Auditing and Assurance Model Test Paper - 6 (Answers) | Model Test Papers for CA Intermediate PDF Download

 Page 1


ANSWER S OF MODEL TEST PAPER 6 
INTERMEDIATE: GROUP – II   
PAPER – 5: AUDITING AND ETHICS 
SUGGESTED ANSWERS / HINTS 
Part I - Multiple Choice Questions 
1. (b)
2. (a)
3. (a)
4. (b)
5. (b)
6. (d)
7. (b)
8. (c)
9. (a)
10. (a)
11. (a)
12. (a)
13. (c)
14. (b)
15. (b)
Part II - Descriptive Answers 
1. (a)  In the given situation, company’s management has not provided
complete information regarding instances of non-compliance with laws 
& regulations.   If the auditor has concerns about the competence, 
integrity, ethical values or diligence of management, or about its 
commitment to or enforcement of these, the auditor shall determine the 
effect that such concerns may have on the reliability of representations 
and audit evidence in general.  
The above situation highlights that auditor has obtained audit evidence 
relating to non-compliance with laws which is inconsistent with written 
representations in this respect casting a doubt about reliability of written 
representations. 
470
Page 2


ANSWER S OF MODEL TEST PAPER 6 
INTERMEDIATE: GROUP – II   
PAPER – 5: AUDITING AND ETHICS 
SUGGESTED ANSWERS / HINTS 
Part I - Multiple Choice Questions 
1. (b)
2. (a)
3. (a)
4. (b)
5. (b)
6. (d)
7. (b)
8. (c)
9. (a)
10. (a)
11. (a)
12. (a)
13. (c)
14. (b)
15. (b)
Part II - Descriptive Answers 
1. (a)  In the given situation, company’s management has not provided
complete information regarding instances of non-compliance with laws 
& regulations.   If the auditor has concerns about the competence, 
integrity, ethical values or diligence of management, or about its 
commitment to or enforcement of these, the auditor shall determine the 
effect that such concerns may have on the reliability of representations 
and audit evidence in general.  
The above situation highlights that auditor has obtained audit evidence 
relating to non-compliance with laws which is inconsistent with written 
representations in this respect casting a doubt about reliability of written 
representations. 
470
As per SA 580, “Written Representation”, if written representations are 
inconsistent with other audit evidence, the auditor shall perform audit 
procedures to attempt to resolve the matter. If the matter remains 
unresolved, the auditor shall reconsider the assessment of the 
competence, integrity, ethical values or diligence of management, or of 
its commitment to or enforcement of these, and shall determine the effect 
that this may have on the reliability of representations and audit evidence 
in general.  
If the auditor concludes that the written representations are not reliable, 
the auditor shall take appropriate actions, including determining the 
possible effect on the opinion in the auditor’s report in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report” having regard to the requirement of disclaimer of opinion. 
(b) In the given case, while performing tests of details on a sample in respect
of sales, misstatements have been found by CA Shubham in selected
sample pertaining to the sales transactions of small values. This
indicates observance of deviations and misstatements while performing
tests of controls and tests of details respectively in selected samples.
As per SA 530, “Audit Sampling”, in analysing the deviations and
misstatements identified, the auditor may observe that many have a
common feature, for example, type of transaction, location, product line
or period of time.
In such circumstances, the auditor may decide to identify all items in the
population that possess the common feature, and extend audit
procedures to those items. In addition, such deviations or misstatements
may be intentional, and may indicate the possibility of fraud.
Therefore, the auditor shall investigate the nature and causes of any
deviations or misstatements identified, and evaluate their possible effect
on the purpose of the audit procedure and on other areas of the audit.
In the extremely rare circumstances when the auditor considers a
misstatement or deviation discovered in a sample to be an anomaly, the
auditor shall obtain a high degree of certainty that such misstatement or
deviation is not representative of the population. The auditor shall obtain
this degree of certainty by performing additional audit procedures to
obtain sufficient appropriate audit evidence that the misstatement or
deviation does not affect the remainder of the population.
(c) In the given case, CA Srishti is performing analytical procedures as risk
assessment procedures.
Analytical procedures performed as risk assessment procedures may
identify aspects of the entity of which the auditor was unaware and may
assist in assessing the risks of material misstatement in order to provide
a basis for designing and implementing responses to the assessed risks.
Analytical procedures performed as risk assessment procedures may
include both financial and non-financial information.
471
Page 3


ANSWER S OF MODEL TEST PAPER 6 
INTERMEDIATE: GROUP – II   
PAPER – 5: AUDITING AND ETHICS 
SUGGESTED ANSWERS / HINTS 
Part I - Multiple Choice Questions 
1. (b)
2. (a)
3. (a)
4. (b)
5. (b)
6. (d)
7. (b)
8. (c)
9. (a)
10. (a)
11. (a)
12. (a)
13. (c)
14. (b)
15. (b)
Part II - Descriptive Answers 
1. (a)  In the given situation, company’s management has not provided
complete information regarding instances of non-compliance with laws 
& regulations.   If the auditor has concerns about the competence, 
integrity, ethical values or diligence of management, or about its 
commitment to or enforcement of these, the auditor shall determine the 
effect that such concerns may have on the reliability of representations 
and audit evidence in general.  
The above situation highlights that auditor has obtained audit evidence 
relating to non-compliance with laws which is inconsistent with written 
representations in this respect casting a doubt about reliability of written 
representations. 
470
As per SA 580, “Written Representation”, if written representations are 
inconsistent with other audit evidence, the auditor shall perform audit 
procedures to attempt to resolve the matter. If the matter remains 
unresolved, the auditor shall reconsider the assessment of the 
competence, integrity, ethical values or diligence of management, or of 
its commitment to or enforcement of these, and shall determine the effect 
that this may have on the reliability of representations and audit evidence 
in general.  
If the auditor concludes that the written representations are not reliable, 
the auditor shall take appropriate actions, including determining the 
possible effect on the opinion in the auditor’s report in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report” having regard to the requirement of disclaimer of opinion. 
(b) In the given case, while performing tests of details on a sample in respect
of sales, misstatements have been found by CA Shubham in selected
sample pertaining to the sales transactions of small values. This
indicates observance of deviations and misstatements while performing
tests of controls and tests of details respectively in selected samples.
As per SA 530, “Audit Sampling”, in analysing the deviations and
misstatements identified, the auditor may observe that many have a
common feature, for example, type of transaction, location, product line
or period of time.
In such circumstances, the auditor may decide to identify all items in the
population that possess the common feature, and extend audit
procedures to those items. In addition, such deviations or misstatements
may be intentional, and may indicate the possibility of fraud.
Therefore, the auditor shall investigate the nature and causes of any
deviations or misstatements identified, and evaluate their possible effect
on the purpose of the audit procedure and on other areas of the audit.
In the extremely rare circumstances when the auditor considers a
misstatement or deviation discovered in a sample to be an anomaly, the
auditor shall obtain a high degree of certainty that such misstatement or
deviation is not representative of the population. The auditor shall obtain
this degree of certainty by performing additional audit procedures to
obtain sufficient appropriate audit evidence that the misstatement or
deviation does not affect the remainder of the population.
(c) In the given case, CA Srishti is performing analytical procedures as risk
assessment procedures.
Analytical procedures performed as risk assessment procedures may
identify aspects of the entity of which the auditor was unaware and may
assist in assessing the risks of material misstatement in order to provide
a basis for designing and implementing responses to the assessed risks.
Analytical procedures performed as risk assessment procedures may
include both financial and non-financial information.
471
  Analytical procedures may help identify the existence of unusual 
transactions or events, and amounts, ratios, and trends that might 
indicate matters that have audit implications. Unusual or unexpected 
relationships that are identified may assist the auditor in identifying risks 
of material misstatement, especially risks of material misstatement due 
to fraud. 
Risk assessment procedures are a basis for the identification and 
assessment of risks of material misstatement at the financial statement 
and assertion levels Risk assessment procedures by themselves, 
however, do not provide sufficient appropriate audit evidence on which 
to base the audit opinion. 
Thus, it can be concluded that auditor’s opinion cannot be solely based 
upon such procedures. 
2. (a)  Key areas that should be included in Audit engagement letter are: 
(i)  The objective and scope of the audit of the financial statements;  
(ii)  The responsibilities of the auditor; 
(iii)  The responsibilities of management; 
(iv)  Identification of the applicable financial reporting framework for the 
preparation of the financial statements and  
(v)  Reference to the expected form and content of any reports to be 
issued by the auditor and a statement that there may be 
circumstances in which a report may differ from its expected form 
and content. 
If law or regulation prescribes in sufficient detail the terms of the audit 
engagement, the auditor need not record them in a written agreement, 
except for the fact that such law or regulation applies and that 
management acknowledges and understands its responsibilities. 
(b)  “When the auditor modifies the audit opinion, the auditor shall use the 
heading “Qualified Opinion,” “Adverse Opinion,” or “Disclaimer of 
Opinion,” as appropriate, for the Opinion section.” The auditor should 
consider the following while expressing the opinion in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report”. 
(i) Qualified Opinion 
• The auditor, having obtained su?cient appropriate audit 
evidence, concludes that misstatements, are material, but not 
pervasive or 
• The auditor is unable to obtain su?cient appropriate audit 
evidence on which to base the opinion, but the auditor 
concludes that the possible e?ects on the ?nancial statements 
of undetected misstatements, if any, could be material but not 
pervasive. 
472
Page 4


ANSWER S OF MODEL TEST PAPER 6 
INTERMEDIATE: GROUP – II   
PAPER – 5: AUDITING AND ETHICS 
SUGGESTED ANSWERS / HINTS 
Part I - Multiple Choice Questions 
1. (b)
2. (a)
3. (a)
4. (b)
5. (b)
6. (d)
7. (b)
8. (c)
9. (a)
10. (a)
11. (a)
12. (a)
13. (c)
14. (b)
15. (b)
Part II - Descriptive Answers 
1. (a)  In the given situation, company’s management has not provided
complete information regarding instances of non-compliance with laws 
& regulations.   If the auditor has concerns about the competence, 
integrity, ethical values or diligence of management, or about its 
commitment to or enforcement of these, the auditor shall determine the 
effect that such concerns may have on the reliability of representations 
and audit evidence in general.  
The above situation highlights that auditor has obtained audit evidence 
relating to non-compliance with laws which is inconsistent with written 
representations in this respect casting a doubt about reliability of written 
representations. 
470
As per SA 580, “Written Representation”, if written representations are 
inconsistent with other audit evidence, the auditor shall perform audit 
procedures to attempt to resolve the matter. If the matter remains 
unresolved, the auditor shall reconsider the assessment of the 
competence, integrity, ethical values or diligence of management, or of 
its commitment to or enforcement of these, and shall determine the effect 
that this may have on the reliability of representations and audit evidence 
in general.  
If the auditor concludes that the written representations are not reliable, 
the auditor shall take appropriate actions, including determining the 
possible effect on the opinion in the auditor’s report in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report” having regard to the requirement of disclaimer of opinion. 
(b) In the given case, while performing tests of details on a sample in respect
of sales, misstatements have been found by CA Shubham in selected
sample pertaining to the sales transactions of small values. This
indicates observance of deviations and misstatements while performing
tests of controls and tests of details respectively in selected samples.
As per SA 530, “Audit Sampling”, in analysing the deviations and
misstatements identified, the auditor may observe that many have a
common feature, for example, type of transaction, location, product line
or period of time.
In such circumstances, the auditor may decide to identify all items in the
population that possess the common feature, and extend audit
procedures to those items. In addition, such deviations or misstatements
may be intentional, and may indicate the possibility of fraud.
Therefore, the auditor shall investigate the nature and causes of any
deviations or misstatements identified, and evaluate their possible effect
on the purpose of the audit procedure and on other areas of the audit.
In the extremely rare circumstances when the auditor considers a
misstatement or deviation discovered in a sample to be an anomaly, the
auditor shall obtain a high degree of certainty that such misstatement or
deviation is not representative of the population. The auditor shall obtain
this degree of certainty by performing additional audit procedures to
obtain sufficient appropriate audit evidence that the misstatement or
deviation does not affect the remainder of the population.
(c) In the given case, CA Srishti is performing analytical procedures as risk
assessment procedures.
Analytical procedures performed as risk assessment procedures may
identify aspects of the entity of which the auditor was unaware and may
assist in assessing the risks of material misstatement in order to provide
a basis for designing and implementing responses to the assessed risks.
Analytical procedures performed as risk assessment procedures may
include both financial and non-financial information.
471
  Analytical procedures may help identify the existence of unusual 
transactions or events, and amounts, ratios, and trends that might 
indicate matters that have audit implications. Unusual or unexpected 
relationships that are identified may assist the auditor in identifying risks 
of material misstatement, especially risks of material misstatement due 
to fraud. 
Risk assessment procedures are a basis for the identification and 
assessment of risks of material misstatement at the financial statement 
and assertion levels Risk assessment procedures by themselves, 
however, do not provide sufficient appropriate audit evidence on which 
to base the audit opinion. 
Thus, it can be concluded that auditor’s opinion cannot be solely based 
upon such procedures. 
2. (a)  Key areas that should be included in Audit engagement letter are: 
(i)  The objective and scope of the audit of the financial statements;  
(ii)  The responsibilities of the auditor; 
(iii)  The responsibilities of management; 
(iv)  Identification of the applicable financial reporting framework for the 
preparation of the financial statements and  
(v)  Reference to the expected form and content of any reports to be 
issued by the auditor and a statement that there may be 
circumstances in which a report may differ from its expected form 
and content. 
If law or regulation prescribes in sufficient detail the terms of the audit 
engagement, the auditor need not record them in a written agreement, 
except for the fact that such law or regulation applies and that 
management acknowledges and understands its responsibilities. 
(b)  “When the auditor modifies the audit opinion, the auditor shall use the 
heading “Qualified Opinion,” “Adverse Opinion,” or “Disclaimer of 
Opinion,” as appropriate, for the Opinion section.” The auditor should 
consider the following while expressing the opinion in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report”. 
(i) Qualified Opinion 
• The auditor, having obtained su?cient appropriate audit 
evidence, concludes that misstatements, are material, but not 
pervasive or 
• The auditor is unable to obtain su?cient appropriate audit 
evidence on which to base the opinion, but the auditor 
concludes that the possible e?ects on the ?nancial statements 
of undetected misstatements, if any, could be material but not 
pervasive. 
472
(ii)  Adverse Opinion: The auditor shall express an adverse opinion 
when the auditor, having obtained su?cient appropriate audit 
evidence, concludes that misstatements, individually or in the 
aggregate, are both material and pervasive to the ?nancial 
statements. 
(iii)  Disclaimer of Opinion: The auditor shall disclaim an opinion when 
he is unable to obtain su?cient appropriate audit evidence on which 
to base the opinion, and he concludes that the possible e?ects on 
the ?nancial statements of undetected misstatements, if any, could 
be both material and pervasive. 
(c) In the given situation, Standards on Assurance Engagements will be 
applicable and such type of assurance engagement provides only a 
“moderate” level of assurance. 
 In assurance reports involving prospective financial information, the 
practitioner obtains sufficient appropriate evidence to the effect that 
management’s assumptions on which the prospective financial 
information is based are not unreasonable, the prospective financial 
information is properly prepared on the basis of the assumptions and it 
is properly presented and all material assumptions are adequately 
disclosed. 
“Historical financial information” and “Prospective financial information.” 
The former relates to information expressed in financial terms of an entity 
about economic events, conditions or circumstances occurring in past 
periods. The latter relates to financial information based on assumptions 
about occurrence of future events and possible actions by an entity. 
Therefore, historical financial information is rooted in past events which 
have already occurred whereas prospective financial information is 
related to future events.  
3. (a)  Accounts regularized near the Balance Sheet Date:The asset 
classification of borrower accounts where a solitary or a few credits are 
recorded before the balance sheet date should be handled with care and 
without scope for subjectivity. Where the account indicates inherent 
weakness on the basis of the data available, the account should be 
deemed as NPA.  
The auditor should check for sample transactions immediately before the 
closing of the financial year and immediately after the closing of the 
financial year to get a knowledge of the objective behind the transactions 
if they have any relation to each other in the borrower accounts or if 
any/some transactions are being reversed during the first few days after 
closing which might show an arrangement to prevent the Borrower 
account(s) from slipping into the NPA category.  
In the given case of Sidharth Industries, a payment of ?10,00,000 was 
made on March 29, 2024 reducing the outstanding loan balance to 
`40,00,000. and subsequently reversed by ?8,00,000 on April 4, 2024. 
Thus, Mahavir and Associates should carefully assess the classification 
473
Page 5


ANSWER S OF MODEL TEST PAPER 6 
INTERMEDIATE: GROUP – II   
PAPER – 5: AUDITING AND ETHICS 
SUGGESTED ANSWERS / HINTS 
Part I - Multiple Choice Questions 
1. (b)
2. (a)
3. (a)
4. (b)
5. (b)
6. (d)
7. (b)
8. (c)
9. (a)
10. (a)
11. (a)
12. (a)
13. (c)
14. (b)
15. (b)
Part II - Descriptive Answers 
1. (a)  In the given situation, company’s management has not provided
complete information regarding instances of non-compliance with laws 
& regulations.   If the auditor has concerns about the competence, 
integrity, ethical values or diligence of management, or about its 
commitment to or enforcement of these, the auditor shall determine the 
effect that such concerns may have on the reliability of representations 
and audit evidence in general.  
The above situation highlights that auditor has obtained audit evidence 
relating to non-compliance with laws which is inconsistent with written 
representations in this respect casting a doubt about reliability of written 
representations. 
470
As per SA 580, “Written Representation”, if written representations are 
inconsistent with other audit evidence, the auditor shall perform audit 
procedures to attempt to resolve the matter. If the matter remains 
unresolved, the auditor shall reconsider the assessment of the 
competence, integrity, ethical values or diligence of management, or of 
its commitment to or enforcement of these, and shall determine the effect 
that this may have on the reliability of representations and audit evidence 
in general.  
If the auditor concludes that the written representations are not reliable, 
the auditor shall take appropriate actions, including determining the 
possible effect on the opinion in the auditor’s report in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report” having regard to the requirement of disclaimer of opinion. 
(b) In the given case, while performing tests of details on a sample in respect
of sales, misstatements have been found by CA Shubham in selected
sample pertaining to the sales transactions of small values. This
indicates observance of deviations and misstatements while performing
tests of controls and tests of details respectively in selected samples.
As per SA 530, “Audit Sampling”, in analysing the deviations and
misstatements identified, the auditor may observe that many have a
common feature, for example, type of transaction, location, product line
or period of time.
In such circumstances, the auditor may decide to identify all items in the
population that possess the common feature, and extend audit
procedures to those items. In addition, such deviations or misstatements
may be intentional, and may indicate the possibility of fraud.
Therefore, the auditor shall investigate the nature and causes of any
deviations or misstatements identified, and evaluate their possible effect
on the purpose of the audit procedure and on other areas of the audit.
In the extremely rare circumstances when the auditor considers a
misstatement or deviation discovered in a sample to be an anomaly, the
auditor shall obtain a high degree of certainty that such misstatement or
deviation is not representative of the population. The auditor shall obtain
this degree of certainty by performing additional audit procedures to
obtain sufficient appropriate audit evidence that the misstatement or
deviation does not affect the remainder of the population.
(c) In the given case, CA Srishti is performing analytical procedures as risk
assessment procedures.
Analytical procedures performed as risk assessment procedures may
identify aspects of the entity of which the auditor was unaware and may
assist in assessing the risks of material misstatement in order to provide
a basis for designing and implementing responses to the assessed risks.
Analytical procedures performed as risk assessment procedures may
include both financial and non-financial information.
471
  Analytical procedures may help identify the existence of unusual 
transactions or events, and amounts, ratios, and trends that might 
indicate matters that have audit implications. Unusual or unexpected 
relationships that are identified may assist the auditor in identifying risks 
of material misstatement, especially risks of material misstatement due 
to fraud. 
Risk assessment procedures are a basis for the identification and 
assessment of risks of material misstatement at the financial statement 
and assertion levels Risk assessment procedures by themselves, 
however, do not provide sufficient appropriate audit evidence on which 
to base the audit opinion. 
Thus, it can be concluded that auditor’s opinion cannot be solely based 
upon such procedures. 
2. (a)  Key areas that should be included in Audit engagement letter are: 
(i)  The objective and scope of the audit of the financial statements;  
(ii)  The responsibilities of the auditor; 
(iii)  The responsibilities of management; 
(iv)  Identification of the applicable financial reporting framework for the 
preparation of the financial statements and  
(v)  Reference to the expected form and content of any reports to be 
issued by the auditor and a statement that there may be 
circumstances in which a report may differ from its expected form 
and content. 
If law or regulation prescribes in sufficient detail the terms of the audit 
engagement, the auditor need not record them in a written agreement, 
except for the fact that such law or regulation applies and that 
management acknowledges and understands its responsibilities. 
(b)  “When the auditor modifies the audit opinion, the auditor shall use the 
heading “Qualified Opinion,” “Adverse Opinion,” or “Disclaimer of 
Opinion,” as appropriate, for the Opinion section.” The auditor should 
consider the following while expressing the opinion in accordance with 
SA 705, “Modifications to the Opinion in the Independent Auditor’s 
Report”. 
(i) Qualified Opinion 
• The auditor, having obtained su?cient appropriate audit 
evidence, concludes that misstatements, are material, but not 
pervasive or 
• The auditor is unable to obtain su?cient appropriate audit 
evidence on which to base the opinion, but the auditor 
concludes that the possible e?ects on the ?nancial statements 
of undetected misstatements, if any, could be material but not 
pervasive. 
472
(ii)  Adverse Opinion: The auditor shall express an adverse opinion 
when the auditor, having obtained su?cient appropriate audit 
evidence, concludes that misstatements, individually or in the 
aggregate, are both material and pervasive to the ?nancial 
statements. 
(iii)  Disclaimer of Opinion: The auditor shall disclaim an opinion when 
he is unable to obtain su?cient appropriate audit evidence on which 
to base the opinion, and he concludes that the possible e?ects on 
the ?nancial statements of undetected misstatements, if any, could 
be both material and pervasive. 
(c) In the given situation, Standards on Assurance Engagements will be 
applicable and such type of assurance engagement provides only a 
“moderate” level of assurance. 
 In assurance reports involving prospective financial information, the 
practitioner obtains sufficient appropriate evidence to the effect that 
management’s assumptions on which the prospective financial 
information is based are not unreasonable, the prospective financial 
information is properly prepared on the basis of the assumptions and it 
is properly presented and all material assumptions are adequately 
disclosed. 
“Historical financial information” and “Prospective financial information.” 
The former relates to information expressed in financial terms of an entity 
about economic events, conditions or circumstances occurring in past 
periods. The latter relates to financial information based on assumptions 
about occurrence of future events and possible actions by an entity. 
Therefore, historical financial information is rooted in past events which 
have already occurred whereas prospective financial information is 
related to future events.  
3. (a)  Accounts regularized near the Balance Sheet Date:The asset 
classification of borrower accounts where a solitary or a few credits are 
recorded before the balance sheet date should be handled with care and 
without scope for subjectivity. Where the account indicates inherent 
weakness on the basis of the data available, the account should be 
deemed as NPA.  
The auditor should check for sample transactions immediately before the 
closing of the financial year and immediately after the closing of the 
financial year to get a knowledge of the objective behind the transactions 
if they have any relation to each other in the borrower accounts or if 
any/some transactions are being reversed during the first few days after 
closing which might show an arrangement to prevent the Borrower 
account(s) from slipping into the NPA category.  
In the given case of Sidharth Industries, a payment of ?10,00,000 was 
made on March 29, 2024 reducing the outstanding loan balance to 
`40,00,000. and subsequently reversed by ?8,00,000 on April 4, 2024. 
Thus, Mahavir and Associates should carefully assess the classification 
473
of Sidharth Industries’ Account, and determine if the payment and 
reversal transactions indicate an attempt to prevent the account from 
slipping into the NPA category. If yes, the account should be classified 
as an NPA in compliance with regulatory guidelines.  
(b)  The following points need to be considered while auditing income and 
expenditure items of a club: -    
(1)  Entrance Fee: Vouch the receipt on account of entrance fees with 
members’ applications, counterfoils issued to them, as well as on a 
reference to minutes of the Managing Committee. 
(2)  Subscriptions: Vouch members’ subscriptions with the counterfoils 
of receipt issued to them, trace receipts for a selected period to the 
Register of Members; also reconcile the amount of total 
subscriptions due with the amount collected and that outstanding. 
(3)  Arrears of Subscriptions: Ensure that arrears of subscriptions for 
the previous year have been correctly brought over and arrears for 
the year under audit and subscriptions received in advance have 
been correctly adjusted. 
(4)  Arithmetical accuracy: - Check totals of various columns of the 
Register of members and tally them across. 
(5)  Irrecoverable Member Dues :- See the Register of Members to 
ascertain the Member’s dues which are in arrear and enquire 
whether necessary steps have been taken for their recovery; the 
amount considered irrecoverable should be mentioned in the Audit 
Report. 
(6)  Pricing: Verify the internal check as regards members being 
charged with the price of foodstuffs and drinks provided to them 
and their guests, as well as, with the fees chargeable for the special 
services rendered, such as billiards, tennis, etc. 
(7)  Member Accounts: Trace debits for a selected period from 
subsidiary registers maintained in respect of supplies and services 
to members to confirm that the account of every member has been 
debited with amounts recoverable from him. 
(8)  Purchases: Vouch purchase of sports items, furniture, crockery, 
etc. and trace their entries into the respective inventory registers. 
(9)  Margins earned: Vouch purchases of foodstuffs, cigars, wines, etc., 
and test their sale price so as to confirm that the normal rates of 
gross profit have been earned on their sales. The inventory of 
unsold provisions and stores, at the end of year, should be verified 
physically and its valuation checked. 
(10)  Management Powers: Examine the financial powers of the 
secretary and, if these have been exceeded, report specific case 
for confirmation by the Managing Committee. 
  
474