Clear CA Inter with Shubham Keswani

Focus matters! You get what you focus on. More you focus on getting positive results. Gaining knowledge. Doing well in life. Your actions will be in that direction. These actions will get you positive results ✅ Just go with the flow!! Sab achha hoga ❤️ Khushi se padhenge, Tabhi aage badhenge!!

5. While performing detailed audit procedures, including verification of cash payments, examination of vouchers, and obtaining management representations, CA Laxman faced limitations in conclusively verifying certain transactions relating to prior years due to the absence of external supporting evidence, the passage of time, and the possibility of collusion involving past management personnel. Some audit evidence obtained was persuasive rather than conclusive, and audit sampling had to be applied considering time and cost constraints. Which of the following statements best explains why an auditor may fail to detect certain material misstatements even after properly planning and performing the audit? a. Audit failures arise only due to negligence of the auditor b. Management representations eliminate audit risk c. Audits are subject to inherent limitations resulting in unavoidable detection risk d. Compliance with Standards on Auditing ensures complete detection of misstatements

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Aaram se read kro..main nap leke aata hu!

5. While planning the audit and performing preliminary risk assessment, CA Laxman observed that the company had recorded unusually high cash payments during the year. Many of these payments were supported only by internal vouchers lacking adequate corroborative or third-party evidence. On further review of past records, similar patterns of cash expenditure were noticed over the preceding four to five years. Inquiry revealed that the Finance Manager, who retired in March 2025, had exercised significant and centralized control over cash payments for several years. There was inadequate segregation of duties, with authorization, recording and custody of cash largely concentrated with the same individual. These circumstances indicated weaknesses in internal control and increased the risk of material misstatement, particularly due to possible misappropriation through inflated expenditure. During substantive audit procedures, the audit team also noted that the balance sheet as at 31st March 2025 disclosed a cash balance of 7 crores, despite the company having availed a bank loan of 2 crores during the year. The existence of such a large cash balances alongside external borrowings appeared unusual and required deeper examination of the genuineness, existence, and utilization of cash balances. While planning the audit of Best Limited, CA Laxman observes that the Finance Manager exercised significant control over cash payments for several years. Which of the following should be the most appropriate audit response in such a situation? a. Reduce audit procedures since the Finance Manager has retired b. Increase professional skepticism and modify the nature and extent of audit procedures c. Rely primarily on management explanations and written representations d. Ignore past-period transactions as they are outside the scope of the current audit

3. A practicing Chartered Accountant is appointed by a company to perform certain agreed-upon procedures relating to its trade payables. Such agreed upon procedures include verifying listing with books of accounts, sending confirmation letters and reporting factual discrepancies to company management. Which of statements is correct in this context? a. The practicing CA shall perform work in accordance with Standards on Related Services and SA 220. b. The practicing CA shall perform work in accordance with Standards on Related Services and SQC 1. c. The practicing CA shall perform work in accordance with Standards on Auditing including SA 220. d. The practicing CA shall perform work in accordance with Standards on Assurance Engagements and SQC 1.

2. M/s DEF & Associates have been appointed as the statutory auditor of JKL Ltd. for the first time for the financial year 2025-26. The engagement partner, CA D, is briefing his engagement team about the need of Engagement Standards and Quality Control Standards in the areas of financial statement audits and in other types of assurance services. Out of the following which one point is not correct about why standards are needed? a. Standards equip professional accountants with professional knowledge & Skill. b. Standards ensure audit quality. c. Standards promote uniformity as audit of financial statements is carried out following these Standards. d. Standards ensure carrying out of audit against established benchmarks at par with local practices.