C.A.

IPCC AUDIT AND ASSURANCE

Email: califeindia@gmail.com

POINTS IN BOLD LETTERS ARE VERY IMPORTANT FOR MAY 2017 EXAM

CHAPTERS 1 TO 9 - TOPICS IN INSTITUTE STUDY MATERIAL (LATEST)

Chapter- 1

1) Functional classification of auditors

2) Engagement Standards and Quality Control Standards - Classification
3) Different types of Errors
4) Types of Intentional Misstatements Fraudulent Financial Reporting and Misappn of Assets
5) Detection of frauds- Auditor s duty
6) Basic Principles Fully Important
7) Inherent limitations of audit Factors influencing inherent limitations
8) Types of Audit (Statutory & Voluntary with examples)
9) Relationship between Auditing & other disciplines

Chapter- 2

Concept of Auditor s Independence- Ethical requirements and Note No.1 at the end Views of the
Research Committee of the Institute
Audit Evidence
1) Sufficiency and Appropriateness of audit evidence
2) Audit Procedures
3) Use of Assertions Three categories
4) Reliability of Audit Evidence
5) Methods of obtaining Audit Evidence (Particularly Inquiry)
6) Concept of Materiality- Study with Chapter 3- Audit Planning and Materiality, Materiality and
Audit Risk
7) Concept of True and Fair Section 129 of Companies Act, 2013
8) Areas in which different accounting policies are encountered
9) Fundamental accounting assumptions

Chapter-3

1) Auditor s Engagement Recurring Audits- Circumstances in which revision is

required- 5 points
2) Establishing an overall Audit Strategy Factors to be considered 5 points
3) Advantages and disadvantages of the use of Audit Programme
4) Audit Planning & Materiality
5) Approaches to Sampling (Statistical & Non-Statistical) SA530
6) Methods of selection of sample
7) Advantages of Statistical Sampling
8) Assessments of Risks of Material Misstatement at the Financial Statement Level
9) Inherent Risk, Control Risk, Detection Risk
10)Objectives of obtaining written representations SA580
Chapter-4

1) Components of Internal Controls and Controls relevant to Audit

2) Auditor and Internal Control SA 265 Communication of Internal Control Deficiencies
3) Methods of Review of Internal Control (Check List, Questionnaire, Flowchart)
4) Examination in depth (also known as Auditing in-depth)
5) General CIS controls and CIS Application controls
6) Auditing around the Computer and Auditing Through the Computer
7) General considerations in forming a system of Internal Check
8) Applicability of Internal Audit u/s 138 of Companies Act, 2013 (Very Important)
9) Using Specific Work of the Internal Auditors Evaluating adequacy of specific work of Internal
Auditors SA 610

Chapter- 5 (Only points in institute study material should be written)

Vouching-Audit of Payments
1) Related Party Transactions
2) Payments controlled by Companies Act (Companies Act 2013 provisions)
3) Remuneration to Directors
4) Assets acquired under Hire Purchase
5) Assets acquired on Lease
6) Payment of Taxes
7) Repairs to Assets
8) Travelling expenses
9) Insurance Claims
10) Advertisement expenses
11) Payment of dividends
12) Retirement Gratuity to Employees

Vouching-Audit of Receipts
1) Rental Receipts
2) Sale proceeds of junk material
3) Refund of general insurance premium paid
4) Discounted Bill Receivable dishonoured

Vouching- Audit of Trading Transactions

1) Special Precautions in verification of Purchase Invoices
2) Work in progress
3) Gross profit Factors decreasing gross profit
4) Cut-off Arrangements/procedures

Vouching- Audit of Ledgers

Ledger Keeper and Frauds Various Ledgers

End of Chapter - 5
External Confirmations (Direct Confirmation Procedure) SA505
Analytical Procedures- SA520

Chapter - 6 (In this Chapter three general points to be remembered)

a. Provisions regarding Accounting Standards First 15 pages and last 10 pages- particularly
depreciation, valuation of inventories, investments, intangible assets, Contingent liabilities,
Provisions, Events Occuring After Balance Sheet Date, Prior period items, Extra-ordinary
items, Changes in Accounting Estimates and Changes in Accounting Policies
b. CARO Reporting requirements- Fixed Assets, Inventories and Loans and Advances
c. Schedule III disclosure requirements

Verification of Assets and Liabilities (Only points in institute study material should be written)
1) Building
2) Leasehold Property
3) Patterns, Dies and Loose Tools
4) Patent Rights
5) Trademark & Copyright
6) Investment in Shares and Debentures of Subsidiary
7) Contingent Liabilities
8) Provision for Tax
9) Provision for Gratuity, Provision for Bonus
10)Declaration of Dividend out of Reserves Five conditions to be fulfilled under Companies
(Declaration and Payment of Dividends) Rules, 2014

Chapter- 7

COMPANY AUDIT (Very important) Companies Act, 2013- To be read with CAAR, 2014
1) Disqualifications under Section 141(3) clauses (d) to (f) and Section 144- Auditor
not to render certain services
2) Filling up of Casual Vacancy Section 139(8)
3) Ceiling on Audits
4) Auditor s Lien
5) Duties of auditors- Inquiry u/s 143(1) and matters to be reported u/s 143(3)
6) Powers/Rights of C&AG in Audit of Government Companies
7) Duty to report on Frauds Section 143(12) and Rule 13 of CAAR, 2014
8) Cost Audit u/s 148 read with Companies (Cost Records and Audit) Rules, 2014 Fully
Important- Amendment to Rules in 2016 will apply
9) Audit Committee under Companies Act, 2013 Section 177
10)SA700 Basic Elements of Auditors (Particularly Auditor s Responsibility and Auditor s opinion
paragraphs) particularly Introductory paragraph
11) SA705 Types of Modified opinions and Circumstances in which Modification is required
12) SA706 Emphasis of Matter paragraph and other matter paragraph
13) CARO, 2016 Companies to which the Order does not apply (Private co. Exemption)
14)Advantages and Disadvantages of Joint Audit and SA-299 Responsibilities of Joint Auditors (5
points)
15)Audit of Branches Paragraph on SA-600 Using Work of Other Auditors

Chapter- 8

1) Section 128 Books of Account Proper books of account

2) Section 129 Financial Statements Study with Chapter -2 Concept of True and Fair
3) Verification of Allotment of shares (Companies Act 2013 provision)
4) Issue of Shares at Premium
5) Sweat Equity Shares
6) Verification of forfeiture and reissue of forfeited shares
7) Verification of Issue of Bonus Shares
8) Audit of Debentures- Verification of Issue of Debentures (10 points)
9) Audit of Dividends (Fully Important)

NOTE: Disclosure requirements of Schedule III of Companies Act, 2013 should be

read (particularly Balance Sheet Items)

Chapter- 9

GOVERNMENT AUDIT
1. Duties of C&AG
2. Audit of Expenditure (Audit against Rules and Orders, Audit of Sanctions, Audit
against Provision of Funds, Propriety Audit, Performance Audit) Propriety audit and
Performance audit are very important)
3. Audit of Government Companies- Powers of C&AG u/s 143(5),(6),(7)

SPECIAL AUDITS (all are important you have to write all points only from institute study material)

1) Audit of Non-Governmental Organisations - (Provisions relating to Audit)

2) Audit of Charitable Institutions (Subscriptions & Donations, Investment income, Expenditure)
3) Audit of Educational Institutions any six to eight points
4) Audit of Hospital
5) Audit of Club
6) Audit of Cinema
7) Audit of Hotel Special problems (5 points)
8) Audit of Hire Purchase (3 Points) and leasing Companies (8 points)
IMPORTANT SHORT NOTES QUESTIONS NOTE: Many short notes are based on definitions
in SAs (very important)
1) Use of Assertions (Chapter-2)
2) Methods of Obtaining audit evidence (Chapter-2)
3) Reliability of Audit Evidence (Chapter-2)
4) Materiality and Audit Planning (Chapter-3)
5) Methods of selection of sample (Chapter-3)
6) Advantages of Statistical sampling (Chapter-3)
7) Audit Risk, Risk of Material Misstatement (earlier known as Inherent Risk and Control Risk)
Detection Risk, Materiality and Audit Risk (Chapter-3)
8) Review and Testing of Internal Control, Internal Control Questionnaire, Audit Check List,
Flow Chart(Chapter-4)
9) Examination in depth / Auditing in depth(Chapter-4)
10)Computer assisted audit techniques (Chapter-4)
11)Auditing Around the Computer and Auditing Through the computer (Chapter-4)
12)Analytical Procedures as Substantive procedures (Chapter -5)
13)Extent of reliance on Analytical Procedures (Chapter-5)
14)Cut-off Arrangement (Chapter -5)
15)Changes in Accounting Policies(Chapter-6)
16)Qualified Opinion, Adverse Opinion, Disclaimer of Opinion(Chapter-7)
17)Emphasis of Matter Paragraph and Other Matter paragraph (Chapter-7)
18)Auditor s Lien(Chapter-7)
19)Interim Dividend(Chapter-8)
20)Propriety audit(Chapter-9)
21)Performance audit (Chapter-9)

Standards on Auditing (SAs should be read along with the respective topics in Chapters 1
to 9 in Latest Institute Study Material)

NOTE: Study definitions in SAs 200, 230, 265, 315, 330, 500, 510, 520, 530, 580, 705, 706, 710

Paragraphs mentioned below are important in these standards and should be read with the
Standard. SAs should be read with the respective chapters (Chapter numbers given below are
in Institute study material).

IMPORTANT STANDARDS ON AUDITING

a. SA-200- A34 to A44 Audit Risk (Chapter 3)
b. SA-230- Audit Documentation (Chapter-3)
c. SA-240- Auditor s Responsibilities Relating to Fraud in Audit of FS (Chapter-1)-Paras 5 to
8, Para A2 to A5
d. SA-265- Paras 7 to 11- Communication of Weakness (Letter of Weakness) Chapter-4 Auditor
and Internal Control
e. SA-300- Overall Audit strategy and Development of Audit Plan (Chapter-3) Paras 6 to 10
f. SA-315-VERY IMP.- Identifying and Assessing Risks of Material Misstatements
(Chapter-3 and 4) Paras 6,11,12, A105 to A113
g. SA-320- Materiality Materiality and Audit Planning, Materiality & Audit Risk (Chapter-2 and 3)
h. SA-500- Audit Evidence- Sufficiency and Appropriateness, Use of Assertions, Methods of
Obtaining Audit Evidence, Reliability of Audit Evidence-Paras A14 to 21, A31 (Chapter-2)
i. SA-505- External Confirmations (end of Chapter-5) Fully important
j. SA-520- Analytical Procedures (end of Chapter-5) - Fully important
k. SA-530- Audit Sampling- Definitions and Appendix IV- Chapter-3 Statistical & Non-Statistical,
Methods of selection
l. SA-570- Going Concern- Auditor s Responsibility- Material Uncertainty (Paras 16 and A2)
m. SA-580- Written Representations Paras 5, 18 (End of Chapter-3)
n. SA-610- Using the Work of Internal Auditor - Paras 8 to 12 (end of Chapter-4)
o. SA-700- Auditor s Report on Financial Statements (Chapter-7) Basic Elements- Paras 21 to 42
p. SA-705- Modifications to Auditor s Opinion (Chapter-7) Paras 6 to 9, A-1
q. SA-706- Emphasis of Matter Paragraph and Other Matter Paragraph (Chapter-7)-
Definitions-Paras 5 to 8
r. SA-710 Definitions in Para 6

GENERAL NOTES
1. Do not answer question No.1 and 2 in the first hour and postpone it to the second hour
2. Answer first questions regarding government audit, special audits and short notes.
3. In question regarding Correct or Incorrect be clear with the reason supporting the conclusion
because no marks may be given if the reason is wrong even though the conclusion is correct.
4. Recent announcement- writing excess questions will not get valued

Please email your response after the exam regarding the question paper which will benefit the
future students in their preparation and in my suggestions for next exam.
ALL THE BEST