direction and Supervision of Engagement Team

3 Nature and Extent of Planning of Financial statements depends upon

4 Planning is not a _______ phase of an audit.
5 Planning is a _______ phase of an audit.
6 Which is more detailed?

One of the engagement team member of A & co, a firm of Chartered Accountants, picked up
for statutory audit of Sun Private Ltd, was involved in the process of planning of audit for the
financial year ended 31 March, 2022. The audit for the financial year ended 31 March, 2021
7 was conducted by a different engagement team. However, the engagement team of Sun
Private Ltd for the current year has got the industry experience. The audit team is confused
during the planning work and would like to have your views on following points. Please
advise by answering one of them.

Kshitij Private Ltd is a company based out of Kochi having operations primarily in Europe.
Because of the nature of the operations of the company, it is required to prepare its financial
statements as per International Standards for reporting to the local regulatory authorities over
there. Since the business is based in Europe, the audit team is also required to visit the
locations wherever the company has offices and is accordingly required to perform certain
audit procedures over there. During the audit of this company for the financial year ended 31
8 March, 2022, the auditors, who had planned their work appropriately and had a large team for
conducting the audit, were facing lot of challenges at various stages.They were also required
to revisit their materiality level during the course of the work. However, at the time of final
reviews when this was discussed with the Audit Partner (Audit Incharge), he was not
convinced with the approach of the audit team wherein they reassessed their plans
continuously resulting in waste of time. In this situation, please advise which one of the
following would be correct.
 M/s VJ limitedhaving its office at Bangalore and operations spread across Southern India,
had a discussion with its statutory auditors regarding the audit plan and the timelines. In the
past years, there have been significant delays in completion of audit work and the
management wanted that for the current year, audit should get completed on time. For doing
this, the audit team suggested that the information for the purpose of audit should be ready on
time and only then the timelines as agreed can be achieved. On the basis of the discussions
with the client & the auditors and internal discussions amongst the audit team members, a
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detailed audit programme was prepared by the audit team for the current year’s audit. But the
audit team discussed that they will not document this audit programme till the completion of
the audit work because at various stages, the work may require changes. If the audit team
documents the audit programme then it would create problems later on at the time of
assembly of the audit file wherein the audit team would have to show the changes made by
them in the audit programme during the course of the audit. You are required to share your
views in respect of this understanding and approach of the auditor.

CA. Sam has already developed an audit strategy for Hitesh Ltd. While a detailed audit plan
is being developed, she decided that materiality levels set earlier need to be lowered as
10 weaknesses in the internal controls were highlighted in the internal audit report.
Subsequently, a deviation from the audit strategy is felt necessary.How this has to be dealt
with.
_____ is the auditor with responsibility for reporting on the financial
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information of an entity
____________ is the Auditor with responsibility for reporting on the financial information of
12 a component which is included in the financial information
audited by the principal auditor.

M/s. ABC and co was apponted as principal Auditor for A group, Which factors the auditor
13
would consider the following before accepting his work as Principal auditor.

14 The auditor should plan his work so as to enable him to conduct

Statement (1): Audit techniques and audit procedures are one and the same thing.
15
Statement (2): Audit techniques refer to certain means and methods for collecting evidences.

Statement (1): Auditor as well as audit staff should not discuss the clients' information with
outsiders.
16
Statement (2): After examination, all vouchers must be stamped.
Statement (3): Audit team manager need not review and supervise the work done.

17 The advantages of audit programme are

18 The auditor shall develop an audit plan which includes

 CA Sameer, after developing the audit strategy for Menka Ltd., develops an audit plan but
19 finds a need to revise the materiality levels set earlier and therefore a deviation from the
already set audit strategy is felt necessary. In this case, he should

AJ Private Ltd is in the business of telecom and have significant operations across India
predominantly in Northern India. The statutory auditors of the company have been continuing
for the last 3 years and have been issuing clean report. For the financial year ended 31 March
2021, the statutory auditors commenced their work in March 2021 as per discussions with the
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management and with a plan to complete the audit by first week of May 2021. The audit team
concluded the work as per the agreed timelines and the financial statements and audit report
were signed on 5 May 2021 along with the engagement letter for the financial year ended 31
March 2021. In the given situation, please advise which of the following would be correct.

______ is the technique provides evidence to evaluate the effectiveness of the controls design
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and confirm that the controls have been placed in operation

22 The Auditor shall document

23 Reviewing the earlier audit programme is essential if

24 Overall Audit Strategy and Audit plan is responsibility of

25 Audit plan starts from

26 Nature of planning vary according to

27 Following activities are taken at the beginning of the current audit engagement

28 The auditor develop an audit plan that shall include a description of

29 Overall Audit strategy involve

30 Benefits of Overall Audit strategy includes

31 Major sources of obtaining information about the client's business are

32 Factors to be considered in development of overall audit plan are

33 Objective of audit planning does not include

 The auditor’s examination of the system of internal control should have three features which
34
are _______

The auditor should review the financial statements of the past several years, audited by his
35 predecessors specially those of the immediately preceding previous year. This would reveal
to him about
Statement 1: Adequate planning benefits the audit of financial statements by giving Attention
to Important areas
36
Statement 2: Proper Selection of Engagement Team can be benefiited by adequate planning
of Financial statements.

37 Who should be involved in planning the audit

Acceptance and Continuance of Client Relationships and Audit Engagements are very
38
important ___________
Planning the nature, timing and extent of specific further audit
39
procedures depends on the outcome of __________.

40 The auditor may need to modify the overall audit strategy and audit plan on account of
ROFESSIONAL ETHICS - CHAPTER 2: AUDIT PLANNING, STRATEGY & EXECUTION
Option - A Option - B Option - C
Overall Objectives of the
The Conduct of an Audit in Independent Auditor and the
Overall Objectives of the
accordance with Standards on Conduct of an Audit in
Independent Auditor
Auditing accordance with Standards on
Auditing

1,2,3,4,5 1,3,4 1,2,3

Size and Complexity of the

PastExperience & Expertise Change in Circumstances
Auditee
discrete continual iterative
discrete continual iterative
Audit Plan Audit Program Audit strategy

The engagement team needs to

The engagement team should
The engagement team should maintain confidentiality and
be independent and hence
consult the previous year’s hence cannot consult the
cannot consult the previous
engagement team during the previous year’s engagement
year’s engagement team during
course of their planning. team during the course of their
the course of their planning.
planning.

Audit Partner being the senior Audit Partner was correct,

most team member is right and however, during the course of
Audit Partner’s view is not
same thing should be an audit which required visits
correct as the audit team did
considered at
the right thing
by audit team by documenting various locations it was
it in the audit file. mandatory.
 Instead of considering the audit
programme, the audit team The approach of the audit team
The decision of audit team
could have prepared a not to document audit
regarding not documenting the
checklist. In case of a checklist, programme is not correct. The
audit programme is very good
such problem will not arise. audit team needs to document
as this would avoid
Because in case of a checklist it properly at the time of
unnecessary problems of
if any changes are made then planning stage itself and any
documentation of changes
the final checklist can be kept changes made
made in the audit programme
in the file along with old after that should also be
at the time of assembly of file.
working checklist used documented with explanations.
during the audit.

Sam would firstly modify the Sam would firstly modify the
overall strategy and thereafter, overall Plan and thereafter,
Sam would modify the
prepare the prepare the
audit plan
audit plan in line with the audit strategy in line with the
strategy. Plan.

Principal Auditor Other Auditor Financial Auditor

Principal Auditor Other Auditor Financial Auditor

the risk of material

the materiality of the portion of principal auditor's degree of misstatements in the financial
the financial information which knowledge regarding the information of the components
the principal auditor audits business of the components audited
by the other auditor
An effective audit Efficient conduct of audit Both (a) and (b)

Only Statement (1) is true Only Statement (2) is true Both the statements are true

Statements (1) and (2) are true Statements (1) and (3) are true Statements (2) and (3) are true

Shelter for some assistants Its mechanical approach No ignorance or overlooking

NTE of planned risk NTE of planned further audit Other planned procedures as
assessment procedures procedures per Sas

Continue with the Audit Plan
without considering the Audit
Strategy
The engagement letter should
have been signed before
commencing the audit work.
Walk through test
The audit plan
Experience gained in previous Important changes in Internal
audit
Management
Start from previous audit till
completion of previous audit
Current Experience
Continuance of client
Compliance with Ethical
relationship in combined
Requirements
reading of SA 220 and SQC 1
Planned audit procedures in
compliance with SA’s
Identifying the scope of
engagement
Employment of Quantity
Resources
Annual reports circulated to
share holders
Accounting policies adopted by Nature and extent of audit
client
Facilitate review
First Modify the audit strategy
Drop the audit and withdraw and thereafter prepare the audit
from the engagement plan according to the modified
strategy.
The engagement letter should
The engagement letter should
have been signed at least a day
have been signed at least a day
before signing the financial
before signing the audit report.
statements.
Cut off Procedure Both A and B
Any significant changes made
Overall Audit Strategy
during the audit
Both A and B
control
Auditor Those charged with governance
Completion from previous
Completion from previous
audit till completion of current
audit till start of current audit
audit
Change in Environment Both A and B
Understanding the terms of
enagement
Size and Complexity of Elements as described with
Auditee entity’s management
Timely resolution of Problems Attention to Important areas
Allocation of Quantity Timing of Deployment of
Resources Resources
Minutes of meeting , policy
Working papers of previous
and procedure manuals of
year
client
Identification of significant
evidence to be obtained. areas.
Reporting on internal control
Identity potential problems
deficiences
review and preliminary
evaluation, testing of
compliance and evaluation
System of internal control and Audit program used by the
accounting procedures.
Statements (1) and (2) are true Statements (1) is true
The engagement partner and
other key members of the
engagement team
Engagement Acceptance
activities
preliminary engagement
activities
Result of unexpected events
review, testing of compliance
and evaluation
previous Auditor
Managemnet and Those
charged with governance
preliminary engagement
activities
Engagement Acceptance
activities
Changes in conditions
Preliminary evaluation, testing
of compliance and evaluation
Fees charged by previous
Auditor
Statements (2) is true
CEO, CFO of the company
Review Activity
risk assessment procedures
Audit evidence
obtained from the results of
audit procedures
ON
Option - D Right - Option
Right - Ans
Overall Objectives of the
Independent Auditor and the
None of the above C Conduct of an Audit in
accordance with Standards on
Auditing

1,4,5 A 1,2,3,4,5

All the above D All the above

None of the above A discrete
Both B and C D Both B and C
All the above A Audit Plan

Only the Partner who is going The engagement team should

to sign the audit report may consult the previous year’s
A
consult the previous year’s engagement team during the
audit team. course of their planning.

Audit Partner’s view is not

correct because the materiality
was revised by the audit team Audit Partner’s view is not
which B correct as the audit team did
is a big thing and same should the right thing
have been considered by the
audit partner.
The decision of audit team not
to document the audit
programme is not correct.
Their concern that the changes
may arise in the audit
programme is valid, however,
to take care of that the audit C it properly at the time of
team can take approval from
the ICAI later on when those
changes will be made. The
audit team will have to
document the changes and the
approval note of the ICAI.
Sam would modify the
audit Strategy.
None of the above
None of the above
All the above
None of these
None of the statements is true
All the statements true
All of these
All of these
The approach of the audit team
not to document audit
programme is not correct. The
audit team needs to document
planning stage itself and any
changes made
after that should also be
documented with explanations.
Sam would firstly modify the
overall strategy and thereafter,
A prepare the
audit plan in line with the
strategy.
A Principal Auditor
B Other Auditor
D All the above
C Both (a) and (b)
B Only Statement (2) is true
A Statements (1) and (2) are true
C No ignorance or overlooking
D All of these

Devise a new audit plan and
then, change the strategy as per C
the Revised Plan.
The engagement letter is
optional in case of a private
company and hence can be
signed anytime.
None of the above
All the above
None of the above
All the above
Start of current audit till
completion of current audit
None of the above
All the above
None of the above
All of the above
All of the above
All of the above
All of the above
Assist in proper assignment of
C
work
First Modify the audit strategy
and thereafter prepare the audit
plan according to the modified
strategy.
The engagement letter should
A have been signed before
commencing the audit work.
A Walk through test
D All the above
C Both A and B
B Auditor
Completion from previous
B audit till completion of current
audit
B Change in Environment
D All the above
Planned audit procedures in
A
compliance with SA’s
Identifying the scope of
A
engagement
Timing of Deployment of
C
Resources
D All of the above
D All of the above
Reporting on internal control
deficiences
 review and preliminary
None of the above A evaluation, testing of
compliance and evaluation

System of internal control and

All of the above A
accounting procedures.

Statements (1) and (2) are not

A Statements (1) and (2) are true
true

The engagement partner and

All the above A other key members of the
engagement team
preliminary engagement
None of the above B
activities

Further Audit procedures C risk assessment procedures

All the above D All the above