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AUDITING
1. Discuss the advantages and disadvantages of balance sheet audit. Also state the
auditor’s position in relation to balance sheet audit.
2. Draft a form of questionnaire, that you would use to determine the effectiveness of
the client’s internal control over payrolls.
3. An enterprise purchases an item of machinery on 1.4.2002 for Rs. 100,000. It
depreciates this item at the rate of 10% per annum on straight-line basis. On
1.4.2005, the enterprise decides to change the method of depreciation from straight-
line to written down value. The applicable rate under the new method is 15%. How
should the enterprise give effect to this change in the method of depreciation?
4. Under what circumstances, an auditor can be appointed by the following:
(a) The Board of Directors
(b) The shareholders
(c) The central government
5. While examining the accounts of a company, you find the following items on credit
side of profit and loss account:
(a) Profit on revaluation of land.
(b) Bounties received from central government
(c) Excess depreciation charged in the previous year now written back
(d) Unclaimed dividend
Would you have any objection as auditor in passing the accounts of the company?
State with reasons.
6. What is a Clean Report? Give a specimen of a qualified report of the auditor.
7. What is investigation? Distinguish investigation from audit.
8. Define ‘Professional Misconduct’ and state how professional misconduct and
professional ethics are related. Give few instances of professional misconduct with
case decisions.
9. What special points should the auditor consider in conducting audit in the following
institutions (a) Charitable institution (b) Educational institution

2. 10. State the controls that can be applied over inputs and processing of data in a
computerized accounting environment.
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