1. What are Special Areas of Audit? Special areas of audit refer to specific 9.

9. What are the Basic Considerations of Audit in an EDP Environment? 6. What is Auditor Rotation, and why is it Important? Auditor rotation refers
fields or types of audits that focus on unique aspects of an organization, In an Electronic Data Processing (EDP) environment, auditors must consider: The to the mandatory change of audit firms or partners after a specified period to
such as cost, management, tax, social, environmental, and energy audits. reliability and security of IT systems. Data integrity and accuracy. Compliance with ensure independence and objectivity. It is important because: It prevents over-
These audits are tailored to address particular objectives and regulatory IT-related regulations. Use of Computer-Assisted Audit Techniques (CAATs). familiarity between the auditor and the company. It reduces the risk of
requirements beyond traditional financial audits. Understanding of the organization’s IT infrastructure and controls. conflicts of interest. It enhances the credibility of the audit process.
2. What are the Special Features of Cost Audit? 5. What is Social Audit, and what are its Objectives? 7. How can a Company Auditor be Removed?
Cost audit involves the verification of cost records and accounts to ensure Social audit assesses the social impact of an organization’s activities on A company auditor can be removed: By the shareholders through a special
accuracy and compliance with cost accounting standards. Its special stakeholders, including employees, customers, and the community. Its objectives resolution after obtaining prior approval from the Central Government. By the
features include: Focus on cost efficiency and cost control. Ensures proper include: Evaluating corporate social responsibility (CSR) initiatives. Ensuring Tribunal in cases of fraud or misconduct. The auditor must be given an
allocation of costs. Helps in pricing decisions and identifying wastage. transparency and accountability. Enhancing stakeholder trust and satisfaction. opportunity to be heard before removal.
Mandatory for certain industries as per regulatory requirements. Promoting ethical business practices. 9. What are the Rights of a Company Auditor?
3. What is Management Audit, and what are its Key Features? 13. What are Some Key Auditing Standards? The rights of a company auditor include: Access to all books, accounts, and
Management audit evaluates the efficiency and effectiveness of Key auditing standards include: International Standards on Auditing (ISA) issued by vouchers of the company. The right to obtain information and explanations
management practices and policies. Its key features include: Focus on the IAASB. Generally Accepted Auditing Standards (GAAS) in the U.S. Standards on from company officers. The right to attend general meetings and receive
organizational goals and objectives. Assesses decision-making processes Internal Audit (SIA) issued by the Institute of Internal Auditors (IIA). National notices. The right to visit branches for audit purposes.
and resource utilization. Provides recommendations for improvement. standards specific to countries (e.g., Standards on Auditing in India). 10. What are the Duties of a Company Auditor?
Non-statutory and voluntary in nature. 14. How do Case Studies Help in Understanding Auditing Practices? The duties of a company auditor include: Examining and verifying financial
4. What is Tax Audit, and why is it Important? Case studies provide practical insights into real-world auditing scenarios by: statements. Ensuring compliance with accounting standards and the
Tax audit is the examination of financial records to ensure compliance with Illustrating the application of auditing standards and techniques. Highlighting Companies Act, 2013. Reporting on the true and fair view of the financial
tax laws and regulations. Its importance lies in: common challenges and solutions. Enhancing problem-solving and analytical skills. position. Reporting fraud or non-compliance to the Central Government.
Verifying the accuracy of tax returns. Preventing tax evasion. Ensuring Offering examples of fraud detection and prevention. 11. What is an Auditor’s Report, and what does it Include?
adherence to tax-related provisions (e.g., Section 44AB of the Income Tax 15. Can you Provide an Example of a Relevant Case Study in Auditing? An auditor’s report is a formal document expressing the auditor’s opinion on
Act in India). Reducing the risk of penalties and legal issues. A relevant case study is the Enron Scandal, where auditors failed to detect the financial statements. It includes: A title and addressee (e.g., shareholders).
6. What is Environmental Audit, and what does it Cover? fraudulent financial practices. Key takeaways include: The importance of auditor An opinion on the financial statements (unqualified, qualified, adverse, or
Environmental audit evaluates an organization’s environmental independence and ethical behavior. The need for robust internal controls and disclaimer). Emphasis of Matter or Other Matter paragraphs, if applicable. A
performance and compliance with environmental laws. It covers: transparency. The role of regulatory bodies in enforcing compliance. The impact of statement on compliance with auditing standards.
Assessment of waste management and pollution control. Verification of auditing failures on stakeholders and the economy. 12. What are the Liabilities of Statutory Auditors under the Companies Act,
adherence to environmental regulations. Identification of areas for 1. What is the Audit of Limited Companies? 2013? Statutory auditors are liable for: Negligence or misconduct in
sustainable practices. Reporting on environmental impact and risks. The audit of limited companies involves the examination of financial statements, performing their duties. Misstatement or omission in the audit report. Fraud or
7. What is Energy Audit, and what are its Benefits? records, and transactions to ensure accuracy, compliance with accounting collusion with company management. Penalties under the Companies Act,
Energy audit involves the analysis of energy consumption patterns to standards, and adherence to the Companies Act, 2013. It provides assurance to 2013, including fines and disqualification.
identify opportunities for energy conservation. Its benefits include: stakeholders about the company’s financial health and governance. 13. What is Divisible Profit, and how is it Calculated?
Reducing energy costs. Improving energy efficiency. Minimizing 2. Who is a Company Auditor? Divisible profit refers to the profit available for distribution as dividends after
environmental impact. Compliance with energy regulations and standards. A company auditor is an independent professional appointed to examine and verify meeting all legal and contractual obligations. It is calculated as: Net profit
8. What are Recent Trends in Auditing? the financial statements of a company. They ensure that the financial statements after tax. Less: Transfers to reserves, provisions, and depreciation. Add: Any
Recent trends in auditing include: Increased use of technology and data present a true and fair view of the company’s financial position and comply with profit brought forward from previous years.
analytics. Focus on sustainability and ESG (Environmental, Social, and statutory requirements. 14. What is the Role of Depreciation in Determining Divisible Profit?
Governance) reporting. Adoption of continuous auditing and monitoring. 3. What are the Qualifications of a Company Auditor? Depreciation is a non-cash expense that reduces the book value of assets. It is
Emphasis on risk-based auditing. Integration of artificial intelligence (AI) As per the Companies Act, 2013, a company auditor must: Be a Chartered deducted from profits to determine divisible profit because: It ensures the
and machine learning (ML) in audit processes. Accountant (CA) holding a valid certificate of practice. Be a member of the Institute replacement cost of assets is accounted for. It complies with the Companies
10. What are Computer-Assisted Audit Techniques (CAATs)? of Chartered Accountants of India (ICAI). Have no disqualifications as specified Act, 2013, and accounting standards. It prevents overstatement of profits
CAATs are tools and techniques used by auditors to analyze large volumes under the Act. available for dividends.
of data and automate audit processes. Examples include: Data extraction 4. What are the Disqualifications of a Company Auditor? 15. What are Provisions and Reserves as per the Companies Act, 2013?
and analysis software (e.g., ACL, IDEA). Automated testing of controls. Use A person is disqualified from being a company auditor if they: Are a body corporate. Provisions: Amounts set aside to cover known liabilities or losses (e.g.,
of scripts and algorithms for sampling and testing. Visualization tools for Are an officer or employee of the company. Have a business relationship with the provision for bad debts). They are charged against profits. Reserves: Amounts
identifying patterns and anomalies. company. Are indebted to the company for more than ₹1,000. Have been convicted set aside from profits for future use (e.g., general reserve). They are not
11. What are the Advantages of Using CAATs in Auditing? of fraud or an offense involving moral turpitude. liabilities but part of shareholders’ equity. Both provisions and reserves are
Advantages of CAATs include: Improved accuracy and efficiency in data 5. How is a Company Auditor Appointed? deducted from profits to determine divisible profit.
analysis. Ability to analyze 100% of data instead of relying on samples. The appointment of a company auditor is done as follows: By the Board of Directors 1. What is Auditing?Auditing is the systematic examination of financial
Faster identification of errors and fraud. Enhanced ability to handle within 30 days of incorporation for the first auditor. By shareholders at the Annual records, transactions, and operations of an organization to ensure accuracy,
complex and large datasets. Reduced manual effort and time. General Meeting (AGM) for subsequent auditors. By the Central Government in case compliance with laws and regulations, and adherence to accounting
12. What are Auditing Standards, and why are they Important?Auditing of a vacancy not filled by the company. standards. It provides an independent opinion on the financial statements.
standards are guidelines and principles that govern the conduct of audits. 8. How is the Remuneration of a Company Auditor Determined? 2. What is the Meaning of Auditing?
They ensure: Consistency and quality in audit processes. Compliance with The remuneration of a company auditor is determined: By the shareholders at the Auditing means the verification and evaluation of financial statements,
legal and regulatory requirements. Reliability and credibility of audit AGM. By the Board of Directors in the case of the first auditor. It must be disclosed in records, and processes to ensure they present a true and fair view of the
reports. Professional competence and ethical behavior of auditors. the company’s financial statements. organization’s financial position and performance.
3. What are the Objectives of Auditing? The objectives of auditing 15. What is the Difference Between Internal Check and Internal Audit? 3. What is the Approach to Bank Audit?
include: Verifying the accuracy and reliability of financial statements. Internal Check: A continuous process where the work of one employee is checked The approach to bank audit includes: Understanding the bank’s business and
Detecting and preventing errors and fraud. Ensuring compliance with laws by another during the course of work. Internal Audit: A periodic and independent regulatory environment. Assessing risks related to loans, investments, and
and regulations. Assessing the effectiveness of internal controls. Providing review of operations and controls by a separate internal audit team. compliance. Evaluating internal controls and systems. Verifying financial
an independent opinion on financial statements. 16. What is Vouching in Auditing? Vouching is the process of verifying the statements and ensuring compliance with RBI guidelines.
4. What are the Basic Principles of Auditing? authenticity and accuracy of transactions recorded in the books of accounts by 11. What is the Audit of Hospitals?
The basic principles of auditing are: Integrity, objectivity, and examining supporting documents such as invoices, receipts, and contracts. The audit of hospitals involves verifying financial records, patient billing,
independence. Confidentiality. Skill and competence. Documentation and 17. What is Verification of Assets? Verification of assets involves confirming the inventory management, and utilization of grants or donations. It ensures
evidence. Planning and supervision. Materiality and risk assessment. existence, ownership, valuation, and condition of assets as reported in the financial compliance with healthcare regulations and proper financial management.
5. What are the Techniques of Auditing? Auditing techniques include: statements. It ensures that assets are not overstated or understated. 12. What are the Key Areas in Auditing Hospitals?
Inspection of documents and records. Observation of processes and 18. What is Verification of Liabilities? Verification of liabilities involves confirming Key areas include: Verification of patient billing and insurance claims.
procedures. Inquiry and confirmation with third parties. Recalculation and the existence, completeness, and accuracy of liabilities recorded in the financial Examination of inventory (medicines and equipment). Compliance with
reperformance of calculations. Analytical procedures and ratio analysis. statements. It ensures that all obligations are properly disclosed. healthcare regulations. Proper utilization of grants and donations.
6. What are the Advantages of Auditing? 19. What are SAPs (Standard Auditing Practices)? 13. What is the Audit of Clubs? The audit of clubs involves verifying financial
The advantages of auditing include: Enhances the credibility of financial SAPs are guidelines issued by professional bodies (e.g., ICAI) to ensure uniformity records related to membership fees, event income, and expenses. It ensures
statements. Detects and prevents errors and fraud. Improves internal and quality in auditing practices. They cover areas such as: Audit planning and proper financial management and compliance with club bylaws.
controls and operational efficiency. Ensures compliance with legal and documentation. Risk assessment and materiality. Audit evidence and reporting. 14. What is the Audit of Hotels and Restaurants? The audit of hotels and
regulatory requirements. Provides assurance to stakeholders. 20. What is the Importance of Audit Evidence? restaurants involves verifying revenue from room bookings, food and
7. What are the Limitations of Auditing? Audit evidence is crucial because: It forms the basis for the auditor’s opinion. It beverage sales, and expenses. It ensures proper financial management and
The limitations of auditing include: Reliance on sampling rather than ensures the reliability and accuracy of financial statements. It helps in detecting compliance with tax regulations.
examining all transactions. Dependence on management representations. errors and fraud. It provides support for audit conclusions and recommendations. 15. What are the Key Areas in Auditing Hotels and Restaurants?
Inability to detect sophisticated frauds. Limited scope due to time and 1. What is the Audit of Banks? The audit of banks involves the examination of Key areas include: Verification of room bookings and food sales. Examination
cost constraints. Subjectivity in judgment and interpretation. financial statements, transactions, and operations of a bank to ensure accuracy, of inventory (food and beverages). Compliance with tax regulations. Proper
8. How is Audit Classified? compliance with banking regulations, and adherence to accounting standards. It recording of expenses and revenues.
Audits can be classified as: Based on Organization: Statutory audit, ensures the bank’s financial health and protects depositors' interests. 16. What is the Audit of Transport Companies? The audit of transport
internal audit, government audit. Based on Scope: Complete audit, partial 2. What is the Legislation Relating to Audit of Banks? companies involves verifying revenue from ticket sales, freight charges, and
audit. Based on Time: Continuous audit, interim audit, final audit. Based The audit of banks in India is governed by: The Banking Regulation Act, 1949. The expenses related to vehicle maintenance and fuel. It ensures proper financial
on Approach: Balance sheet audit, operational audit. Reserve Bank of India (RBI) guidelines. The Companies Act, 2013 (for banking management and compliance with transport regulations.
9. What is Audit Planning? companies). The Income Tax Act, 1961 (for tax-related matters). 17. What is the Audit of Co-operative Societies?
Audit planning is the process of developing a strategy and approach for 4. What is Internal Control Evaluation in Bank Audit? The audit of co-operative societies involves verifying financial records,
conducting an audit. It involves: Understanding the client’s business and Internal control evaluation in bank audit involves assessing the effectiveness of member contributions, and utilization of funds. It ensures compliance with
industry. Assessing risks and materiality. Determining the scope and controls in areas such as: Loan disbursement and recovery. Deposit management. the Co-operative Societies Act and proper financial management.
objectives of the audit. Allocating resources and setting timelines. Fraud prevention and detection. Compliance with regulatory requirements. 18. What is the Audit of Local Self-Government Bodies? The audit of local
10. What are Audit Procedures? 5. What are Non-Performing Assets (NPAs)? Non-Performing Assets (NPAs) are self-government bodies (e.g., Gram Panchayats, Municipalities) involves
Audit procedures are the specific steps and methods used by auditors to loans or advances where the borrower has failed to make interest or principal verifying financial records, grants, and utilization of funds for public welfare
gather evidence and achieve audit objectives. Examples include: Vouching payments for a specified period (usually 90 days). NPAs are classified as: projects. It ensures transparency and accountability in public spending.
of transactions. Verification of assets and liabilities. Analytical review of Substandard, doubtful, or loss assets based on the duration of default. 19. What are the Key Areas in Auditing Gram Panchayats? Key areas
financial statements. Testing internal controls. 6. What are Provisions for NPAs? include: Verification of grants and funds received from the government.
11. What are Relevant Documents in Auditing? Provisions for NPAs are amounts set aside by banks to cover potential losses from Examination of expenditures on rural development projects. Compliance with
Relevant documents in auditing include: Financial statements (balance bad loans. The RBI mandates specific provisioning requirements based on the Panchayati Raj regulations. Proper maintenance of financial records.
sheet, profit and loss account, cash flow statement). Bank statements classification of NPAs (e.g., 15% for substandard assets, 40% for doubtful assets). 20. What is the Audit of Municipal Corporations?
and reconciliation. Invoices, receipts, and vouchers. Contracts and 7. What is Included in a Bank Audit Report? The audit of municipal corporations involves verifying financial records,
agreements. Minutes of meetings and statutory registers. A bank audit report includes: Auditor’s opinion on the financial statements. property taxes, and utilization of funds for urban development projects. It
12. What is Internal Control? Internal control refers to the policies, Compliance with RBI guidelines and regulations. Details of NPAs and provisioning. ensures compliance with municipal laws and proper financial management.
procedures, and mechanisms implemented by an organization to: Observations on internal controls and risk management. 1. What is an Audit Report? An audit report is a formal document prepared
Safeguard assets. Ensure accuracy & reliability of financial records. 8. What is the Audit of Educational Institutions? The audit of educational by an auditor after examining an organization’s financial statements. It
Promote operational efficiency. Ensure compliance with laws, regulations. institutions involves verifying financial records, grants, donations, & fee collections expresses the auditor’s opinion on whether the financial statements present
13. What is Internal Check? Internal check is a system of checks and to ensure proper utilization of funds and compliance with regulatory requirements. a true and fair view of the organization’s financial position and performance.
balances within an organization where the work of one employee is 9. What are the Key Areas in Auditing Educational Institutions? 2. What are the Features of an Audit Report? It is a written document. It is
verified by another. It aims to: Prevent errors and fraud. Ensure accuracy in Key areas include: Verification of fee receipts and grants. Examination of prepared by an independent auditor. It provides an opinion on the financial
recording transactions. Divide responsibilities to reduce risks. scholarship disbursements. Compliance with government regulations. Proper statements. It is addressed to the shareholders or governing body. It follows a
14. What is Internal Audit? Internal audit is an independent function utilization of funds for infrastructure and development. standardized format as per auditing standards.
within an organization that evaluates and improves the effectiveness of 10. What is the Audit of Libraries? 13. What is an Other Matter Paragraph in an Audit Report? An Other Matter
risk management, control, and governance processes. It focuses on: The audit of libraries involves verifying financial records related to book purchases, paragraph is included in the audit report to provide additional information
Assessing internal controls. Identifying operational inefficiencies. membership fees, and grants. It ensures proper utilization of funds and that is relevant to stakeholders but not related to the financial statements. It
Ensuring compliance with policies and regulations. maintenance of library assets. does not modify the auditor’s opinion.