Auditing - Comment the Auditor Is Responsible for Failure to Disclose the Affairs of the Company Kept Out of Books and Concealed from Him

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AUDITING

Q1) H.W.P. Private Ltd. Is having only two members H and W. During the audit of accounts for the year ended 31st March 2000, you as a auditor find that :

a) H, who is in charge of purchases has introduced fictitious purchase bills of Rs 50 lakhs.

b) W, who is in charge of sales has sold goods worth Rs 1 crore without bringing the same in the books of accounts. You raise the matter with H and W in their capacity as directors. They contest that as this is a position known to them and within their own fold, you should not report the same under the Company's Act 1956. Discuss whether the above arguments are acceptable under the Company's Act 1956 for non-reporting?

Q2) As an auditor, how would you react to the following situation? The company produced photocopies of fixed deposit receipts as the original receipts were kept in the iron safe of the director finance who was presently out of the country on company business?

Q3) ABC Private Limited is engaged in the wholesale business of buying and selling silk sarees. The accounts are maintained under the Companies Act from 1st October to 30th September each year. The Chief Accountant of the company is requesting the tax auditor to conduct tax audit U/S 44 AB of the I. T. Act for the period for which accounts have been maintained under the Company's Act. As the tax auditor of ABC Private Limited, how will you react to the Chief Accountant request?

Q4) Comment : The Auditor is responsible for failure to disclose the affairs of the company kept out of books and concealed from him.

Q5) Comment : Balance confirmations from debtors/creditors can only be obtained for balances standing in their accounts at the year end?

Q6) Give your comments and observations on the following many cheques have been received by the auditor on the last day of the year, but not yet...