Group 17: Other Audits

Sanction is not the same as a budget A municipality's supplied budget authorises Rs 40 lakh for drainage. The engineer buys a Rs 6 lakh vehicle charged to that head. There is no authorised transfer or vehicle sanction. Management says the purchase is valid because total spending of Rs 38 lakh remains below Rs 40 lakh. No State-specific legal rule is supplied. Required: Apply the entity-specific audit principles to these facts. (3 marks)

A property register is missing from the revenue test A local body's annual property-tax demand list totals Rs 90 lakh. Cash receipts are Rs 76 lakh and authorised rebates Rs 4 lakh. Arrears are recorded at Rs 6 lakh. Forty occupied properties appear in the municipal property register but not in the demand list. Their correct tax is not supplied. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Completed toilets, unusable toilets and claimed grant compliance A municipality receives Rs 100 lakh under a supplied scheme for 200 public toilets at a maximum reimbursable cost of Rs 50000 each. Its utilisation certificate claims all 200 completed and functional. Work records support 180 constructed; joint inspection finds 150 functional,30 without water and 20 not built. Rs 8 lakh of the reported Rs 100 lakh expenditure lacks invoices or alternative evidence. Conditions require functional delivery and supported expenditure; they do not specify an automatic penalty formula. Required: Apply the entity-specific audit principles to these facts. (10 marks)

A promise is booked as a grant receivable An NGO books Rs 30 lakh grant income on a donor's unsigned expression of interest. A later signed agreement covers only Rs 18 lakh, conditional on an approved programme. At year-end neither programme approval nor reasonable assurance of receipt/condition compliance is available. Cash received is nil. The exercise applies ICAI'sNPO guide recognition principles. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A management reserve is called a donor restriction An NGO receives Rs 12 lakh expressly restricted by a donor to a nutrition project. Its board separately earmarks Rs 5 lakh of unrestricted funds for a future office move. Accounts merge both amounts into a single externally restricted fund. The exercise uses the NPO guide's fund definitions; no tax exemption is assumed. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Grant cash, eligible programme cost and duplicate reimbursement An NGO's supplied donor agreement provides Rs 24 lakh for a training programme. Only delivered training costs incurred during the year are eligible. The report charges Rs 18 lakh:Rs 12 lakh of evidenced delivered training,Rs 3 lakh advance for next year's courses,Rs 2 lakh administration not allowed by this donor and Rs 1 lakh invoice also claimed against another donor. All Rs 18 lakh is recorded as expense and used grant income. The bank has Rs 6 lakh of grant cash left. Apply the guide's separate revenue-grant income/expense presentation and the supplied refundable-unspent condition; the agreement prohibits duplicate recovery. Required: Apply the entity-specific audit principles to these facts. (10 marks)

A bookkeeping task is presented as a full audit A sole proprietor agrees orally that an accountant will prepare accounts and check only cash transactions. The proprietor later asks for a document titled"Full audit of the business"for a bank. Inventory, liabilities and credit sales were not examined. Required: Apply the entity-specific audit principles to these facts. (3 marks)

One partner changes profit sharing without the others The written deed givesA and Bprofits in 3:2, permits Rs 2 lakh salary to A and requires firm tax provision before division. Profit before that salary and a supplied Rs 1 lakh firm tax is Rs 13 lakh. A allocates Rs 7 lakh to himself and Rs 5 lakh to B after deducting only tax. No amended deed exists. Tax deductibility is not asked. Required: Apply the entity-specific audit principles to these facts. (5 marks)

The active partner borrows beyond the deed A firm's deed limits borrowing to Rs 10 lakh without both partners' written approval. The active partner takes a Rs 16 lakh loan without the second signature and keeps it outside the ledger because"it is unauthorised". Bank confirmation and bank receipt prove the firm's actual obligation and receipt. No cancellation or discharge exists. Required: Apply the entity-specific audit principles to these facts. (5 marks)

An agreed LLP audit is replaced by partner signatures The LLP partners elect to have the year's accounts audited and approve an engagement. The designated partners sign the statement of account and solvency and claim their signatures replace the independent audit. The audit firm has received only a profit total, with no contribution or withdrawal schedules. Mandatory threshold applicability is deliberately not supplied. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A single closing balance hides withdrawals An LLP shows partner C contribution of Rs 20 lakh at both year-ends. During the year C introduced Rs 8 lakh and withdrew Rs 8 lakh. C also has an agreed Rs 1.5 lakh remuneration credited to a separate current account. Notes show only "no change in contribution" and omit the current account. The exercise uses the ICAI LLP Guidance Note partner-fund disclosure format. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A street collection has only a volunteer estimate A charity uses numbered sealed collection boxes. One box is opened by a volunteer alone before the official count; its seal and collection sheet are missing. The charity books Rs 18000 using that volunteer's estimate. Other boxes were jointly counted and banked. Required: Apply the entity-specific audit principles to these facts. (3 marks)

A charity concert is reported net and omits direct-bank tickets A charity prints 1000 numbered concert tickets at Rs 500. Records show 120 returned unsold and 80 authorised complimentary tickets. The remaining 800 were sold; payment evidence supports 700 tickets paid in cash and 100 paid directly to bank. The organiser reports Rs 350000 cash less Rs 60000 expenses, and the charity records Rs 290000 net income only. Vouchers support Rs 45000 of those expenses; the remaining Rs 15000 lacks evidence. No refund or tax is involved. The exercise requires gross event receipts and separate event expenses. Required: Apply the entity-specific audit principles to these facts. (10 marks)

A school records every deposit as fee income A school receives Rs 9 lakh from students:Rs 6 lakh for current tuition,Rs 1 lakh for next year's tuition and Rs 2 lakh refundable caution deposits. All Rs 9 lakh is tuition income. No amount has become non-refundable and the exercise uses accrual accounting. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Concession authority is not supported by a friendly note The school's written rules allow fee concessions only after scholarship-committee approval. The clerk gives concessions totaling Rs 240000 using unsigned notes from parents. The head says hardship seems genuine and asks the auditor to mark the whole amount "approved". No later approval is supplied. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A prize endowment is used to fund the hostel A college receives Rs 20 lakh under a deed requiring principal to remain invested, annual income to fund merit prizes and unspent prize income to be added to the investment. During the year it earns Rs 160000 interest and pays Rs 100000 prizes. It transfers Rs 300000 of principal to hostel repairs. The remaining Rs 60000 prize income is left in the general bank account and described as "available surplus". College general funds separately owe Rs 50000 for delivered hostel food at year-end, but no liability is recorded. The deed and accrual basis are supplied. Required: Apply the entity-specific audit principles to these facts. (10 marks)

Admissions occur without bills A hospital's attendance register records 20 chargeable day-care treatments. The billing system has invoices for only 16. Management says checking the 16 invoices back to attendance proves complete revenue. The correct tariff for the four omitted treatments is not yet verified. Required: Apply the entity-specific audit principles to these facts. (3 marks)

Expired medicine is counted as fully usable stock The hospital has 500 vials at recorded cost Rs 200 each. Physical count finds 500, but 80 have expired and may no longer be administered; no return credit or salvage value is available. Another 40 require cold storage, but temperature logs are missing. The supplied valuation criterion excludes expired stock and requires further assessment of uncertain usability. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Donated equipment is personally registered A donor funds a ventilator for the hospital's intensive-care unit with a condition that it belongs to the hospital and is used there. Invoice/title is in the medical director's personal name and the machine is kept at his private clinic. Accounts show a hospital-owned intensive-care asset based only on the donor receipt. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A subscription ledger carries forward the wrong arrears A club has Rs 80000 opening subscription arrears. Current-year subscriptions demanded are Rs 600000. Collections applied to current dues are Rs 520000 and to opening arrears Rs 50000. The supplied rules permit an authorised Rs 10000 write-off of old arrears, which is recorded. Next-year subscription advances Rs 30000 are wrongly credited against this year's demand. The club reports nil closing dues. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Members consume goods without account debits A club's restaurant records show Rs 90000 food served to members and their guests on signed orders, all chargeable under its tariff. Only Rs 64000 reaches member accounts. The bar margin also falls sharply, but no count, wastage or pricing analysis has been performed. The secretary says the margin fall proves Rs 26000 theft. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A free-pass list replaces ticket reconciliation A cinema admits patrons through QR tickets but permits a supervisor to create unlogged complimentary codes. Paid ticket settlement reconciles to bank. Management concludes all admissions are controlled because cash agrees. Required: Apply the entity-specific audit principles to these facts. (3 marks)

The distributor advance is never adjusted A cinema pays Rs 8 lakh advance to a distributor. The film has already run and the signed contract establishes Rs 5 lakhfinalhire, leaving Rs 3 lakh refundable. Accounts retain the entire Rs 8 lakh advance and omit film-hire expense. The distributor disputes the refund and gives no payment assurance. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Cash price and total instalments are confused A hire-purchase financier's signed contract identifies equipment, a Rs 4 lakh cash price,Rs 1 lakh initial payment andthree Rs 1.2 lakh instalments. Total contract price is Rs 4.6 lakh. Management books all Rs 3.6 lakh future instalments as principal receivable and all Rs 60000 financeincome immediately. The supplied accounting policy allocates finance income over the contract term as earned; no early maturity has occurred. Required: Apply the entity-specific audit principles to these facts. (5 marks)

The lessor uses legal title as its only classification test A leasing company applies AS 19 in this exercise. Its supplied criteria assess substance and transfer of substantially all risks and rewards. An equipment lease covers 9 of 10 years economic life, rentals' present value is 98% of fair value and equipment can be used only by this lessee without major modification. Legal title remains with the lessor. Management calls it operating solely for that reason. Required: Apply the entity-specific audit principles to these facts. (5 marks)

Housekeeping occupancy disagrees with guest bills A hotel housekeeping report lists 40 occupied rooms for a night. Front-office bills cover 34 at Rs 3000 each. Two other rooms are documented staff stays without charge. Four have guests and no bills. No discount, complimentary approval or alternative billing exists for those four; the supplied tariff is Rs 3000 perroom. Required: Apply the entity-specific audit principles to these facts. (5 marks)

The kitchen order trail, booking commission and wedding deposit A hotel outlet receives 200 authorised kitchen orders at a supplied Rs 800 selling price; 10 are cancelled with evidence and 20 are authorised staff meals without charge. POS has 150 chargeable bills and cash/bank collections Rs 120000, all matched to those bills. There is no discount or other valid omission. A travel agent also sends Rs 90000 net for rooms whose gross bill is Rs 100000 and whose contract permits 10% commission. Separately, Rs 50000 received for next year's wedding is credited to current hall income. Apply gross room/outlet revenue and separate commission and advance-liability presentation, with no tax or refund complication. Required: Apply the entity-specific audit principles to these facts. (10 marks)

Casual staff signatures repeat for absent workers A hotel pays cash wages to 40 casualworkers. Attendance records support 32; eight signatures are identical and no supervisor certifies their shifts. The manager asks the auditor to accept the payroll because busy-season casual staff rarely keep records. No proof that the eight actually worked exists. Required: Apply the entity-specific audit principles to these facts. (5 marks)

A national name hides a State-law question An organisation calls itself "National Welfare Trust". Its auditor uses one State's public-trust accounts format for every branch and the IndianTrustsAct 1882 as a universal fallback. The registration instrument, legal form, relevant State enactment and branch requirements have not been examined. Management also assumes automatic income-tax exemption from the word "welfare". Required: Apply the entity-specific audit principles to these facts. (5 marks)

A society's restricted fund, personal payment and missing papers A society's supplied bylaws require two committee approvals for payments above Rs 25000 and project-specific donor accounting. It receives Rs 10 lakh for library books, pays Rs 7 lakh to the approved supplier for delivered books,Rs 1 lakh advance for future books and Rs 80000 for a committee member's personal vehicle repair. The Rs 80000 payment has onlyone approval. Accounts report Rs 880000 library expense and stateall payments authorised. Remaining bank balance is Rs 120000. No recovery, donation variation or advance delivery occurred. The exercise uses accrual accounting and donor terms requiring library use and refund of amounts not eligible; no jurisdiction-specific mandatory form is assumed. Required: Apply the entity-specific audit principles to these facts. (10 marks)