ASSURANCE

Time Allowed - 2 hours

Total marks – 100

[N.B. – The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take
account of the quality of language and of the manner in which the answers are presented. Different parts, if any,
of the same question must be answered in one place in order of sequence.]

Marks

1. a) What is the meaning of auditor’s normal expression of ‘true and fair view’ in any audit report
which denotes a reasonable assurance? 5
b) ‘Certificate of absolute assurance or correctness’ cannot be provided due to some limitations.
What are those limitations? 5
c) Define assurance engagement in an audit function. 3
d) In an audit engagement, the engagement team does so many things following the defined
methodology the Engagement Partner approves. All these are done and finally a suitable report
is issued as per prescription of International Standards on Auditing. You are required to draft an
unqualified audit report as per ISA 700 applicable for a company. 10

2. a) Define control activities. Explain the types of control activities with examples. 10
b) What will be the tests of Controls in recording wages and salaries and any deductions thereof? 9
c) Define CAAT. What are the main types of CAAT/tools which are being used while conducting
an audit? 6

3. The auditor should obtain written representations from management on matters relating to the financial
statements when other appropriate audit evidences collected may not be felt to be sufficient.
a) How does Letter of Representation support as audit evidence? 5
b) What actions should the auditor take when no other evidence is available and only internal
confirmations form significant basis for opinion? 5
c) What actions should the auditor take when management is reluctant to provide
representations/internal confirmations? 5
d) What should the auditors do when they receive management representations? 5

4. a) Explain materiality in the context of an audit, from the point of view of an auditor. 5
b) How does materiality assessment and fixation help to control an audit? 5
c) What does the term ‘Subsequent Events’ mean? 3

5. Like all other professionals, accountants are also expected to work under certain ethical codes. In
the light of such expectation, please write your understanding on the followings:
a) ABC & Co. Chartered Accountants has accepted the appointment as auditor of Petro Chemical
Ltd. (PCL), a listed company whose shares are traded through both Stock Exchanges. The PCL
being a good company, the related shares enjoy very high demand in the market. The younger
brother of ABC’s Engagement Manager on this engagement is a regular trader of shares in the
secondary market.
Please write about the firm’s expected standpoint in such an engagement. 5
b) Give an account of the available threats as identified in the IESBA Code of Ethics that
accountants should bear in their minds while at work. 7
c) Write briefly about the fundamental principles as per IESBA Code of Ethics. 7

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