compilation of sa questions

8/9/2019 Compilation of SA Questions

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Standards on Auditing Past Examinations Questions(C.A.Final)

SA in Exams

June 2009 (New) !ar"sQ #$ %&ile 'ondu'ting statutor Audit o A*C +td., ou 'ome a'ross - /s amounting to .2'rores as against a 'as& 1alan'e s&own in 1oo"s o .2.#0 'rores. ou also o1ser3e t&at des4itesimilar &ig& 1alan'es t&roug&out t&e ear, small amounts o . 0,000 are wit&drawn rom t&e 1an" to meet da 5to5da ex4enses 6

7int$ - - / is outstanding sin'e long it indi'ates t&e existen'e o sus4e'ted misa44ro4riation o 'as&. A''ording to SA5280 &e auditor s res4onsi1ilities relating to raud in an audit o inan'ial statements , w&en t&e auditor assesses t&at t&ere is a ris" at assertion indi'ating t&e

4ossi1le misstatements resulting rom 4ro'edure to 'onsider t&e e e't o raud on auditor sre4ort. -n t&is 'ase, t&e 'ir'umstan'es indi'ate t&at t&e 4ossi1le misstatements in inan'ialstatements is due to raud, t&e auditor must o1tain su i'ient and a44ro4riate audit e3iden'e to'on irm w&et&er t&e raud is t&ere or not.&e :uidan'e Note on Audit o Cas& and *an" 1alan'es also mentions t&at i t&e entit is

maintaining an undul large 1alan'e o 'as&, &e s&ould 'arr out sur4rise 3eri i'ation o 'as& morere;uentl to as'ertain w&et&er it agrees wit& t&e 'as& 1oo". - 'as& in &and is not in agreementwit& t&e 1oo" 1alan'e, &e s&ould see" ex4lanations and i t&e same are not satis a'tor s&ouldstate t&e said a't a44ro4riatel in &is Audit etermine w&et&er t&ere is a 4ro essional or legal re;uirement to re4ort to t&e 4erson or

4ersons w&o made t&e audit a44ointment or, in some 'ases, to regulator aut&orities, t&eauditor s wit&drawal rom t&e engagement and t&e reasons or t&e wit&drawal.

Q @$ %&at is t&e term non 'om4lian'e wit& laws and regulation means 6

Non5'om4lian'e means a'ts o omission or 'ommission 1 t&e entit , eit&er intentional or unintentional, w&i'& are 'ontrar to t&e 4re3ailing laws or regulations. Non5'om4lian'e does not


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in'lude 4ersonal mis'ondu't (unrelated to t&e 1usiness a'ti3ities o t&e entit ) 1 t&ose '&argedwit& go3ernan'e, management or em4lo ees o t&e entit .

J/NE, 2009 ( ld)

!ar"sQ 8$ State 1rie l t&e Communi'ation B


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&e auditor s&all re;uest management and, w&ere a44ro4riate, t&ose '&arged wit& go3ernan'e to 4ro3ide written re4resentations t&at all "nown instan'es o non5'om4lian'e or sus4e'ted non5'om4lian'e wit& laws and regulations w&ose e e'ts s&ould 1e 'onsidered w&en 4re4aringinan'ial statements &a3e 1een dis'losed to t&e auditor.

No3 20#0 ( ld) 8!ar"sQ =$ * +td. manu a'turing ' 'les &as # 0 em4lo ees. Auditors o1ser3e t&at it &as notregistered itsel or Pro3ident Fund and ES- 4ur4oses, not remitting t&e dues in time and auditor insists or ;uali ing t&e


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1) Signi i'ant di i'ulties, i an , en'ountered during t&e audit?') /nless all o t&ose '&arged wit& go3ernan'e are in3ol3ed in managing t&e entit ?i) !aterial wea"nesses, i an , in t&e design, im4lementation or o4erating e e'ti3eness o internal 'ontrol t&at &a3e 'ame to t&e auditor s attention and &a3e 1een 'ommuni'ated to

management as re;uired 1 SA5@# or SA5@@0?ii) Signi i'ant matters, i an , arising rom t&e audit t&at were dis'ussed, or su1De't to'orres4onden'e wit& management? and iii) %ritten re4resentations t&e auditor is re;uesting? andd) t&er matters, i an , arising rom t&e audit t&at, in t&e auditor s 4ro essional Dudgment,are signi i'ant to t&e o3ersig&t o t&e inan'ial re4orting 4ro'ess.

No3em1er, 20## (8 !ar"s)Q 9$ A*C Co. and >EF Co, C&artered A''ountants irms were a44ointed as Doint auditors o :ood 7ealt& Care +td. or 20095#0. A s4e'ial audit was 'ondu'ted /Bs. 2@@ A o t&e Com4aniesA't #9 = during !ar'& 20## and o1ser3ed gross understatement o esigning an Audit Strateg is t&e 1a'"1one o t&e Audit Planning 4ro'ess. >is'uss.

7int$ Audit strateg is in'ludes designing o4timi ed audit a44roa'&es to a'&ie3e t&e reasona1leassuran'e at t&e o4timum 'ost wit&in t&e 'onstraints o time and t&e in ormation a3aila1le. -t is

1a'" 1one o t&e audit 4lanning 1e'ause it in'ludes determination o $&e inan'ial re4orting ramewor" on w&i'& t&e inan'ial in ormation to 1e audited &as 1een

4re4ared, in'luding an need or re'on'iliations to anot&er inan'ial re4orting ramewor".-ndustr 5s4e'i i' re4orting re;uirements su'& as re4orts mandated 1 industr regulators.

&e ex4e'ted audit 'o3erage, in'luding t&e num1er and lo'ations o 'om4onents to 1e in'luded.&e resour'es to de4lo or s4e'i i' audit areas allo'ation o t&e wor" amongst t&e engagement


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team a''ording to t&eir audit s"ills and ex4erien'e.7ow su'& resour'es de4lo ed as a1o3e are re;uired to 1e managed, dire'ted or su4er3ised,Engagement 1udgeting, in'luding 'onsidering t&e a44ro4riate amount o time to set aside or areasw&ere t&ere ma 1e &ig&er ris"s o material misstatement.

&e entit

s timeta1le or re4orting, su'& as at interim and inal stages.&e organi ation o meetings wit& management and t&ose '&arged wit& go3ernan'e to dis'uss t&enature, timing and extent o t&e audit wor".&e dis'ussion wit& management and t&ose '&arged wit& go3ernan'e regarding t&e ex4e'ted t 4eand timing o re4orts to 1e issued. Setting materialit or 4lanning 4ur4oses.Setting and 'ommuni'ating materialit or auditors o 'om4onents.


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-G. &e entit s o1De'ti3es and strategies, and t&ose related 1usiness ris"s t&at ma result inris"s o material misstatement.G. &e measurement and re3iew o t&e entit s inan'ial 4er orman'e.-n addition to t&e im4ortan'e o "nowledge o t&e 'lient s 1usiness in esta1lis&ing t&e o3erall

audit 4lan, su'& "nowledge &el4s t&e auditor to identi areas o s4e'ial audit 'onsideration, toe3aluate t&e reasona1leness 1ot& o a''ounting estimates and management re4resentations, and toma"e Dudgment regarding t&e a44ro4riateness o a''ounting 4oli'ies and dis'losures.

!a 20## 8!ar"sQ #2$ I +td. &as its entire o4erations in'luding a''ounting 'om4uteri ed. As t&e audit 4artner ouare 'on'erned a1out in&erent and 'ontrol ris" or material inan'ial statement assertions. %&at'ould 1e t&e area ou loo" orward or de i'ien'ies and ris" identi i'ation 6

Answer$


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in'luding t&e rele3ant 'ontra'tual terms or t&e a'ti3ities underta"en 1 t&e ser3i'e organi ation.e) Auditor ma as" rom t&e user entit to 4rodu'e ser3i'e organi ations auditor re4ort ons stem 4ro'edures and internal 'ontrol.) n t&e 1asis o a1o3e auditor s&all determine t&e nature timing and extent o audit

4ro'edure.

!a , 20## 8!ar"sQ #8$ -n t&e 'ourse o t&e audit o < +td., t&e audit manager o A*C Co. o1ser3ed t&at < +td.&as outsour'ed 'ertain a'ti3ities to an outsour'ed agen' . As t&e engagement 4artner guide t&eaudit manager in t&e assessment o ser3i'es 4ro3ided 1 t&e outsour'ing agen' in relation to t&eaudit.Answer$ &is ;uestion 1elongs to situations ex4lained in SA5802, Audit Considerations relatingto an Entit /sing a Ser3i'e rgani ation A''ording to t&is SA t&e auditor o t&e entit usingser3i'e organi ation (/ser Auditor) s&all o1tain an understanding o entit and its 1usiness ina''ordan'e wit& SA @# . &e user auditor s&all o1tain an understanding o &ow a user entit usest&e ser3i'es organi ation in t&e user entit s o4eration in'luding$i. &e nature o ser3i'es 4ro3ided 1 t&e ser3i'e organi ation and t&e signi i'an'e o su'&ser3i'es to t&e user entit , in'luding its e e't on t&e internal 'ontrol o user entit .ii. &e nature and materialit o t&e transa'tions 4ro'essed or a''ounts or inan'ial re4orting

4ro'esses a e'ted 1 t&e ser3i'e organi ation.iii. &e degree o intera'tion 1etween t&e a'ti3ities o t&e ser3i'e organi ation and t&ose o user entit and

i3. &e nature o t&e relations&i4 1etween t&e user entit and t&e ser3i'e organi ationin'luding t&e rele3ant 'ontra'tual terms or t&e a'ti3ities underta"en 1 t&e ser3i'e organi ation.

!a , 20## 8!ar"sQ # $ -n t&e 'ourse o audit o +td., t&e audit team is not sure o t&e 4ossi1le sour'e o misstatement in t&e inan'ial statements. As t&e audit manager identi t&e sour'e o misstatements.Answer$ A''ording to SA 8 0 E3aluation o !isstatements -denti ied during t&e Audit ,auditor s&ould 'onsider t&at ollowing ma 1e t&e 'auses or a misstatements a misstatement ininan'ial statement.i. An ina''ura' in gat&ering or 4ro'essing data rom w&i'& t&e inan'ial statements are

4re4ared.ii. An omission o an amount o dis'losure.iii. An in'orre't a''ounting estimate arising rom o3erloo"ing or 'lear misinter4retation o a'ts andi3. Judgements o management 'on'erning a''ounting estimates t&at t&e auditor 'onsidersunreasona1le or t&e sele'tion and a44li'ation o a''ounting 4oli'ies t&at t&e 'onsidersina44ro4riate.

!a 20## !ar"s


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Q #=$ >ire'tor o +td. draws an ad3an'e o /S 200 4er da in 'onne'tion wit& t&e oreign tri4underta"en on 1e&al o t&e 'om4an . n &is return &e iles a de'laration stating t&at entiread3an'e was ex4ended wit&out an su44orting or e3iden'e. +td. 1oo"s t&e entire ex4enses ont&e 1asis o su'& de'laration. As t&e auditor o +td. &ow do ou deal wit& t&is 6

Answer$ SA 00 Audit E3iden'e states t&at an auditor s&ould o1tain su i'ient a44ro4riateaudit e3iden'e to o4timi e &is audit ris" at it low. Auditor s&ould as" or su44orting and i ex4enditures are not su44orted 1 do'umentar e3iden'e, t&ese ex4enses will 1e treated as

4ersonal ex4enses o t&e dire'tor de1ited in 4ro it and loss a''ount and as 4er Se'tion 22 (-A) (e)t&e Com4anies A't, #9 = re;uires an auditor to re4ort w&en 4ersonal ex4enses &a3e 1een it wouldnot 1e treated as 4ersonal ex4enses i it is an allowan'e gi3en under t&e terms o em4lo ment'ontra't. No e3iden'e su44orting t&e ex4enditure is re;uired or 4a ment o allowan'e to t&edire'tor. n t&e ot&er &and, i t&e 4a ment is reim1ursement s&ould 1e against a'tual ex4enditure.7en'e on t&e 1asis o a'ts and 'ir'umstan'es o t&e 'ase auditor s&all re4ort a''ordingl .

No3. 200 (New) !ar"sQ # $ ou are t&e auditor o Eas Communi'ations +td. or t&e ear 200 50 . &e in3entor as att&e end o t&e ear i.e. @#[email protected] was .2.2 'rores. >ue to una3oida1le 'ir'umstan'es, ou 'ould not

1e 4resent at t&e time o annual 4& si'al 3eri i'ation. /nder t&e a1o3e 'ir'umstan'es &ow wouldou ensure t&at t&e 4& si'al 3eri i'ation 'ondu'ted 1 t&e management was in order 6

7int$ A''ording to SA 0# - t&e auditor is una1le to attend 4& si'al in3entor 'ounting due toun oreseen 'ir'umstan'es, t&e auditor s&all ma"e or o1ser3e some 4& si'al 'ounts on an

alternati3e date, and 4er orm audit 4ro'edures on inter3ening transa'tions

4er orm alternati3eaudit 4ro'edures ma in'lude ollowing#.


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>esigning t&e orm o t&e 'on irmation re;uest.Communi'ating t&e 'on irmation re;uest to t&e a44ro4riate t&ird 4art .1taining res4onse rom t&e t&ird 4art .E3aluating t&e in ormation or a1sen'e t&ereo .

Q #9 $ External Con irmations in Audit 8 !ar"s7Answer$ Following are t&e Exam4les o situations w&ere external 'on irmations ma 1e usedin'lude t&e ollowing$*an" 1alan'es and ot&er in ormation rom 1an"ers.A''ounts re'ei3a1le 1alan'es.Sto'"s &eld 1 t&ird 4arties.Pro4ert title deeds &eld 1 t&ird 4arties.-n3estments 4ur'&ased 1ut deli3er not ta"en.+oans rom lenders.A''ounts 4a a1le 1alan'es.+ong outstanding s&area44li'ation mone .


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No3. 2009 (New) !ar"sQ 20 $ !oon +imited re4la'ed its statutor auditor or t&e inan'ial ear 200 509. >uring t&e'ourse o audit, t&e new auditor ound a 'redit item o . la"&s. n en;uir , t&e 'om4anex4lained &im t&at it is, a 3er old 'redit 1alan'e. &e 'reditor &ad neit&er a44roa'&ed or t&e

4a ment not &e is tra'ea1le. /nder t&e 'ir'umstan'es, no 'on irmation o t&e 'redit 1alan'e isa3aila1le.

7int$ -n t&e gi3en 'ase t&e 'reditor is 4ending sin'e long. -t 'reates a sus4i'ion to t&e auditor t&atw& a litigation &as not 1een instituted 1 t&e 'reditor against t&e entit . -t mig&t 1e a 'ase t&at anin'ome o . la"&s &ad 1een &idden in 4re3ious ears 1 de1iting raudulent 'redit 4ur'&ase.

Auditor s&ould o1tain su i'ient e3iden'e in su44ort o t&e 1alan'e. 7e s&ould a44l alternati3eaudit 4ro'edures to get do'umentar 4roo o t&e transa'tionBs and s&ould not rel entirel on t&emanagement re4resentation. Finall , &e s&ould in'lude t&e matter 1 wa o a ;uali i'ation in &isaudit re4ort to t&e mem1ers a''ording to SA 0 i disagreement wit& management.

!a 20#0 ( ld) !ar"sQ 2# $ %&en t&e audit team 3isited t&e 'lient to 4er orm su1stanti3e audit o de1tors, t&e 'lient

4rodu'ed ledger a''ounts o 'ustomers and 'on irmations or t&e to4 #0 de1tors. ne o t&ede1tors was more t&an ears old, 1ut it &ad 'on irmed &is 1alan'e.


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7int$ As in t&e gi3en 'ase one o t&e de1tors o more t&an ear old &ad 'on irmed &is 1alan'e.&e auditor s&ould en;uire a1out t&e de1tor to 'on irm t&e external 'on irmations#. %&o is t&e de1tor 6 %&et&er &e is related wit& t&e 'lient.2. >e1tor s inan'ial a1ilities and

@.


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A. Anal ti'al Pro'edures in Planning t&e Audit&e auditor s&ould a44l anal ti'al 4ro'edures at t&e 4lanning stage to assist in understanding t&e

1usiness and in identi ing areas o 4otential ris".*. Anal ti'al Pro'edures as Su1stanti3e Pro'edures

&e auditor

s relian'e on su1stanti3e 4ro'edures to redu'e dete'tion ris" relating to s4e'i i'inan'ial statement assertions ma 1e deri3ed rom tests o details, rom anal ti'al 4ro'edures, or rom a 'om1ination o 1ot&. &e de'ision a1out w&i'& 4ro'edures to use to a'&ie3e a 4arti'ular audit o1De'ti3e is 1ased on t&e auditor s Dudgement a1out t&e ex4e'ted e e'ti3eness ande i'ien' o t&e a3aila1le 4ro'edures in redu'ing dete'tion ris" or s4e'i i' inan'ial statementassertions.C. Anal ti'al Pro'edures in t&e 3erall


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Answer$5 As 4er SA 80 Auditing A''ounting Estimates, -n'luding Fair Galue A''ountingEstimates, and is'losures , it is auditor s dut to o1tain su i'ient and a44ro4riateaudit e3iden'e t&at a''ounting estimates 1 management are reasona1le in 4resent 'ir'umstan'esor not. Auditor irst a44l to


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-n t&e gi3en 'ase, t&e amount o .#, 0 'rores is a material amount and it is t&e result o an e3ent,w&i'& &as o''urred a ter t&e *alan'e S&eet date. &e a'ts &a3e 1e'ome "nown to t&e auditor

1e ore t&e date o issue o t&e Audit etermining w&et&er t&ere is ade;uate su44ort or t&e assum4tions underl ing t&eore'ast.d)


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#. %& s&e is gi3ing 4ersonal guarantee2. %&et&er s&e is 'a4a1le o 1e'oming suret or t&e 'om4an@. * in usion o su'& und w&et&er 'as& low will im4ro3e to 'o4e u4 wit& inan'ial 'run'&8. 7ow man orders are &and to exe'ute, on t&e 1asis o w&i'& de'ision o management is to

ta"e 4ersonal guarantee.. a"ing written re4resentation rom dire'tor and external 'on irmation rom dire'tor swi e is needed.

Q @# $ &e statutor auditor o t&e 7olding Com4an demands or t&e wor"ing 4a4ers o t&eauditors o t&e su1sidiar 'om4an , o w&i'& ou are t&e auditor 6

As 4er SA 2@0, Audit >o'umentation wor"ing 4a4ers are t&e 4ro4ert o t&e auditor.&e auditor ma , at &is dis'retion, ma"e 4ortion o or extra'ts o &is wor"ing 4a4ers a3aila1le to&is 'lient.SA =00 /sing t&e %or" o Anot&er Auditors also states t&at an auditor s&ould res4e't t&e'on identialit o in ormation a';uired during t&e 'ourse o &is audit wor" and s&ould not dis'losesu'& in ormation unless t&ere is a legal or 4ro essional dut to dis'lose. Clause # to t&e Part - o t&e Se'ond S'&edule to t&e C&artered A''ountants A't, #989 also 4ro3ides t&at a '&artereda''ountant in 4ra'ti'e s&all 1e deemed to 1e guilt o 4ro essional mis'ondu't i &e >is'losesin ormation a';uired in t&e 'ourse o &is 4ro essional engagement to an 4erson ot&er t&an &is'lient, wit&out t&e 'onsent o &is 'lient, or ot&erwise t&an as re;uired 1 an law or t&e time

1eing in or'e .&e -CA- &as 'lari ied t&at ex'e4t to t&e extent stated a1o3e, t&e auditor is not re;uired to 4ro3ide

t&e 'lient or t&e ot&er auditors o t&e same enter4rise or its related enter4rises su'& as a 4arent or asu1sidiar , a''ess to &is audit wor"ing 4a4ers. &e statutor auditor o an enter4rise do not &a3erig&t o a''ess to t&e audit wor"ing 4a4ers o t&e 1ran'& auditor. An auditor 'an rel on t&e wor" o anot&er auditor, wit&out &a3ing an rig&t o a''ess to t&e audit wor"ing 4a4ers o ot&er auditor.-n 3iew o t&e a1o3e guidelines, issued 1 t&e Coun'il o -CA-, t&e statutor auditor o 7olding'om4an 'annot &a3e a''ess to audit wor"ing 4a4ers o t&e su1sidiar 'om4an s auditor. 7e'an &owe3er, as" t&e auditor to answer 'ertain ;uestions a1out t&e manner in w&i'& t&e audit is'ondu'ted and 'ertain ot&er 'lari i'ations regarding audit.

June, 2009 (New) 8 !ar"sQ @2 $ &e statutor auditor o t&e 7olding Com4an demands or t&e wor"ing 4a4ers o t&eauditors o t&e su1sidiar 'om4an , o w&i'& ou are t&e auditor 6

Q @@$ ou &a3e 1een a44ointed auditor o a large industrial 'om4an w&i'& &as an esta1lis&edinternal audit de4artment. ou are re;uired to state t&e main as4e'ts t&at would 1e 'onsidered toind out t&e e e'ti3eness o t&e de4artment.

7int$ As 4er SA5=#0 (


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June, 2009 (New) !ar"sQ @8$ ou are a44ointed statutor auditor o K +td., &as an internal audit s stem and re4orts or t&e same are gi3en to ou. !ention t&e a'tors ou will 'onsider to ensure t&at t&e said s stem o

internal audit o K +td. is 'ommensurate wit& t&e si e o t&e 'om4an and nature o its 1usiness 67int$ A''ording to SA5=#0 (


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in'rease t&e retirement age.

Answer$ A''ording to SA =20 /sing t&e %or" o an Auditor s Ex4ert , alt&oug& anex4ert is res4onsi1le or &is met&ods and assum4tions and auditor due to &is limited 'om4eten'e

'annot '&allenge t&e met&ods and assum4tions o an ex4ert. *ut as 4er SA 200 &e s&ould exer'iset&e 4ro essional s"e4ti'ism and s&ould not a''e4t t&e wor" o an ex4ert wit&out a44l ing an'onsiderations t&ereon. So, t&e auditor s&all e3aluate t&e ade;ua' o t&e auditor s ex4ert swor" or t&e auditor s 4ur4ose, in'luding t&e rele3an'e and reasona1leness o t&at ex4ert sindings or 'on'lusions, and t&eir 'onsisten' wit& ot&er audit e3iden'e as 4er SA 00.-n t&e instant 'ase, a ;uali ied a'tuar &as issued a 'erti i'ate or gratuit lia1ilit 3aluation, or w&i'& retirement age ado4ted is = ears against t&e existing retirement age o =0 ears? &owe3er t&e 'om4an is 'onsidering a 4ro4osal to in'rease t&e retirement age. -n 3iew o SA 5 00alongwit& SA5=20, t&e assum4tion made 1 a'tuar are not rele3ant and 'onsistent. 7en'e t&eauditor is re;uired to 'ommuni'ate to t&e management and ad3i'e t&e modi i'ations a''ordingl .-n 'ase o ailure o 'om4lian'e o t&e same t&e auditor ma ;uali t&e re4ort.

Q @ $ !r. K, a s&are&older o t&e 'om4an 4ointed out t&at$i) &e goodwill in t&e *alan'e S&eet o t&e 'om4an &as a44eared on same igure during t&e

4ast t&ree ears.ii) Premium re'ei3ed on issue o s&ares 4rior to t&e date o 1alan'e s&eet &as 1een trans erredto Pro it and +oss a''ount or arri3ing at t&e igure o 'ommission 4a a1le to t&e managingdire'tor.7int$

i) As 4er t&e 4ro3isions o AS 5#8 :oodwill s&all 1e amorti ed wit&in i3e ears o a';uisition o 1usiness unless an longer 4eriod is Dusti ia1le to t&e management. - su'&a''ounting 4oli' is not 1eing ollowed 1 t&e 'om4an it will 1e 3iolation o AS 5#8 w&i'& is asu1De't matter o ;uali i'ation in auditor s re4ort.ii) Premium re'ei3ed on issue o s&ares is 'a4ital re'ei4t and s&ould not 'redited to 4ro it andloss a''ount. As 4er t&e 4ro3isions o Se'tion @89 o t&e Com4anies A't, 4remium on issue o s&ares s&ould not 1e 'onsidered in 'om4utation o net 4ro it or t&e 4ur4ose o managerialremuneration. &e auditor s&ould &a3e ;uali ied t&e audit re4ort and ;uali ied t&e amount 1w&i'& t&e 4ro it stands in lated.

!a , 200= !ar"sQ @9 $ >is'uss t&e 3arious as4e'ts to 1e 'onsidered 1 t&e Statutor Auditor 1e ore ;uali ing &isre4ort 6

Answer$ &e auditor s&all ex4ress a ;uali ied o4inion w&en$a) &e auditor, &a3ing o1tained su i'ient a44ro4riate audit e3iden'e, 'on'ludes t&atmisstatements, indi3iduall or in t&e aggregate, are material, 1ut not 4er3asi3e, to t&e inan'ial

statements? or 1) &e auditor is una1le to o1tain su i'ient a44ro4riate audit e3iden'e on w&i'& to 1ase t&e


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Situation52$5 - inan'ial statements 4re4ared in a''ordan'e wit& t&e re;uirements o a air 4resentation ramewor" do not a'&ie3e air 4resentation, t&e auditor s&all dis'uss t&e matter wit&management and, de4ending on t&e re;uirements o t&e a44li'a1le inan'ial re4orting ramewor" and &ow t&e matter is resol3ed, s&all determine w&et&er it is ne'essar to modi t&e o4inion in

t&e auditor

s re4ort in a''ordan'e wit& SA5 0 . For exam4le Finan'ial statements are not inagreement wit& s'&edule G- in su'& situation t&e matter s&all 1e dis'ussed wit& management.

!a , 200 8!ar"sQ 8@$ Em4&asis o matter 4aragra4& in Audit


21/22

4ro3ision or an lia1ilit , t&at ma result, &as 1een made in t&e inan'ial statements.-n our o4inion

-n our o4inion and to t&e 1est o our in ormation and a''ording to t&e ex4lanation gi3en to us, t&einan'ial statements gi3e a true and air 3iew in 'on ormit wit& t&e a''ounting 4rin'i4les

generall a''e4ted in -ndia$a) in t&e 'ase o t&e 1alan'e s&eet, o t&e State o a airs o as on @#st !ar'& 2xxxx and

1) in t&e 'ase o t&e 4ro it and loss a''ount, o t&e 4ro itBloss or t&e ear ended on t&at date.

2. &e addition o a 4aragra4&, em4&asi ing a going 'on'ern 4ro1lem or signi i'antun'ertaint is ordinaril ade;uate to meet t&e auditor s re4orting res4onsi1ilities regarding su'&matters. 7owe3er, in extreme 'ases, su'& as situations in3ol3ing multi4le un'ertainties t&at aresigni i'ant to t&e inan'ial statements, t&e auditor ma 'onsider it a44ro4riate to ex4ress adis'laimer o o4inion instead o adding an em4&asis o matter 4aragra4&.

June, 2009 (New) !ar"sQ 8 $ &e audit re4ort o P +td. or t&e ear 200 50 'ontained a ;uali i'ation regarding non

4ro3ision o dou1t ul de1ts. As t&e statutor auditor o t&e 'om4an or t&e ear 200 509, &owwould ou re4ort, i $i) &e 'om4an does not ma"e 4ro3ision or dou1t ul de1ts in 200 509 6ii) &e 'om4an ma"es ade;uate 4ro3ision or dou1t ul de1ts in 200 509 6

7int$ Auditor s res4onsi1ilities in 'ases w&ere audit re4ort or an earlier ear is ;uali ied isgi3en in SA #0 Com4arati3e . 7int $ As 4er SA #0, w&en t&e Audit


22/22

a) A''ounting 4oli'ies used or 'orres4onding igures are 'onsistent wit& t&ose o t&e 'urrent 4eriod or w&et&er a44ro4riate adDustments andBor dis'losures &a3e 1een made and 1) Corres4onding igures agree wit& t&e amounts and ot&er dis'losures 4resented in t&e 4rior 4eriod w&et&er a44ro4riate adDustments andBor dis'losures &a3e 1een made.

--. %&en t&e inan'ial statements o t&e 4rior 4eriod &a3e 1een audited 1 anot&er auditor, t&ein'oming auditor s&ould assess w&et&er t&e 'orres4onding igures meet t&e 'on'lusions s4e'i ieda1o3e.---. %&en t&e inan'ial statements o t&e 4rior 4eriod &a3e not 1een audited, t&e in'omingauditor nonet&eless s&ould assess w&et&er t&e 'orres4onding igures meet t&e 'onditions s4e'i ieda1o3e.-G. - t&e auditor 1e'omes aware o a 4ossi1le misstatement in t&e 'orres4onding igures w&en

4er orming t&e 'urrent 4eriod audit, t&e auditor s&ould 4er orm su'& additional 4ro'edures as area44ro4riate in t&e 'ir'umstan'es.

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