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Principles and Practice of Auditing

Semester 3 · 15 topics in 5 units

Past question papers for Principles and Practice of Auditing

Unit I 3 topics

  1. Auditing: meaning, objectives, advantages and limitationsWhat an audit is, how auditing differs from accountancy, the primary and subsidiary objectives (opinion on the accounts, detection and prevention of errors and frauds), the kinds of errors and frauds, and the advantages and limitations of an audit.7 min
  2. Types of audit: statutory, continuous, final, cost, management and tax auditClassification of audits by legal requirement, by time and by scope: statutory and voluntary audit, continuous, final, interim and balance sheet audit, and the special audits most often set as short notes, namely cost audit under section 148 of the Companies Act 2013, management audit and tax audit.6 min
  3. Commencement of a new audit, audit programme, audit note book and working papersThe steps an auditor takes before beginning a new audit, the audit programme with its advantages and drawbacks, the audit note book and its contents, and audit working papers, their ownership and custody, with references to SA 210, SA 230 and SA 300.6 min

Unit II 3 topics

  1. Internal check: meaning, principles, objectives and cash transactionsWhat internal check is, its fundamental principles and objectives, its advantages and limits, the auditor's duty in relation to it, and the internal check system for cash receipts, cash sales and cash payments.5 min
  2. Internal check on wage payments, purchases and salesThe internal check system for wage payments, from engagement and time-keeping through wage sheets to payment and unclaimed wages, and for credit purchases and credit sales, with the frauds each step is meant to stop.5 min
  3. Internal audit and internal control, and how they differ from internal checkInternal audit, its advantages and disadvantages and the companies required to have one under section 138 and Rule 13; internal control, its objectives and components and the internal financial controls regime of the Companies Act 2013; and the table distinguishing internal check from internal audit.5 min

Unit III 2 topics

  1. Vouching: meaning, importance, principles, vouchers and routine checkingWhy vouching is called the essence of auditing, its objectives and principles, what a voucher is and its kinds (primary and collateral, internal and external), the points to check on a voucher and when a voucher is defective, and routine checking with its merits and limits.5 min
  2. Vouching of the cash book: receipts, payments, credit sales and deferred revenue expenditureHow the auditor vouches each item set in the papers: cash sales, receipts from debtors, sale of investments and other debit-side items; cash purchases, payments to creditors, wages and other credit-side items; credit sales; and deferred revenue expenditure.6 min

Unit IV 3 topics

  1. Verification and valuation of assets: meaning, objectives and the auditor's positionWhat verification and valuation mean and how they differ from each other and from vouching, the objectives of verifying assets and liabilities, the general procedure, the bases of valuation, and the auditor's position on valuation from Kingston Cotton Mill to the current Standards on Auditing.6 min
  2. Verification and valuation of specific assets: land and building, plant, goodwill, investments, stock-in-trade and debtorsItem-by-item procedure for verifying and valuing land and building, plant and machinery, goodwill, investments, stock-in-trade (with a worked lower-of-cost-and-NRV example and attendance at the stock count) and debtors, with the frauds and errors to watch for each.6 min
  3. Verification of liabilities: creditors, bills payable, loans, outstanding expenses and contingent liabilitiesWhy the liabilities side needs as much care as the assets side, the general procedure, and the verification of share capital, reserves, secured and unsecured loans, debentures, trade creditors, bills payable, outstanding expenses, provisions and contingent liabilities under AS 29 and Schedule III.5 min

Unit V 4 topics

  1. Company auditor: appointment, rotation, qualifications, disqualifications, removal and remunerationSections 139 to 142 of the Companies Act 2013: appointment of the first and subsequent auditors, the five-year term, rotation of auditors and audit firms, casual vacancies, auditors of government companies, qualifications and disqualifications under section 141, removal, resignation and the Tribunal's power under section 140(5), and remuneration.7 min
  2. Company auditor: rights, powers and duties, the audit report, CARO 2020 and NFRAThe rights and powers of a company auditor under sections 143 and 146, his duties to inquire, report, follow auditing standards and report fraud, the services barred by section 144, the kinds of audit opinion, the matters reported under CARO 2020, and the National Financial Reporting Authority under section 132.7 min
  3. Liabilities of an auditor, professional ethics and professional misconductCivil liability of an auditor for negligence and misfeasance, liability to third parties after Hedley Byrne and Caparo, the leading English cases, criminal liability under sections 147, 447 and 448 of the Companies Act 2013, disciplinary liability before ICAI and NFRA, the ICAI Code of Ethics and the Schedules to the Chartered Accountants Act 1949.7 min
  4. Special audits: educational institutions, insurance companies and co-operative societiesThe audit procedure for an educational institution (fees, grants, salaries, funds and assets), for an insurance company (premium, claims, commission, reinsurance, reserves and investments under the Insurance Act 1938) and for a co-operative society (Article 243ZM, Rajendra N. Shah, and the special features of co-operative audit).6 min