Which of the following statements is most appropriate?

The concept of materiality is applied by the auditor:

Statement 1: The establishment of the overall audit strategy and the detailed audit plan are not necessarily discrete or sequential process but are closely inter –related.
Statement 2: The auditor shall establish an overall audit strategy that guides the development of audit plan.

_______means the amount set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatement exceeds materiality for the financial statements as a whole

Which of the following is not an example of benchmark that can be used in determining the materiality in the case of financial statements: -

CA R illustrated to his team that the utility of the Audit Programme can be retained and enhanced only by keeping the programme as also the client’s operations and internal control under recurrent assessment. Which attribute of the Audit Programme is highlighted here?

Once the overall audit strategy has been established, _______can be developed to address the various matters identified in the overall audit strategy, taking into account the need to achieve the audit objectives through the efficient use of the auditor’s resources.

The auditor shall develop an audit plan that shall include a description of:

Kaur & Associates, a sole proprietor firm of Simran Kaur, is offered appointment as auditor of a company engaged in manufacturing of automobile components for the first time. She is fact checking about the integrity of promoters of the company and key managerial persons. Matters such as competence of staff to perform the engagement are also considered by her. The appointment is subsequently accepted by her. She is also taking into account number and location of branches of the company, requirements of Schedule III of Companies Act, 2013 and expected time by which audit has to be completed keeping in view statutory requirements. Initially, she has thought it proper to inquire key employees of the company in procurement and marketing departments and planned for the same. She has also planned to visit three plants of the company. The purpose of planned inquiry and visit is to identify and assess risk of material misstatements. A detailed set of instructions has been prepared by her office and it has been handed over to assistants in engagement team. These set of instructions include details of extent of checking and nature of audit procedures to be performed regarding purchases, sales, items of income, items of expenditure etc. During the course of execution of above set of instructions, it has been brought to her notice that company is also producing substantial quantities of scrap generated during manufacturing process. However, no instructions have been given to engagement team in this regard. Based on above, answer the following questions: 

C. Taking into account description of planned inquiry and visit, which of the following statements is TRUE?

Kaur & Associates, a sole proprietor firm of Simran Kaur, is offered appointment as auditor of a company engaged in manufacturing of automobile components for the first time. She is fact checking about the integrity of promoters of the company and key managerial persons. Matters such as competence of staff to perform the engagement are also considered by her. The appointment is subsequently accepted by her. She is also taking into account number and location of branches of the company, requirements of Schedule III of Companies Act, 2013 and expected time by which audit has to be completed keeping in view statutory requirements. Initially, she has thought it proper to inquire key employees of the company in procurement and marketing departments and planned for the same. She has also planned to visit three plants of the company. The purpose of planned inquiry and visit is to identify and assess risk of material misstatements. A detailed set of instructions has been prepared by her office and it has been handed over to assistants in engagement team. These set of instructions include details of extent of checking and nature of audit procedures to be performed regarding purchases, sales, items of income, items of expenditure etc. During the course of execution of above set of instructions, it has been brought to her notice that company is also producing substantial quantities of scrap generated during manufacturing process. However, no instructions have been given to engagement team in this regard. Based on above, answer the following questions:

E. The issue of generation of scrap has been overlooked in detailed set of instructions given to engagement team. What should be proper course of action by CA Simran Kaur?

CA Rajan Pillai is heading the engagement team conducting audit of a company. While audit is in progress, consider following issues regarding audit documentation: - (A) Audit programme was prepared assigning responsibilities for different types of works to be performed by team members. The engagement team consists of 4 members Mohit (CA final student), Rohit (CA final student), Shobhit (Paid CA) and CA Rajan Pillai (partner of audit firm). (B) The team has determined materiality for financial statements as a whole. (C) The team has assessed risks of material misstatements to be low. (D) CA Shobhit is responsible for attending inventory count process and putting down its documentation part. (E) During the course of audit, many related party transactions have come to notice. On the basis of above, answer the following questions: -

B. As regards materiality, which of the following statements is most appropriate in context of audit documentation?

CA Rajan Pillai is heading the engagement team conducting audit of a company. While audit is in progress, consider following issues regarding audit documentation: - (A) Audit programme was prepared assigning responsibilities for different types of works to be performed by team members. The engagement team consists of 4 members Mohit (CA final student), Rohit (CA final student), Shobhit (Paid CA) and CA Rajan Pillai (partner of audit firm). (B) The team has determined materiality for financial statements as a whole. (C) The team has assessed risks of material misstatements to be low. (D) CA Shobhit is responsible for attending inventory count process and putting down its documentation part. (E) During the course of audit, many related party transactions have come to notice. On the basis of above, answer the following questions: -

C. As regards team’s assessment that risk of material misstatements is low, which of the following statements is odd one relating to documentation of risk?

CA Rajan Pillai is heading the engagement team conducting audit of a company. While audit is in progress, consider following issues regarding audit documentation: - (A) Audit programme was prepared assigning responsibilities for different types of works to be performed by team members. The engagement team consists of 4 members Mohit (CA final student), Rohit (CA final student), Shobhit (Paid CA) and CA Rajan Pillai (partner of audit firm). (B) The team has determined materiality for financial statements as a whole. (C) The team has assessed risks of material misstatements to be low. (D) CA Shobhit is responsible for attending inventory count process and putting down its documentation part. (E) During the course of audit, many related party transactions have come to notice. On the basis of above, answer the following questions: -

D. CA Shobhit is responsible for attending physical inventory count of the company. Which of the following is usually not true in this regard relating to audit documentation?

M/s SPR & Associates are appointed as auditors of XYZ Ltd. for the Financial Year 2021- 22. • The team consisted of Mr. S, Mr. P, Mr. R all Chartered Accountants and three article assistants. • Mr. S, the engagement partner, briefed the audit staff about various items of financial statement to be checked in detail in case of XYZ Ltd and about various aspects to be covered in the audit of the company. • Mr. S told the audit staff about audit documentation, audit evidence, audit file, completion memorandum and many other things along with relevant Standards of Auditing applicable. • Mr. S also told the staff about the risk of material misstatement that the financial statements are prone to and how it affects the sufficiency and appropriateness of audit evidence. • The audit staff was also apprised about the various audit procedures to be adopted while conducting the audit of XYZ Ltd. • Further discussions were done about various types of risks related to financial statement and the audit work, the related audit procedures, and the risk assessment procedures. • The engagement team is also very particular about the application of various Standards on Auditing applicable in case of XYZ Ltd. Based on the above facts, answer the following: -

Statement 1: -Substantive Procedures alone can provide sufficient and appropriate audit evidence at the assertion level. Statement 2: -Test of Control is audit procedure designed to evaluate the operating effectiveness of controls in prevention, detection and correcting material misstatement at the assertion level.

The overall audit strategy and the audit plan remain the __________ responsibility.