### **CA Intermediate Audit - Probable 100 Marks Question Paper**
This mock paper consists of questions based on recurring patterns in RTPs, MTPs,
and past exam questions. Each question is accompanied by the topic, the thinking
approach, and a mnemonic where applicable.
---
### **Section A: Standards on Auditing (30 Marks)**
#### **Q1. (10 Marks)**
Explain the objectives and reporting requirements of the auditor as per **SA 700:
Forming an Opinion and Reporting on Financial Statements**.
**Topic Covered**: SA 700 – Auditor’s Report
**Thinking Approach**:
- Define the purpose of the auditor's report.
- Mention key components (title, addressee, opinion, basis for opinion).
- Link to "true and fair view" and compliance with auditing standards.
**Mnemonic**: *T-O-B-R*
- **T**: Title
- **O**: Opinion
- **B**: Basis for opinion
- **R**: Responsibilities
---
#### **Q2. (10 Marks)**
As an auditor, how would you assess the risk of material misstatement in a company
with significant inventory balances? Explain with reference to **SA 315**.
**Topic Covered**: SA 315 – Risk Assessment and Internal Control
**Thinking Approach**:
- Begin by defining risk of material misstatement.
- Link to understanding internal controls around inventory management.
- Discuss inherent risk factors (valuation, obsolescence, physical verification).
**Mnemonic**: *C-R-I-M*
- **C**: Control environment
- **R**: Risk factors
- **I**: Inherent risk
- **M**: Material misstatement
---
#### **Q3. (10 Marks)**
Describe the auditor’s responsibility for detecting fraud as per **SA 240**.
**Topic Covered**: SA 240 – Fraud Detection
**Thinking Approach**:
- Define fraud types: misappropriation of assets and financial reporting fraud.
- Emphasize professional skepticism and fraud risk factors.
- Discuss communication of suspected fraud to management.
**Mnemonic**: *F-I-R-E*
- **F**: Fraud types
- **I**: Indicators of fraud
- **R**: Responsibilities of auditor
- **E**: Escalation to management
---
### **Section B: Company Audit (20 Marks)**
#### **Q4. (8 Marks)**
Explain the provisions regarding the appointment of auditors under Section 139 of
the Companies Act, 2013.
**Topic Covered**: Auditor Appointment
**Thinking Approach**:
- State the rules for initial appointment, tenure, and reappointment.
- Discuss first auditor and rotation provisions.
**Mnemonic**: *A-T-R*
- **A**: Appointment by Board/Shareholders
- **T**: Tenure (5 years)
- **R**: Rotation for listed companies
---
#### **Q5. (6 Marks)**
List the disqualifications of an auditor under Section 141 of the Companies Act,
2013.
**Topic Covered**: Auditor Disqualifications
**Thinking Approach**:
- Use Section 141 to list personal, financial, and professional disqualifications.
**Mnemonic**: *S-E-C*
- **S**: Securities held
- **E**: Employment relationships
- **C**: Conflicts of interest
---
#### **Q6. (6 Marks)**
What are the reporting requirements of an auditor under Section 143 of the
Companies Act, 2013?
**Topic Covered**: Auditor Reporting Requirements
**Thinking Approach**:
- List items like fraud, books of account, and CARO (if applicable).
- Link to auditor’s ethical responsibilities.
**Mnemonic**: *F-R-A-U-D*
- **F**: Fraud
- **R**: Reporting on internal controls
- **A**: Accounts examined
- **U**: Unusual transactions
- **D**: Directors’ actions
---
### **Section C: Audit Evidence and Procedures (20 Marks)**
#### **Q7. (10 Marks)**
Explain the procedures for verifying inventory valuation as part of the audit of
financial statements.
**Topic Covered**: Audit of Inventories
**Thinking Approach**:
- Describe physical verification, compliance with AS-2, and cutoff procedures.
**Mnemonic**: *P-V-C*
- **P**: Physical verification
- **V**: Valuation as per AS-2
- **C**: Cutoff procedures
---
#### **Q8. (10 Marks)**
What are the advantages and limitations of audit sampling as per **SA 530**?
**Topic Covered**: Audit Sampling
**Thinking Approach**:
- Define sampling and explain the difference between statistical and non-
statistical methods.
- Discuss common risks and reliability concerns.
**Mnemonic**: *A-L-E-R-T*
- **A**: Advantages
- **L**: Limitations
- **E**: Efficiency improvement
- **R**: Risk of incorrect acceptance
- **T**: Testing sample results
---
### **Section D: Ethics and Professional Misconduct (15 Marks)**
#### **Q9. (8 Marks)**
What constitutes professional misconduct under the First Schedule of the Chartered
Accountants Act, 1949?
**Topic Covered**: Ethics and Professional Misconduct
**Thinking Approach**:
- Focus on examples of professional negligence and non-compliance with accounting
standards.
**Mnemonic**: *N-E-G-L-E-C-T*
- **N**: Non-disclosure of facts
- **E**: Errors in reporting
- **G**: Gross negligence
- **L**: Lack of due diligence
- **E**: Ethical breaches
- **C**: Conflict of interest
- **T**: Technical incompetence
---
### **Section E: Audit of Financial Statements (15 Marks)**
#### **Q10. (15 Marks)**
Describe the auditor’s approach to evaluating internal controls in an IT
environment and its impact on the audit process.
**Topic Covered**: Audit of Financial Statements – IT Controls
**Thinking Approach**:
- Discuss general and application controls.
- Mention the role of ITGC (IT General Controls) in risk assessment.
- Link to automated transactions and their verification.
**Mnemonic**: *I-T-A-R*
- **I**: IT General Controls
- **T**: Transaction integrity
- **A**: Application controls
- **R**: Risk of misstatement
---
### Total: 100 Marks
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