Guwahati university B.com all sem solved
Board Question paper of Auditing and Corporate Governance for B.COM 6th semester of 2024, SOLVED
2024
COMMERCE
(Honours Core)
Paper: COM-HC-6016
(Auditing and
Corporate Governance)
Time: Three hours
The figures in the
margin indicate full marks for the questions.
Write the answers
to the two Groups in separate books.
Group – A
(Auditing)
Marks: 40
1. Answer as directed: 1×4=4
(i) Auditing does not depend on accounting. (State whether the statement is True or False)
Answer: False. Auditing heavily depends on accounting. Auditing examines the financial records prepared by accounting.
(ii) Internal audit is done by the staff of the employer. (Fill in the blank)
Answer: Internal audit is done by the staff of the
employer.
(iii) A voucher is evidence in writing. (Comment on the
statement)
Answer: The statement is correct.
A voucher is a written document that verifies a financial transaction,
providing key details for auditing.
(iv) When an auditor gives opinion subject to certain
observation, such opinion is termed as qualified opinion.
Answer: The statement is correct. A qualified
opinion is issued when the auditor finds that the financial statements are
materially misstated, but the misstatements are not pervasive enough to require
an adverse opinion.
2. Answer the following: 2×3
= 6
(a) What do you mean by audit programme?
Answer: An audit programme is a detailed plan
outlining the specific procedures where an auditor will follow to conduct an
audit. It serves as a guide for the audit team, ensuring that all necessary
areas are covered and that the audit is performed efficiently and consistently.
(b) Mention two objectives of audit report.
Answer: The two objectives of audit report are
mention below –
i.
To provide an opinion on whether the financial
statements present a true and fair view of the company's financial position.
ii.
To communicate the auditor's findings and
conclusions to the stakeholders, such as shareholders and creditors, allowing
them to make informed decisions.
(c) What is the meaning of continuous audit?
Answer: A continuous audit involves the auditor
examining the financial records of a business at regular intervals throughout
the financial year, rather than just at the end. This allows for ongoing
monitoring and early detection of errors or fraud.
3. Write on the following: (any
two) 5×2=10
(i) Auditor's duty regarding errors and frauds
Answer: Auditors
ensure financial statements are free from material misstatements, whether
errors or fraud. For errors, they assess materiality and require corrections.
For fraud, they evaluate risk, investigate suspicions, and report material
fraud. They maintain professional skepticism, document all actions, and may
issue qualified opinions if needed. Their duty is to provide reasonable
assurance, not prevent all fraud.
(ii) Five points of difference between Audit Report
and Audit Certificate
Answer:
(iii) General principles of vouching
Answer: Vouching verifies transaction accuracy by
examining supporting documents. Principles include ensuring documents are
authentic, relevant, and authorized. Vouchers should match accounting entries.
Auditors verify dates, amounts, and parties involved. They check for proper
approvals and consider internal controls. Thoroughness is key, ensuring all
transactions are properly supported. Vouching helps confirm the validity and
completeness of financial records.
(iv) Problem arising in verification of assets
Answer: Verifying assets presents challenges like
determining ownership, valuation, and existence. Physical verification may be
difficult for intangible or remote assets. Assessing asset condition and
obsolescence requires expertise. Legal titles must be verified. Management may
manipulate asset records. Auditors need to be vigilant against overvaluation or
undisclosed liabilities. Ensuring proper depreciation and amortization is
crucial.
4. Answer the following questions: (any two) 10×2=20
(i) What is internal control? Also discuss the
objectives of internal control. 3+7=10
Answer: Internal
control is a company's system designed to protect assets and ensure accurate
financial reporting. It comprises policies and procedures to prevent errors and
fraud, promoting operational efficiency and compliance with laws.
The objectives of internal control are :
safeguarding assets, ensuring reliable financial data,
fostering adherence to management policies, and encouraging efficient
operations. Strong controls involve segregation of duties, proper
authorization, and regular reconciliations. These measures minimize risks,
provide accurate information for informed decision-making, and ensure the
company's compliance with regulatory requirements. Effective internal controls
are essential for maintaining financial integrity and operational stability.
(ii) Explain the preparatory steps to be taken before
accepting the appointment and before commencement of audit 5+5=10
Answer: The preparatory steps to be taken before
accepting the appointment:
- Professional
Clearance: Obtain
professional clearance from the previous auditor to ensure ethical
considerations are addressed.
- Independence
Assessment: Assess potential conflicts of interest to maintain
auditor independence.
- Competence
Evaluation: Assess if the
audit team has the necessary skills and experience to conduct the audit.
- Client
Risk Assessment: Evaluate
the client's risk profile to determine if the audit engagement is
acceptable.
The preparatory steps to be
taken before commencement of audit:
- Understanding
the Client's Business: Gain a thorough understanding of the
client's industry, operations, and internal controls.
- Audit
Planning: Develop an audit plan outlining the scope, objectives,
and approach of the audit.
- Audit
Team Formation: Assemble an audit team with the appropriate skills
and experience.
- Review
of Prior Year's Documents: Review prior year's audit documentation
to identify potential risks and issues.
- Risk
Assessment: Conduct a detailed risk assessment to identify
potential areas of material misstatement.
- Engagement
Letter: Ensure that an engagement letter is in place, clearly
defining the terms of the audit
(iii) What are the objectives of verification of
assets? What are the factors to be considered for valuation of assets? 5+5=10
Answer: the objectives of verification of assets are
mention below :
Objectives of Verification of Assets
Verification of assets guarantees that a firm's financial
books are correct. This confirms a firm's assets, like property or money, are
correctly marked.
·
Preservation of Financial Accuracy: Among
the goals is to make sure that a company's asset data is correct. This is
because companies need to understand exactly what they have. Accurate records
allow the company to make good choices. It also allows the company to be in
compliance with the law and regulations.
·
Determining the Actual Value of Assets:
Another goal is to identify the actual worth of what a company has. This is
crucial because some assets will depreciate in the future. The information on
true value tells companies where they are. This helps them plan.
·
Safeguarding the Interests of Shareholders
and Creditors: Verification helps protect shareholders' and creditors'
interests. Shareholders would like to have confidence that their investment is
protected, and creditors would like to have confidence that assets are
correctly stated. By verifying assets, firms can present them with
authoritative information. Trust and confidence are established.
·
Compliance with Laws and Regulations: The
process of verification also ensures that the company is complying with the
law. Companies must present their financial data in the format provided by the
law. By verifying the value of assets, the company can ensure compliance with
these rules. This ensures that the company does not have any issues with the
law.
Factors to be Considered for Valuation
of Assets
Valuation of assets requires a robust
understanding of the asset’s underlying value. It's a quantitative process that
attempts to objectively measure value.
·
Assessment of Opportunity (Revenue Potential): The first component
is the opportunity, or revenue potential. This involves market-based
intelligence on how the asset will generate income. This includes considering
upside potential for additional markets and downside risks from competition.
·
Consideration of Costs: Following revenue,
consider costs, including development, regulatory, sales, marketing,
manufacturing, royalties, and overhead. The timing and likelihood of these
costs should be assessed, and scenarios for potential cost variations should be
developed.
·
Assessment of Risk: The final and most
critical component is risk assessment. This includes risk associated with the
asset itself (regulatory and developmental risks) and risk associated with the
company's ability to maximize the asset's commercial opportunity. Objective assessments
of regulatory and commercial success are crucial. Company risk is often
measured by the weighted average cost of capital.
(iv) What do you mean by a 'qualified report'? Give
specimen of a qualified report of a limited company.
Answer: A qualified audit report is issued when an
auditor finds some issues with a company's financial statements, but these
issues aren't severe enough to require an adverse opinion (which would mean the
statements are fundamentally wrong). It's an opinion that says the financial
statements are generally fair, "except for" a specific matter.
Specimen:
here's a specimen of a qualified audit report for a limited company,
are explained below:
To the Members of ABC Limited
Report on the Audit of the Financial Statements:
We have audited the financial statements of ABC Limited.
Management is responsible for these statements, and our responsibility is to
express an opinion. We conducted our audit per auditing standards.
Basis for Qualified Opinion
We draw attention to Note X, which discloses that the
Company has not provided for a potential loss of Rs. [Amount] arising from a
legal claim. Management states the outcome is uncertain, but we believe a
provision is required due to the high probability of a loss.
Qualified Opinion
Except for the effects of the matter described in the Basis
for Qualified Opinion section, the financial statements present fairly,
in all material respects, the financial position of 2 ABC Limited as at March 31, 2025, and its
financial performance and its cash flows for the year then ended
GROUP B WILL BE UPDATED SOON..........
DOWNLOAD QUESTION PAPPER - CLICK HERE
Comments
Post a Comment