CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
CA FINAL
ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
BY – CA AARTI N. LAHOTI
1
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
1. ENGAGEMENT AND QUALITY CONTROL STANDARDS
No. of
SQC/ SA/
SRE /SAE/
SRS
SQC 1
SA 200
SA 210
SA 220
SA 230
SA 240
SA 250
SA 260
Title of the Standard
Important Points
 Leadership responsibilities for quality
within the firm
 Ethical
requirements
including
Quality Control for Firms that Perform independence
Audits & Reviews of Historical Financial
 Acceptance & continuance of client
Information, & Other Assurance &
relationships
Related Services Engagements.
 Human resources
 Engagement performance
 Monitoring
Overall Objectives of the Independent
Auditor & the Conduct of an Audit in  Professional Skepticism
Accordance with Standards on Auditing  Audit Risk
(Revised)
Agreeing
the
Terms
of
Audit  Limitation on Scope
Engagements (Revised)
 Recurring Audits
 Direction
Quality Control for an Audit of Financial
 Supervision
Statements (Revised)
 Review
 Factors affecting the form, content and
extent of Audit Documentation
Audit Documentation (Revised)
 Property of the Auditor
 Types of Fraud
 Fraud Risk Factors
The Auditor’s Responsibilities Relating to
 Auditor’s Responsibilities in relation to
Fraud in an Audit of Financial Statements
Fraud
(Revised)
 Management Override of Controls
 Case Study Practice
The Auditor’s Responsibilities Relating to  Audit Procedures to identify nonLaws & Regulation in an Audit of Financial compliances with laws & regulations
Statements (Revised)
 Indications of Non-Compliance
 Significant Findings from the audit to
Communications with Those Charged be communicated to TCWG
With Governance (Revised)
 Factors affecting the form of
communication with TCWG
2
CA AARTI N. LAHOTI
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CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
SA 265
SA 299
SA 300
SA 315
SA 320
SA 330
SA 402
SA 450
SA 500
SA 501
SA 505
QUICK REVISION CLASS NOTES
Communicating Deficiencies in Internal
Control to Those Charged with  Contents of the letter of weakness
Governance& Management
 Risk Assessment & allocation of work
Joint Audit of Financial Statements  Sharing of responsibility by Joint
(Revised)
Auditors
 Reporting by Joint Auditors
 Advantages of Audit Planning
Planning an Audit of Financial Statements  Factors to be considered in the
(Revised)
development of the overall audit strategy/
plan.
 Sources of Misstatements
Identifying & assessing the Risks of
 Inherent Risk at the Financial
Material
Misstatements
through
Statement Level
understanding the Entity & Its
/ Account Balance Level
Environment
 Detection Risk
 Factors to be considered in the
identification
of
an
appropriate
Materiality in Planning & Performing an
benchmark
Audit (Revised)
 Revision of Audit Materiality
 Tests of Control
 Substantive Procedures
 Factors to be considered in
Audit Considerations Relating to an Entity
understanding the nature of services
Using a Service Organisation (Revised)
provided by the service organisation
Evaluation of Misstatements Identified  Procedures to be followed for
During the Audit
identified/ uncorrected misstatements
 Methods of obtaining audit evidence
 Assertions
addressed
through
Audit Evidence (Revised)
substantive procedures
 Management’s expert
Audit Evidence – Specific Considerations  Procedures of verification of existence
for Selected Items (Revised)
& condition of inventory
 Situations
where
external
confirmations may be used
 Negative confirmation requests
 External Confirmation Process
External Confirmations (Revised)
 Designing the confirmation request
 Management’s refusal to allow the
auditor to send a confirmation request
Auditor’s Responses to Assessed Risks
3
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
SA 510
SA 520
SA 530
SA 540
SA 550
SA 560
SA 570
SA 580
SA 600
SA 610
SA 620
QUICK REVISION CLASS NOTES
Initial Audit Engagements - Opening  Audit procedures to obtain evidence
Balances (Revised)
regarding the opening balances
 Factors to be considered while using
Analytical Procedures (Revised)
Substantive Analytical Procedures
 Sampling Risk
 Tolerable Misstatement
Audit Sampling (Revised)
 Sample selection methods
 Statistical & Non-Statistical Sampling
Auditing of Accounting Estimates,  Estimation Uncertainty
including Fair Value Accounting Estimates  Procedures to Minimise the Risk of
& Related Disclosures (Revised)
Material Misstatement due to estimates
 Audit Procedures to identify Related
Parties
 Audit Procedures for newly identified
Related Parties (Revised)
related parties
 Audit Procedures for related party
transactions outside the normal course of
business
 Inquiries of Management regarding
subsequent events
Subsequent Events (Revised)
 Audit
procedures
to
identity
Subsequent Events
 Indications of Going Concern.
 Audit procedures if events/ conditions
have been identified that raise a doubt
Going Concern (Revised)
regarding the entity’s ability to continue
as a going concern.
 Case study practice
 Features of Written Representations
Written Representations (Revised)
 Management’s refusal to provide
Written Representations to the auditor
 Evaluation of the work of the other
auditor
Using the Work of Another Auditor
 Refer Sec 143(8) of the Companies Act,
2013.
 Evaluation of the work of the Internal
Using the work of Internal Auditors
Auditor
(Revised)
 Direct Assistance
 Evaluation of Expert
Using the Work of an Auditor’s Expert
 Sources
to obtain information
(Revised)
regarding the expert
4
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
 Evaluation of Expert’s Work
 Agreement between Auditor
Auditor’s Expert.
 Case Study Practice
SA 700
SA 701
SA 705
SA 706
SA 710
SA 720
SA 800
SA 805
SA 810
SRE 2400
SRE 2410
&
Forming an Opinion & Reporting on
 Contents of the Auditors Report
Financial Statements (Revised)
 Definition of Key Audit Matters
 Purpose of communicating Key Audit
Matters
Communicating Key Audit Matters in the
 Circumstances in Which a Matter
Independent Auditor’s Report
Determined to Be a Key Audit Matter Is
Not Communicated in the Auditor’s
Report
 Types of Modified Opinion
Modifications to the Opinion in the
 Circumstances which require a
Independent Auditor’s Report
modification to the auditor’s opinion
Emphasis of Matter Paragraphs & Other
 Features & Examples of Emphasis of
Matter Paragraphs in the Independent
Matter Paragraph
Auditor’s Report
 Audit
responsibilities
regarding
Comparative
Information
–
Comparative Information
Corresponding Figures & Comparative
 Audit Reporting on Comparative
Financial Statements (Revised)
Information
The Auditor's Responsibilities Relating to
 Meaning of Other Information
Other Information
Special Considerations - Audits of
 Considerations while planning &
Financial Statements Prepared in
performing an audit of Special Purpose
Accordance with Special Purpose
Financial Statements
Framework
Special Considerations - Audits of Single
Purpose Financial Statements & Specific
 Elements, Accounts or Items of a
Financial Statement
 Engagement Acceptance
Engagements to Report on Summary
 Procedures for an engagement to
Financial Statements
report on Summary Financial Statements
Engagements to Review Historical  Preconditions for accepting review
Financial Statements (Revised)
engagement
 Circumstances when the practitioner
Review of Interim Financial Information
will not accept a review engagement
Performed by the Independent Auditor of
 Reasonable Assurance Engagement Vs.
the Entity
Limited Assurance Engagement
5
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
SAE 3400
SAE 3402
SAE 3420
SRS 4400
SRS 4410
QUICK REVISION CLASS NOTES
 Acceptance of Engagement
The Examination of Prospective Financial
 Examination Procedures
Information
 Presentation & Disclosure
Assurance Report on Controls at a Service  Assessment of suitability of criteria
Organisation
 Factors to be considered before
accepting an engagement to report on Pro
Assurance Engagements to Report on the
Forma Financial Information
Compilation of Pro Forma Financial
 Agreement with the responsible party
Information Included in a Prospectus
 Planning
&
performing
the
engagement
Engagements to Perform Agreed-upon
Procedures
Regarding
Financial
Information
 Objective of Compilation Engagement
 Engagement Level Quality Control for
Compilation Engagement
Compilation Engagements (Revised)
 Compilation Procedures
 Case Study Practice
6
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
2. PROFESSIONAL ETHICS
Summary of Important Clauses
SR.
PART SCHEDULE
CLAUSE
NO.
1)
2
I
FIRST
2)
3
I
FIRST
3)
4
I
FIRST
4)
6
I
FIRST
PARTICULARS
Pays or allows or agrees to pay or allow, directly or indirectly, any
share, commission or brokerage in the fees or profits of his
professional business.
to any person other than
- member of the Institute or
- partner or
- retired partner or
- the legal representative of a deceased partner, or
- member of any other professional body or
- with such other persons having such qualifications as may be
prescribed, for the purpose of rendering such professional
services from time to time in or outside India.
Accepts or agrees to accept any part of the profits of the
professional work of a person who is not a member of the Institute.
Provided that nothing herein contained shall be construed as
prohibiting a member from entering into profit sharing or other
similar arrangements, including receiving any share, commission or
brokerage in the fees, with a member of such professional body or
other person having qualifications, as is referred to in item (2) of
this Part;
Enters into partnership, in or outside India, with any person other
than a CA in practice or such other person who is a member of any
other professional body having such qualifications as may be
prescribed, including a resident who but for his residence abroad
would be entitled to be registered as a member under clause (v) of
sub-section (1) of section 4 or whose qualifications are recognised
by the Central Government or the Council for the purpose of
permitting such partnerships.
Solicits clients or professional work either directly or indirectly by
- circular,
- advertisement,
- personal communication or
- interview or
- by any other means
Provided that nothing herein contained shall be construed as
preventing or prohibiting –
i Any CA from applying or requesting for or inviting or securing
professional work from another CA in practice; or
7
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
5)
7
I
FIRST
6)
8
I
FIRST
7)
9
I
FIRST
8)
10
I
FIRST
9)
11
I
FIRST
10)
12
I
FIRST
QUICK REVISION CLASS NOTES
ii A member from responding to tenders or enquiries issued by
various users of professional services or organisations from
time to time & securing professional work as a consequence.
Advertises his professional attainments or services, or
uses any designation or expressions other than CA on professional
documents, visiting cards, letter heads or sign boards, unless it be
- a degree of a University established by law in India or
- recognised by the Central Government or
- a title indicating membership of the ICAI or
of any other institution that has been recognised by the Central
Government or may be recognised by the Council. Provided that a
member in practice may advertise through a WRITE UP, setting out
the services provided by him or his firm & particulars of his firm
subject to such guidelines as may be issued by the Council.
If he accepts a position as auditor previously held by another CA or
a certified auditor who has been issued certificate under the
Restricted Certificate Rules, 1932 without first communicating with
him in writing.
Accepts an appointment as auditor of a company without first
ascertaining from it whether the requirements of section 139, 140
& 142 read with Section 141 of the Companies Act, 2013, in respect
of such appointment have been duly complied with;
Charges or offers to charge, accepts or offers to accept in respect
of any professional employment, fees which are based on a
percentage of profits or which are contingent upon the findings, or
results of such employment, except as permitted under any
regulation made under this Act.
Engages in any business or occupation other than the profession of
CA unless permitted by the Council so to engage.
Provided that nothing contained herein shall disentitle a CA from
being a director of a company (not being a managing director or a
whole-time director) unless he or any of his partners is interested
in such company as an auditor. Unless permitted by the Council so
to engage.
Provided that nothing contained herein shall disentitle a CA from
being a director of a company (not being a managing director or a
whole-time director) unless he or any of his partners is interested
in such company as an auditor.
Allows a person not being a member of the Institute in practice, or
a member not being his partner to sign on his behalf or on behalf
of his firm, any balance sheet, profit & loss account, report on FS.
Exception: Signing documents not containing expression of
opinion.
8
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
11)
2
II
FIRST
12)
2
III
FIRST
13)
2
IV
FIRST
14)
1
I
SECOND
15)
3
1
SECOND
16)
4
I
SECOND
17)
5
I
SECOND
18)
6
I
SECOND
19)
7
I
SECOND
20)
8
I
SECOND
21)
10
I
SECOND
QUICK REVISION CLASS NOTES
accepts or agrees to accept any part of fees, profits or gains from a
lawyer, a CA or broker engaged by such company, firm or person or
agent or customer of such company, firm or person by way of
commission or gratification.
Does not supply the information called for, or does not comply with
the requirements asked for, by the Institute, Council or any of its
Committees, Director (Discipline), Board of Discipline, Disciplinary
Committee, Quality Review Board or the Appellate Authority;
In the opinion of the Council, brings disrepute to the profession or
the Institute as a result of his action whether or not related to his
professional work.
Discloses information acquired in the course of his professional
engagement to any person other than his client so engaging him
without the consent of his client or otherwise than as required by
any law for the time being in force
If he permits his name or name of his firm to be used in connection
with the estimate of earnings contingent upon future transactions
in a manner which may lead to the belief that he vouches for
accuracy of the forecast.
SAE 3400 ‘The Examination of Prospective Financial Information’
Expresses his opinion on FS of any business or enterprise in which
he, his firm, or a partner in his firm, or his relatives (AS 18) has a
substantial interest;
This clause is meant for reports/ certificates which are to be
submitted to any outside authority, but not where statements are
prepared by members in employment for INFORMATION SYSTEMS
of their employers etc.
Fails to disclose a material fact known to him which is not disclosed
in a financial statement, but disclosure of which is necessary in
making such financial statement where he is concerned with that
financial statement in a professional capacity.
Fails to report a material misstatement known to him to appear in
a financial statement with which he is concerned in a professional
capacity;
Does not exercise due diligence, or is grossly negligent in the
conduct of his professional duties;
Fails to obtain sufficient information which is necessary for
expression of an opinion or its exceptions are sufficiently material
to negate the expression of an opinion.
Fails to keep moneys of his client other than fees or remuneration
or money meant to be expended in a separate banking account or
9
CA AARTI N. LAHOTI
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YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
22)
1
II
23)
3
II
QUICK REVISION CLASS NOTES
to use such moneys for purposes for which they are intended
within a reasonable time.
Exception: (i) Fees/ Remuneration (even advance)
(ii) Reasonable time usage
SECOND Contravenes any of the provisions of this Act or the regulations
made there under or any guidelines issued by the Council.
SECOND Includes in any information, statement, return or form to be
submitted to the Institute, Council or any of its Committees,
Director (Discipline), Board of Discipline, Disciplinary Committee,
Quality Review Board or the Appellate Authority any particulars
knowing them to be false.
KNOW YOUR CLIENT (KYC) NORMS
1. Where Client is an
Individual/
Proprietor
2. Where Client is a Corporate
Entity
3. Where Client is a NonCorporate Entity
A.
A. General Information
A. General Information
General
Information
→ Name
of
the
→ Name and Address of the Entity
→ Business Description
Individual
→ PAN No. or Aadhar
Card No. of the
Individual
→ Name of the Parent Company in → Copy of PAN No.
→ Business Description
case of Subsidiary
Statement
of
PAN/Aadhar
last
&
their
Card/DIN
No.)
→ Copy of last Audited
Financial
Statement
B.
Names
Addresses (with
Description
Audited
Entity
→ Copy of last Audited Financial → Partner’s
→ Business
→ Copy
→ Name and Address of the
Financial Statement
Engagement
B. Engagement Information
B. Engagement Information
Information
→ Type
Engagement
of
→ Type of Engagement
→ Type of Engagement
C. Regulatory Information
→ Company PAN No.
→ Company Identification No.
→ Directors’ Names & Addresses
→ Directors’ Identification No.
10
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
RECENT DECISIONS OF ETHICAL STANDARDS BOARD
PARTICULARS
1.
A CA in practice may be an equity research adviser, but he cannot publish retail report, as it
would amount to other business or occupation.
2.
A CA in practice may engage himself as Registration Authority (RA) for obtaining digital
signatures for clients.
3.
A CA in practice can act as mediator in Court, since acting as a “mediator” would be
deemed to be covered within the meaning of “arbitrator’; which is interalia permitted to
members in practice as per Regulation 191 of the CA Regulations, 1988.
4.
It is permissible for a member in practice to be a settlor of a trust.
5.
A CA in practice cannot become Financial Advisors and receive fees/commission from
Financial Institutions such as Mutual Funds, Insurance Companies, NBFCs etc.
6.
It is not permissible for CAs in practice to take agencies of UTI, GIC or NSDL.
7.
A member in practice cannot hold Customs Brokers Licence under section 146 of the
Customs Act, 1962 read with Customs Brokers Licensing Regulations, 2013 in terms of the
provisions of Code of Ethics.
8.
A CA, who is a member of a Trust, cannot be the auditor of the said trust.
9.
A CA can hold the credit card of a bank when he is also the auditor of the bank, provided
the outstanding balance on the said card does not exceed Rs 10000 beyond the prescribed
credit period limit on credit card given to him.
10.
A CA in practice is not permitted to accept audit assignment of a bank in case he has taken
loan against a Fixed Deposit held by him in that bank.
11.
A CA in service may appear as tax representative before tax authorities on behalf of his
employer, but not on behalf of other employees of the employer.
12.
A CA who is the statutory auditor of a bank cannot for the same financial year accept stock
audit of the same branch of the bank or any of the branches of the same bank or sister
concern of the bank, for the same financial year.
13.
A CA Firm which has been appointed as the internal auditor of a PF Trust by a Government
Company cannot be appointed as its Statutory Auditor.
14.
A concurrent auditor of a bank ‘X’ cannot be appointed as statutory auditor of bank ‘Y’,
which is sponsored by ‘X’.
15.
A CA/CA Firm can act as the internal auditor of a company & statutory auditor of its
employees PF Fund under the new Companies Act 2013.
11
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
16.
A CA cannot exercise lien over the client documents/records for nonpayment of his fees.
17.
It is not permissible for CA Firm to print its vision and values behind the visiting cards, as it
would result in solicitation and therefore would be violative of the provisions of Clause (6)
of Part-I of First Schedule to the CA Act, 1949.
18. → The Ethical Standards Board in 2013 generally apply the stipulations contained in the then
amended Rule 11U of Income Tax generally, wherein statutory auditor /tax auditor cannot
be the valuer of unquoted equity shares of the same entity.
→ The Board has at its recent Meeting (January, 2017) has reviewed the above, and decided
that where law prohibits for instance in the Income Tax Act and the rules framed
thereunder, such prohibition on statutory auditor/tax auditor to be the valuer will
continue, but where there is no specific restriction under any law, the said eventuality will
be permissible, subject to compliance with the provisions, as contained in the Code of
Ethics relating to independence.
19. → The Ethical Standards Board had in 2011 decided that it is not permissible for a member
who has been Director of a Company, upon resignation from the Company to be appointed
as an auditor of the said Company, and the cooling period for the same may be 2 years.
→ The Board has at its recent Meeting (January, 2017) has reviewed the above, and noted
that the Section 141 of Companies Act, 2013 on disqualification of auditors does not
mention such prohibition; though threats pertaining to the said eventuality have been
mentioned in Code of Ethics.
→ Further, the Board was of the view that a member may take decision in such situation
based on the provisions of Companies Act, 2013 and provisions of Code of Ethics.
20.
The Ethical Standards Board while noting that there is requirement for a Director u/s 149(3)
of the Companies Act, 2013 to reside in India for a minimum period of 182 days in the
previous calendar year, decided that such a Director would be within the scope of Director
Simplicitor (which is generally permitted as per ICAI norms), if he is non – executive director,
required in the Board Meetings only, and not paid any remuneration except for attending
such Board Meetings.
12
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CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
3. COMPANIES (AUDITOR’S REPORT) ORDER, 2016
APPLICABILITY OF CARO, 2016
It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the
Companies Act, (18 of 2013) [hereinafter referred to as the Companies Act], except–
(i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949;
(ii) an insurance company as defined under the Insurance Act,1938;
(iii) a company licensed to operate under section 8 of the Companies Act;
(iv) a One Person Company as defined under clause (62) of section 2 of the Companies Act and a
small company as defined under clause (85) of section 2 of the Companies Act; and
(v) a private limited company, not being a subsidiary or holding company of a public company,
•
having a paid up capital and reserves and surplus not more than ` 1 crore as on the balance
sheet date and
• which does not have total borrowings exceeding ` 1 crore from any bank or financial
institution at any point of time during the financial year and
• which does not have a total revenue as disclosed in Schedule III to the Companies Act, 2013
(including revenue from discontinuing operations) exceeding ` 10 crore during the financial
year as per the FS.
PROVIDED THE ORDER SHALL NOT APPLY TO THE AUDITOR’S REPORT ON CONSOLIDATED FS.
CLAUSE
(i) FIXED ASSETS
(ii) INVENTORIES
(iii) LOANS TO SEC 189
PARTIES
PARTICULARS
(a) whether the company is maintaining proper records showing full
particulars, including quantitative details & situation of fixed assets;
(b) whether these fixed assets have been physically verified by the
management at reasonable intervals; whether any material
discrepancies were noticed on such verification & if so, whether the
same have been properly dealt with in the books of account;
(c) whether the title deeds of immovable properties are held in the name
of the company. If not, provide the details thereof;
Whether physical verification of inventory has been conducted at
reasonable intervals by the management & whether any material
discrepancies were noticed & if so, whether they have been properly dealt
with in the books of account;
Whether the company has granted any loans, secured or unsecured to
companies, firms, Limited Liability Partnerships or other parties covered in
the register maintained under section 189 of the Companies Act, 2013. If
so,
(a) whether the terms & conditions of the grant of such loans are not
prejudicial to the company’s interest;
(b) whether the schedule of repayment of principal & payment of interest
has been stipulated & whether the repayments or receipts are regular;
13
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CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
(c) if the amount is overdue, state the total amount overdue for more than
ninety days, & whether reasonable steps have been taken by the
company for recovery of the principal & interest;
(iv) LOANS/ INVESTMENTS/ In respect of loans, investments, guarantees, & security whether provisions
GUARANTEES/
of section 185 & 186 of the Companies Act, 2013 have been complied with.
SECURITIES
If not, provide the details thereof.
(v) DEPOSITS FROM
In case, the company has accepted deposits, whether the directives issued
PUBLIC
by the Reserve Bank of India & the provisions of sections 73 to 76 or any
other relevant provisions of the Companies Act, 2013 & the rules framed
thereunder, where applicable, have been complied with? If not, the nature
of such contraventions be stated; If an order has been passed by Company
Law Board or National Company Law Tribunal or Reserve Bank of India or
any court or any other tribunal, whether the same has been complied with
or not?
(vi) COST RECORDS
Whether maintenance of cost records has been specified by the Central
Government under sub-section (1) of section 148 of the Companies Act,
2013 & whether such accounts & records have been so made &
maintained.
(vii) STATUTORY DUES
(a) whether the company is regular in depositing undisputed statutory
dues including provident fund, employees' state insurance, incometax, sales-tax, service tax, duty of customs, duty of excise, value added
tax, cess & any other statutory dues to the appropriate authorities &
if not, the extent of the arrears of outstanding statutory dues as on the
last day of the financial year concerned for a period of more than six
months from the date they became payable, shall be indicated;
(b) where dues of income tax or sales tax or service tax or duty of customs
or duty of excise or value added tax have not been deposited on
account of any dispute, then the amounts involved & the forum where
dispute is pending shall be mentioned. (A mere representation to the
concerned Department shall not be treated as a dispute).
(viii)REPAYMENT OF
Whether the company has defaulted in repayment of loans or borrowing
DUES
to a financial institution, bank, Government or dues to debenture holders?
If yes, the period & the amount of default to be reported (in case of
defaults to banks, financial institutions, & Government, lender wise details
to be provided).
(ix) END USE OF MONEYS Whether moneys raised by way of initial public offer or further public offer
RAISED
(including debt instruments) & term loans were applied for the purposes
for which those are raised. If not, the details together with delays or default
& subsequent rectification, if any, as may be applicable, be reported;
(x) FRAUD
Whether any fraud by the company or any fraud on the Company by its
officers or employees has been noticed or reported during the year; If yes,
the nature & the amount involved is to be indicated;
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(xi) MANAGERIAL
REMUNERATION
(xii) NIDHI COMPANY
(xiii) RELATED PARTIES
(xiv)PREFERENTIAL
ALLOTMENT
(xv) NON CASH
TRANSACTIONS
(xvi)REGISTRATION WITH
RBI
QUICK REVISION CLASS NOTES
Whether managerial remuneration has been paid or provided in
accordance with the requisite approvals mandated by the provisions of
section 197 read with Schedule V to the Companies Act? If not, state the
amount involved & steps taken by the company for securing refund of the
same;
Whether the Nidhi Company has complied with the Net Owned Funds to
Deposits in the ratio of 1: 20 to meet out the liability & whether the Nidhi
Company is maintaining ten per cent unencumbered term deposits as
specified in the Nidhi Rules, 2014 to meet out the liability;
Whether all transactions with the related parties are in compliance with
sections 177 & 188 of Companies Act, 2013 where applicable & the details
have been disclosed in the Financial Statements etc., as required by the
applicable accounting standards;
Whether the company has made any preferential allotment or private
placement of shares or fully or partly convertible debentures during the
year under review & if so, as to whether the requirement of section 42 of
the Companies Act, 2013 have been complied with & the amount raised
have been used for the purposes for which the funds were raised. If not,
provide the details in respect of the amount involved & nature of noncompliance;
Whether the company has entered into any non-cash transactions with
directors or persons connected with him & if so, whether the provisions of
section 192 of Companies Act, 2013 have been complied with;
Whether the company is required to be registered under section 45-IA of
the Reserve Bank of India Act, 1934 & if so, whether the registration has
been obtained.
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4. AUDIT UNDER FISCAL LAWS
IMPORTANT CASE STUDIES ON APPLICABILITY OF TAX AUDIT
1.
DB Pvt. Ltd. Has total Section 44AD is not applicable to company assessee, hence
turnover of ` 125 lacs for the Limit of ` 2 crore is not applicable to DB Pvt. Ltd and it has to
conduct the Audit of Books of Accounts under section 44AB
FY 2017-18.
of the Act for the FY 2017-18 as turnover exceeds ` 1 crore.
ABC & Co. (a partnership Section 44AD is applicable to Partnership Firm. Thus, ABC &
firm) engaged in trading of Co. can declare the minimum profit @ 8% of the turnover as
electronic goods having a its turnover during the PY 2017-18 does not exceed ` 2
turnover of ` 165 lacs for the crores. If the firm do not opt for presumptive income
scheme under section 44AD, it has to get books of accounts
FY 2017-18.
audited u/s 44AB of the Act.
Mr. Anand Khater, a Though Section 44AD is applicable to an Individual, it is not
Commission
Agent
has applicable to Commission income. In the given case, since,
commission receipts of ` 137 Mr. Anand earns the commission income, he cannot take the
benefit of section 44AD. His total turnover during the FY
lacs during the FY 2017-18.
2017-18 in respect of commission income exceeds ` 1 crore,
he has to get his books of accounts audited u/s 44AB of the
Act.
Mr. Vishal Raka, owning an Though Section 44AD is applicable to an Individual, it is not
Agency of Samsung Mobile applicable to Commission income. In the given case, since,
for the city of Pune and Mr. Vishal earns the commission income, he cannot take the
makes the turnover of ` 87 benefit of section 44AD. His total turnover during the FY
2017-18 in respect of commission income does not exceeds
lacs during the FY 2017-18.
` 1 crore, therefore, he need not to get his books of accounts
audited u/s 44AB of the Act.
2.
3.
4.
IMPORTANT CLAUSES OF FORM 3CD OF TAX AUDIT
Sr.
No.
1)
2)
Clau
se of
For
m
3CD
8
12
3)
13
Particulars
Indicate the relevant clause of section 44AB under which the audit has been conducted
Whether the profit & loss account includes any profits & gains assessable on presumptive
basis, if yes, indicate the amount & the relevant section (44AD, 44AE, 44AF, 44B, 44BB, 44BBA,
44BBB, Chapter XII- G, First Schedule or any other relevant section.)
(a) Method of accounting employed in the previous year
(b) Whether there had been any change in the method of accounting employed vis-a-vis the
method employed in the immediately preceding previous year.
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(c) If answer to
(b) above is in the affirmative, give details of such change, & the effect thereof on the profit
or loss.
Serial number
4)
14
Particulars
16
6)
17
7)
21
Decrease in profit
(`)
Clause 13 (d) Whether any adjustment is required to be made to the profits or loss for
complying with the provisions of income computation & disclosure standards notified under
section 145(2).
Clause 13 (e) If answer to (d) above is in the affirmative, give details of such adjustments:
ICDS I TO X
Increase in profit (') Decrease in profit (') Net effect (')
Clause 13 (f) Disclosure as per ICDS I TO X
(a) Method of valuation of closing stock employed in the previous year.
(b) In case of
deviation from the method of valuation prescribed under section 145A, & the effect
thereof on the profit or loss, please furnish:
Serial number
5)
Increase in profit (`)
Particulars
Increase in profit (`)
Decrease in profit (`)
Amounts not credited to the profit & loss account, being, (a) The items falling within the scope of section 28;
(b) The proforma credits, drawbacks, refund of duty of customs or excise or service tax, or
refund of sales tax or value added tax where such credits, drawbacks or refunds are
admitted as due by the authorities concerned;
(c) escalation claims accepted during the previous year;
(d) any other item of income;
(e) capital receipt, if any.
Where any land or building or both is transferred during the previous year for a consideration
less than value adopted or assessed or assessable by any authority of a State Government
referred to in section 43CA or 50C, please furnish:
(a) Please furnish the details of amounts debited to the profit & loss account, being in the
nature of capital, personal, advertisement expenditure etc.
Nature
Sr. No.
Particulars
• Capital expenditure
• Personal expenditure
• Advertisement expenditure in any souvenir,
brochure, tract, pamphlet or the like published by
a political party
• Expenditure incurred at clubs being entrance fees
& subscriptions
• Expenditure incurred at clubs being cost for club
services & facilities used.
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• Expenditure by way of penalty or fine for violation
of any law for the time being force
• Expenditure by way of any other penalty or fine
not covered above
• Expenditure incurred for any purpose which is an
offence or which is prohibited by law
(b) Amounts inadmissible under section 40(a): (i) as payment to non-resident referred to in sub-clause (i)
(A) Details of payment on which tax is not deducted:
(I) date of payment (II) amount of payment (III) nature of payment (IV) name & address
of the payee
(B) Details of payment on which tax has been deducted but has not been paid during the
previous year or in the subsequent year before the expiry of time prescribed under section
200(1)
(I) date of payment (II) amount of payment (III) nature of payment (IV) name & address
of the payee (V) amount of tax deducted (ii) as payment referred to in sub-clause (ia)
(A) Details of payment on which tax is not deducted:
(I) date of payment (II) amount of payment (III) nature of payment (IV) name & address
of the payee
(B) Details of payment on which tax has been deducted but has not been paid on or before
the due date specified in sub- section (1) of section 139.
(I) date of payment (II) amount of payment (III) nature of payment (IV) name &
address of the payer (V) amount of tax deducted (VI) amount out of (V) deposited, if
any (iii) under sub-clause (ic) [Wherever applicable] (iv) under sub-clause (iia) (v) under
sub-clause (iib) (vi) under sub-clause (iii) (A) date of payment (B) amount of payment
(C) name & address of the payee (vii) under sub-clause (iv) (viii) under sub-clause (v)
(c) Amounts debited to profit & loss account being, interest, salary, bonus, commission or
remuneration inadmissible under section 40(b)/40(ba) & computation thereof;
(d) Disallowance/deemed income under section 40A(3):
(A) On the basis of the examination of books of account & other relevant
documents/evidence, whether the expenditure covered under section 40A (3) read
with rule 6DD were made by account payee cheque drawn on a bank or account
payee bank draft. If not, please furnish the details:
Serial
number
(B)
Date of
payment
Nature of
payment
Amount
Name & Permanent Account Numbe
of the payee, if available
On the basis of the examination of books of account & other relevant
documents/evidence, whether the payment referred to in section 40A(3A) read with
rule 6DD were made by account payee cheque drawn on a bank or account payee
bank draft If not, please furnish the details of amount deemed to be the profits &
gains of business or profession under section 40A (3A);
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Serial
number
8)
28
9)
29
10)
31
QUICK REVISION CLASS NOTES
Date of
payment
Nature of
payment
Amount
Name & Permanent Account Numbe
of the payee, if available
Whether during the previous year the assessee has received any property, being share of a
company not being a company in which the public are substantially interested, without
consideration or for inadequate consideration as referred to in section 56(2)(viia), if yes,
please furnish the details of the same.
Whether during the previous year the assessee received any consideration for issue of shares
which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if yes,
please furnish the details of the same.
(a) * Particulars of each loan or deposit in an amount exceeding the limit specified in section
269SS taken or accepted during the previous year: (i)
name, address & permanent account number (if available with the assessee) of
the lender or depositor;
(ii)
amount of loan or deposit taken or accepted;
(iii)
whether the loan or deposit was squared up during the previous year;
(iv)
maximum amount outstanding in the account at any time during the previous year;
(v)
whether the loan or deposit was taken or accepted by cheque or bank draft or use
of electronic clearing system through a bank account;
(vi)
in case the loan or deposit was taken or accepted by cheque or bank draft, whether
the same was taken or accepted by an account payee cheque or an account payee
bank draft.
*(These particulars need not be given in the case of a Government company, a banking
company or a corporation established by a Central, State or Provincial Act.)
(b) Particulars of each specified sum in an amount exceeding the limit specified in section
269SS taken or accepted during the previous year: (i)
name, address & Permanent Account Number (if available with the assessee)
of the person from whom specified sum is received;
(ii) amount of specified sum taken or accepted;
(iii) whether the specified sum was taken or accepted by cheque or bank draft or use
of electronic clearing system through a bank account;
(iv) in case the specified sum was taken or accepted by cheque or bank draft, whether
the same was taken or accepted by an account payee cheque or an account payee
bank draft.
(Particulars at (a) & (b) need not be given in the case of a Government company, a
banking company or a corporation established by the Central, State or Provincial Act.)
(c) Particulars of each repayment of loan or deposit or any specified advance in an amount
exceeding the limit specified in section 269T made during the previous year: (i)
name, address & Permanent Account Number (if available with the assessee)
of the payee;
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amount of the repayment;
maximum amount outstanding in the account at any time during the previous year;
whether the repayment was made by cheque or bank draft or use of electronic
clearing system through a bank account;
(v) in case the repayment was made by cheque or bank draft, whether the same was
taken or accepted by an account payee cheque or an account payee bank draft.
(d) Particulars of repayment of loan or deposit or any specified advance in an amount
exceeding the limit specified in section 269T received otherwise than by a cheque or bank
draft or use of electronic clearing system through a bank account during the previous
year: (i)
name, address & Permanent Account Number (if available with the assessee)
of the payer;
(ii) amount of loan or deposit or any specified advance received otherwise than by a
cheque or bank draft or use of electronic clearing system through a bank account
during the previous year.
(e) Particulars of repayment of loan or deposit or any specified advance in an amount
exceeding the limit specified in section 269T received by a cheque or bank draft which is
not an account payee cheque or account payee bank draft during the previous year:
(i)
name, address & Permanent Account Number (if available with the assessee)
of the payer;
(ii) amount of loan or deposit or any specified advance received by a cheque or a bank
draft which is not an account payee cheque or account payee bank draft during the
previous year.
(Particulars at (c), (d) & (e) need not be given in the case of a repayment of any loan or deposit
or any specified advance taken or accepted from the Government, Government company,
banking company or a corporation established by the Central, State or Provincial Act).
(a) Details of brought forward loss or depreciation allowance, in the following manner, to the
extent available:
(ii)
(iii)
(iv)
11)
32
Serial
Number
Assessment
Year
Nature of loss/
allowance
(in `)
Amount as
returned
(in `)
Amounts as assessed
(give reference to
relevant order)
Remark
s
(b) Whether a change in shareholding of the company has taken place in the previous year
due to which the losses incurred prior to the previous year cannot be allowed to be
carried forward in terms of section 79.
(c) Whether the assessee has incurred any speculation loss referred to in section 73 during
the previous year, if yes, please furnish the details of the same.
(d) whether the assessee has incurred any loss referred to in section 73A in respect of any
specified business during the previous year, if yes, please furnish details of the same.
(e) In case of a company, please state that whether the company is deemed to be carrying on
a speculation business as referred in explanation to section 73, if yes, please furnish the
details of speculation loss if any incurred during the previous year.
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12)
37
Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or
disagreement on any matter/item/value/quantity as may be reported/identified by the cost
auditor.
13)
40
Details regarding turnover, gross profit, etc., for the previous year & preceding previous
year:
Sr.
No.
Particulars
1.
2.
3.
4.
5.
Total turnover of the assessee
Gross profit/turnover
Net profit/turnover
Stock-in-trade/turnover
Material consumed/finished goods produced
Previous year
Preceding previous
year
(The details required to be furnished for principal items of goods traded or manufactured or
services rendered)
14)
41
Please furnish the details of demand raised or refund issued during the previous year under
any tax laws other than Income-tax Act, 1961 & Wealth tax Act, 1957 alongwith details of
relevant proceedings.
AUDIT PROVISIONS UNDER GST LAW
DEFINITION OF “AUDIT” HAS
BEEN AS PER SECTION 2(13)
OF THE CGST ACT, 2017 IS
GIVEN BELOW:
“Audit” means the examination of records, returns and other
documents maintained or furnished by the registered person under this
Act or the rules made thereunder or under any other law for the time
being in force to verify the correctness of turnover declared, taxes paid,
refund claimed and input tax credit availed, and to assess his
compliance with the provisions of this Act or the rules made
thereunder.”
TYPES OF AUDIT UNDER GST
(1) AUDIT
BY
PROFESSIONALS
-
Audit of Accounts [Section 35(5) Read alongwith Section 44(2) and Rule 80]
(i)
Every registered person must get his accounts audited by a Chartered
Accountant or a Cost Accountant if his aggregate turnover during a FY
exceeds ` 2 crores.
(ii)
Such registered person is required to furnish electronically through the
common portal alongwith Annual Return a copy of:
• Audited annual accounts
•
A Reconciliation Statement, duly certified, in prescribed FORM
GSTR-9C.
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Reconciliation Statement will reconcile the value of supplies declared in the return
furnished for the financial year with the audited annual financial statement and
such other particulars, as may be prescribed.
Meaning
Includes Value of all outward supplies
of
• Taxable supplies
Aggregate
• Exempt supplies
Turnover
•
Exports
•
Inter-State supplies of persons having the same PAN be
computed on all India basis.
Excludes the following:
(2) GENERAL AUDIT
-
•
CGST
•
SGST
•
UTGST
•
IGST
•
Compensation
cess
•
Value of inward supplies on
which tax is payable under
reverse charge
Audit by tax authorities wherein the commissioner or any officer authorised by
him, can undertake audit of any registered person for such period, at such
frequency and in such manner as may be prescribed. [section 65 and rule 101]
The audit under Section 66 is a special audit to be conducted by a CA or CMA
nominated by the Commissioner whereas the audit under Section 65 is a routine
audit by the tax office.
(3) SPECIAL AUDIT -
Special Audit wherein the registered person can be directed to get his records
including books of account examined and audited by a CA or a CMA during any
stage of scrutiny, inquiry, investigation or any other proceedings; depending
upon the complexity of the case. [Section 66 and rule 102]
One of the facility extended by the Act is in Section 66 where an officer not below
the rank of Assistant Commissioner, duly approved, may avail the services of a CA
or CMA to conduct a detailed examination of specific areas of operations of a
registered person.
Availing the services of the expert be it a CA or CMA is permitted by this section
only when the officer considering the nature & complexity of the business and in
the interest of revenue is of the opinion that:
Value has not been correctly declared; or
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Credit availed is not within the normal limits.
It would be interesting to know how these ‘subjective’ conclusions will be drawn
and how the proper officers determines what is the normal limit of input credit
availed.
Circumstances for
Notice for Special
Audit
-
-
-
AUDIT PROCEDURES
UNDER GST LAW
An Assistant Commissioner who nurses an opinion on
the above two aspects, after commencement and
before completion of any scrutiny, enquiry,
investigation or any other proceedings under the Act,
may direct a registered person to get his books of
accounts audited by an expert.
The Assistant Commissioner needs to obtain prior
permission of the Commissioner to issue such
direction to the taxable person.
Identifying the expert is not left to the registered
person whose audit is to be conducted but the expert
is to be nominated by the Commissioner.
Time Limit to Submit
the Audit Report
Within a period of 90 days, to the Assistant
Commissioner.
Extension in
Submission of Audit
Report
Due date of submission of audit report may be extended
by another 90 days.
Expenses for
Examination and
Remuneration for
Audit
To be determined and borne by the Commissioner.
As per the CGST Rules on Assessment and Audit Rules, the auditor shall verify the
documents on the basis of which the accounts are maintained and the periodical
returns/statements are furnished.
While conducting the audit, the auditor is authorized to:
- Verify books & records
- Returns & statements
- Correctness of turnover, exemptions & deductions
- Rate of tax applicable in respect of supply of goods and/or services
- The input tax credit claimed/availed/unutilized and refund claimed.
Some of the best practices to be adopted for GST audit among others could be:
The evaluation of the internal control viz-a-viz GST would indicate the area to be
focused. This could be done by verifying:
(a) The Statutory Audit report which has specific disclosure needs in regard to
maintenance of record, stock and fixed assets.
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(b) The Information System Audit report and the internal audit report.
(c) Internal Control questionnaire designed for GST compliance.
(i) The use of generalised audit software to aid the GST audit would ensure
modern practice of risk based audit are adopted.
(ii) The reconciliation of the books of account or reports from the ERP’s to the
return is imperative.
(iii) The review of the gross trial balance for detecting any incomes being set
off with expenses.
(iv) Review of purchases/expenses to examine applicability of reverse charge
applicable to goods/services. The foreign exchange outgo reconciliation
would also be necessary for identifying the liability of import of services.
(v) Quantitative reconciliation of stock transfer within the State or for
supplies to job workers under exemption.
(vi) Ratio analysis could provide vital clues on areas of non-compliance.
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5. COMPANY ACCOUNTS AND AUDIT
Sec 139(2) ROTATION OF As per rules prescribed in Companies (Audit and Auditors) Rules, 2014,
AUDITOR
for applicability of section 139(2) the class of companies shall mean
the following classes of companies:(a) All unlisted public companies having paid up share capital of
`10 crore or more;
(b) ALL PRIVATE LIMITED COMPANIES HAVING PAID UP SHARE
CAPITAL OF `50 CRORE OR MORE;
(c) All companies having paid up share capital of below threshold
limit mentioned in (a) and (b) above, but having public
borrowings from financial institutions, banks or public deposits
of `50 crores or more.
Sec 141(3)(g)
Additional requirement for claiming exemption under section 141(3)(g)
for counting ceiling limit is available only if such company has not
committed default in filing its financial statements under section 137 and
annual returns under section 92 of the Act to the registrar as per
notification dated 13 June 2017.
sec 143(3)(i)
Section 143(3)(i), shall not apply to a private company:- which is a
Internal Financial Controls
(a) one person company or a small company; or
with
reference
to
(b) which has turnover less than ` 50 crore as per latest audited
Financial Statements financial statement and which has aggregate borrowings from
reporting by statutory
banks or financial institutions or anybody corporate at any point
auditor
of time during the financial year less than ` 25 crore."
The above exemption shall be applicable to a private company which
has not committed a default in filing its financial statements under
section 137 of the Companies Act 2013 or annual return under section
92 of Act with the Registrar.
Sec 139(1)
Ratification for appointment of auditors is not required at every AGM
when auditors have been appointed for five years - Proviso to section
139(1) omitted as per Companies (Amendment) Act, 2017.
Sec 141(3)(i) read with Under sub-section (3) of section 141 along with Rule 10 of the
section 144
Companies (Audit and Auditors) Rules, 2014 a person who, directly or
indirectly, renders any service referred to in section 144 to the company
or its holding company or its subsidiary company shall not be eligible for
appointment as an auditor of a company.
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6. IMPORTANT TOPICS FROM CHAPTERS
Name of Chapter
Company Audit
Topic
 Disqualifications of Company Auditor
 Rotation of Company Auditor
 Removal of Auditor by Tribunal or CG
 Duty to Report u/s 143(3)
 Duty to report Fraud to CG – Sec 143(12)
 Branch Audit – Sec 143(8)
 Consolidated Financial Statements u/s 129(3) & (4)
Liabilities of Auditor
 Criminal Liabilities under the Companies Act, 2013
 Untrue Statement in Prospectus
Audit Committee & Corporate  Section 177 – Constitution & Role of Audit Committee
Governance
 Applicability of SEBI LODR Regulations
 Issues of Corporate Governance
 Contents of Management Discussion & Analysis
 Constitution of Audit Committee under SEBI LODR
 Mandatory Areas of Review by Audit Committee
Audit
of
Consolidated  Sec 129 of the Companies Act, 2013
Financial Statements
 Permanent & Current Period Consolidation Adjustments
 Reporting on Consolidated Financial Statements
 Case Study Practice
Cost Audit
 Advantages of Cost Audit
 Sec 148 of the Companies Act, 2013
 General Features of the Cost Audit Report
Internal Audit, Management &  Definition of IFC & Inherent Limitations of Internal
Operational Audit
Controls
 Internal Check & factors to be considered in designing an
effective system of Internal Check.
 Section 138 Applicability of Internal Audit & Work to be
reviewed by internal auditor
 Distinguish Between: Operational Audit Vs. Financial
Audit/ Management Audit Vs. Operational Audit
 Objectives/ Need/ Types of Operational Audit
 Management Audit Questionnaire
 Behavioural Aspects encountered in Management Audit
 Solution to Behavioural Problems
Investigations & Due Diligence  Investigation under section 213 & 216 of the Companies
Act, 2013
 Investigation on behalf of incoming partner
 Investigation on behalf of bank advancing a loan to a
customer
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 Investigation of Fraud in cash Receipts
 Types of Due Diligence
 Examples of Hidden Liabilities & Overvalued Assets
 Contents of Due Diligence Report
Audit of Banks
 Contingent Liabilities of Banks
 Agricultural Advances
 Sale/ Purchase of NPAs of Banks
 Verification of Advances of Banks
 Verification of Advances given against Stock/ Receivables
 Risk Management process in Banks.
Audit of General Insurance  Solvency Margin
Companies
 Trade Credit Insurance
 Verification of claims provisions
 Registers & Records in respect of claims by Insurance
Companies
 Unexpired Risk Reserve
 Receipts & Payment Account
 Outstanding Premium & Agent’s Balance
 Types of Reinsurance Contracts
Audit of Co-operative Societies  Special Report to the Registrar
 Investments of a Co-operative Society
 Shareholding Pattern of Co-operative Society
 Books of Account to be maintained by Multi State Cooperative Society
 Special Audit of Multi State Co-operative Society
Audit of Non-Banking Financial  Classification of Frauds by NBFCs
Companies
 NBFC Audit Report Directions, 2016
 Verification of Loan Companies
 Verification of Hire Purchase Financing Companies
Audit of Public Sector  Propriety Audit
Undertakings
 Planning a performance audit
 Powers of C & AG in case of Government Companies
 Contents of Audit Report of C & AG
Peer Review
 Objectives of Peer Review
 Technical/ Ethical & Professional Standards of Peer Review
 Areas not to be examined in Peer Review
CIS Audit
 Method of collecting & evaluating evidence in CIS
Environment
 Primary changes due to shifting from manual to electronic
medium
 Recent changes due to shifting from manual to electronic
medium
 Procedures that can be performed using CAATs
27
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti
CA FINAL – ADVANCED AUDITING &
PROFESSIONAL ETHICS
QUICK REVISION CLASS NOTES
7. CLARIFICATION REGARDING CA FINAL OLD COURSE & CA
FINAL NEW COURSE FOR CA FINAL AUDITING
APPLICABLE FOR OLD AND NEW
COURSE STUDENTS (AS IT IS)
1. Engagement and Quality Control Standards
2. Professional Ethics
3. CARO, 2016
4. Liabilities of Auditor
5. Audit Committee and Corporate Governance
6. Audit of Consolidated Financial Statements
7. Audit of NBFCs
8. Audit under Fiscal Laws
9. Audit of PSUs
10. Peer Review
APPLICABLE ONLY FOR OLD
1. Sarbanes Oxley Act, 2002. (Reference in ‘Special
COURSE STUDENTS
Aspects of Auditing in an Automated
Environment’ Chapter)
2. Cost Audit (Brief Discussion now in Company
Audit Chapter)
3. Audit of Co-operative Societies
4. Audit under CIS Environment
APPLICABLE ONLY FOR NEW
1. Special Aspects of Auditing in an Automated
COURSE STUDENTS
Environment
2. Quality Review (Added in Chapter of Peer
Review)
CHANGE IN THE CONTENTS OF THE CHAPTER AS COMPARED TO THE OLD COURSE
CHANGE FOR NEW COURSE STUDENTS
1. Company Accounts & Audit
→ Audit of LLP – added
→ Cost Audit – added
2. Due Diligence, Investigations & → Forensic Audit – added
Forensic Audit
→ Due Diligence – Changed
3. Internal Audit, Management & → List of SIAs – added
Operational Audit
4. Audit of Banks
→ Chapter Revamped
5. Audit of Insurance Companies
→ Life Insurance Companies - added
6. Special Audit Assignments
→ Audit of Stock and Debtors - Unit
Inspection - added
→ Environment Audit – change
→ Energy Audit – change
→ Audit of Mutual Funds - Change
28
CA AARTI N. LAHOTI
Email ID - aartinlahoti9@gmail.com
YouTube Channel – Aarti Lahoti