Group 8: SA 500 / 501 / 505 / 510

30 original descriptive cases. Descriptive mix: 7 at 3 marks, 16 at 5 marks, 7 at 10 marks.

Original practice, not ICAI questions, official suggested answers or an official examiner scheme. Equivalent correct work is credited within the stated caps. Public practice availability is not full official question-bank completion.

Source hold: module p78 wording is not taught as automatic projection of confirmation exceptions; SA505 para14 requires investigation.

AUD-G08-D001 · 3 marks

More irrelevant evidence is not better evidence A trainee obtains 200 receipts for subsequent customer collections to prove inventory valuation. The trainee says quantity makes the evidence appropriate. Required: Explain sufficiency, appropriateness and the objective mismatch. (3 marks)
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MarksCreditCase application / answer
1Sufficiency concerns evidence quantity, affected by risk and quality.Two hundred documents do not independently establish that enough useful evidence was obtained.
1Appropriateness concerns relevance and reliability.Collection receipts must be evaluated for the actual assertion and purpose, not treated as appropriate merely because numerous.
1Evidence for one assertion is not a substitute for another.Customer collections do not establish inventory valuation in this case; obtain relevant reliable evidence for the inventory objective.

Non-credit errors

  • No quantity cures an irrelevant evidence objective.
Official ICAI concept source

AUD-G08-D002 · 5 marks

Outside the entity does not mean beyond doubt A supplier statement contradicts the entity ledger. The statement was prepared by a person with no knowledge of the disputed transactions. Management asks the auditor to accept it automatically because it is external. Required: Explain source, knowledge, internal controls, contradictory evidence and the response. (5 marks)
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MarksCreditCase application / answer
1Independent external sources generally increase reliability, with exceptions.External origin is not an unconditional reliability hierarchy.
1Source knowledge and circumstances matter.Investigate whether the preparer can support the disputed transaction information.
1Internal evidence reliability depends partly on relevant preparation/maintenance controls.Evaluate the ledger and supporting records rather than dismiss all internal information automatically.
1Contradictory information is part of audit evidence.Do not erase the discrepancy simply by selecting the preferred source.
1Determine necessary additions/modifications and effects on other audit aspects.Obtain suitable corroboration and investigate the difference; no fraud, quantified adjustment or opinion is established yet.

Non-credit errors

  • No external source always wins despite reliability doubts.
Official ICAI concept source

AUD-G08-D003 · 5 marks

An ageing summary lacks the detail the objective needs The entity supplies an annual total of outstanding invoices for a test requiring invoice dates and customer-specific amounts. The total agrees with the ledger, but underlying coverage and dates are untested. Required: Explain accuracy, completeness, precision/detail, intended purpose and the evidence limit. (5 marks)
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MarksCreditCase application / answer
1Evaluate accuracy as necessary for the purpose.Agreement of a total does not establish that individual amounts/dates are correct.
1Evaluate completeness as necessary for the purpose.Investigate whether all relevant invoices/customers are included, not only whether the supplied total matches.
1Evaluate sufficient precision and detail.An annual aggregate lacks the dates and customer-level information this test needs.
1Obtain information and validation aligned with the actual audit objective.Request a suitable detailed schedule and corroborate relevant data against supported records.
1A reconciled total is not all-purpose reliable evidence.Document what it supports and what remains untested; proposed validation is not evidence already obtained.

Non-credit errors

  • No aggregate agreement proves every underlying date or objective.
Official ICAI concept source

AUD-G08-D004 · 5 marks

Management's expert is not the auditor's conclusion A specialist engaged by management supplies a material property valuation. Fees depend partly on achieving management's target value, and the report does not explain its assumptions or source data. The trainee proposes using the signed value without further work. Required: Explain five applied evaluation points under SA500. (5 marks)
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MarksCreditCase application / answer
1Evaluate competence and capabilities to the extent necessary given significance.Assess relevant expertise and ability to perform this valuation, not merely the signature.
1Evaluate objectivity.Investigate the target-linked fee and management influence without presuming the value is necessarily wrong.
1Understand the expert's work.Obtain its nature, scope, objectives, methods and relevant assumptions rather than rely on the unexplained number.
1Evaluate appropriateness for the relevant assertion.Assess relevant findings, assumptions/methods and source-data support for the valuation purpose.
1Determine further evidence needed and retain auditor judgement.Resolve gaps with appropriate work; the expert's report does not automatically provide sufficient appropriate evidence or select an opinion.

Non-credit errors

  • No signed expert value is automatically sufficient evidence.
Official ICAI concept source

AUD-G08-D005 · 10 marks

Count attendance is more than standing in the warehouse Material inventory is counted on 28 March for 31 March statements. Management's instructions do not control used count sheets, goods move during counting and final records differ from the count results. The auditor merely watches one aisle and plans no work on movements after the count. No actual misstatement amount is supplied. Required: (a) Explain four attendance activities, applied to the facts. (4 marks) (b) Explain final-record and intervening-movement work. (3 marks) (c) State three scope/evidence boundaries. (3 marks)
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MarksCreditCase application / answer
1Evaluate management's recording/control instructions and procedures.Investigate used count sheets and movement controls rather than treat attendance as passive presence.
1Observe actual performance of the count procedures.Check how staff apply instructions and handle moving goods within relevant scope.
1Inspect inventory for existence and condition.A view of one aisle does not establish all relevant inventory or valuation.
1Perform relevant test counts.Obtain count evidence rather than merely watch; choose appropriate directions and items for the objective.
1Test whether final inventory records accurately reflect actual count results.Reconcile and investigate the differences between count results and final records.
1Obtain evidence that changes from count date to statement date are properly recorded.Test relevant receipts, dispatches and other intervening changes through 31 March.
1Consider perpetual-record reliability, adjustments and significant differences.Assess relevant record support and unexplained movements, not an automatic roll-forward from unsupported totals.
1Material inventory requires attendance unless impracticable and appropriate further work.The count date and limited aisle visit do not remove the required evidence objective.
1Existence/condition evidence does not establish every assertion.Valuation or ownership objectives need relevant evidence; no all-assertion proof from attendance.
1Planned work and weaknesses are not established results or a predetermined opinion.Document actual scope/results and investigate gaps before reporting conclusions.

Non-credit errors

  • No passive attendance equals full count evidence.
  • No unchanged count total without intervening work.
Official ICAI concept source

AUD-G08-D006 · 3 marks

An unforeseen missed count has a specific response An unexpected transport closure prevents the auditor attending a material inventory count. The auditor says management's count total now suffices because the absence was not intentional. Required: Explain alternative-date counts, intervening transactions and the conclusion limit. (3 marks)
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MarksCreditCase application / answer
1For unforeseen inability to attend, make or observe some physical counts on an alternative date.Unexpected absence is not an exemption from relevant inventory evidence.
1Perform procedures on intervening transactions.Connect the alternative-date evidence with the intended reporting/count position through relevant changes.
1Evaluate whether sufficient appropriate evidence has actually been obtained.Management's total or the proposed later count is not performed evidence or automatic grounds for a selected opinion.

Non-credit errors

  • No unforeseen absence makes management total sufficient automatically.
Official ICAI concept source

AUD-G08-D007 · 5 marks

A legal expense points beyond management's list Management supplies a litigation list marked complete. A legal expense account and board minutes refer to another material claim. The auditor has not contacted external counsel. Required: Explain three identification procedures, the communication trigger and the evidence/reporting limit. (5 marks)
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MarksCreditCase application / answer
1Inquire of management and relevant people including in-house counsel.Investigate the additional claim rather than accept the complete label.
1Review governance minutes and external-counsel correspondence.Trace the claim noted in minutes and relevant legal communications.
1Review legal expense accounts.Use the identified payment to investigate potentially omitted litigation.
1Seek direct external-counsel communication when assessed risk or procedures indicate other material claims.Use an appropriate letter of inquiry asking counsel to communicate directly with the auditor.
1Evaluate obtained evidence and alternatives where communication is prohibited or blocked.If sufficient appropriate evidence cannot be obtained through alternatives in the stated refusal/prohibition circumstances, modify under SA705 as appropriate; no opinion type or actual claim amount is supplied here.

Non-credit errors

  • No management list label erases contradictory litigation evidence.
Official ICAI concept source

AUD-G08-D008 · 3 marks

A positive reply is different from silence The auditor asks a customer to reply directly whether it agrees with a balance. The request is returned undelivered. A trainee records agreement because no difference was reported. Required: Classify the request, classify the result and explain the next evidence step. (3 marks)
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MarksCreditCase application / answer
1The request is positive, requiring a reply in all cases.Asking for agreement or disagreement is not a negative request.
1An undelivered positive request is a non-response.It is not agreement and not an exception response showing a difference.
1Perform appropriate alternative procedures for a non-response and evaluate results.Consider relevant subsequent receipts/shipping/sales evidence and follow-up; if a positive response is specifically necessary, alternatives cannot replace that required evidence and audit/opinion implications must be assessed.

Official standard, paragraphs 12-13

Non-credit errors

  • No undelivered request equals customer agreement.
Official ICAI concept source

AUD-G08-D009 · 5 marks

Negative confirmation cannot stand alone on size alone A large number of small homogeneous receivable balances is proposed for negative confirmations as the sole substantive procedure. Risk has not been assessed as low; relevant controls are untested, disputes are common and customers often ignore mail. Required: Apply the four required conditions and explain the silence limit. (5 marks)
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MarksCreditCase application / answer
1Low assessed risk and sufficient appropriate evidence of relevant control effectiveness are required.Both are missing; small balances do not substitute for them.
1A large number of small homogeneous balances is required.This condition is supplied but is only one of all required conditions.
1A very low exception rate must be expected.Common disputes undermine treating that condition as established.
1No known circumstances should cause recipients to disregard requests.Habitual ignored mail contradicts that requirement.
1Silence does not explicitly demonstrate receipt or verification.Negative confirmations are less persuasive; they cannot be the sole substantive procedure here merely because balances are small.

Official standard, paragraphs 15

Non-credit errors

  • No small balances alone permit sole negative-confirmation reliance.
Official ICAI concept source

AUD-G08-D010 · 10 marks

Opening evidence and current effects are different questions An initial audit follows an unaudited year. Opening inventory includes a suspected error; management has changed an accounting policy without showing its accounting or disclosures. Opening receivables are collected during the year, but no other opening work is recorded. A trainee treats collections as proof of every opening balance and proposes an adverse opinion immediately. Required: (a) Explain the opening-balance and policy objectives. (2 marks) (b) Set out four relevant evidence actions/limits. (4 marks) (c) Explain current-effect follow-up and communication. (2 marks) (d) Distinguish evidence inability from established misstatement/policy reporting, without selecting an unsupported opinion. (2 marks)
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MarksCreditCase application / answer
1Obtain sufficient appropriate evidence whether opening misstatements materially affect current statements.Initial-audit objectives concern current effects, not an automatic re-audit opinion on every prior-year figure.
1Assess appropriate policy consistency or proper accounting/presentation/disclosure of changes.Determine the applicable framework and actual change treatment, not assume every change is wrong.
1Read the most recent statements and any predecessor report, where present.Here the prior year was unaudited; do not invent a predecessor report or its assurance.
1Check brought-forward amounts and relevant underlying records.Assess correct transfer and appropriate policies; do not prescribe universal adjustment accounting without verifying the framework.
1Evaluate relevance of current-period procedures.Collections may provide some opening-receivable evidence but do not prove opening inventory or every disclosure.
1Perform specific opening work as needed, especially for inventory.Consider current count reconciled to opening quantities, opening valuation and relevant gross-profit/cut-off work as appropriate; current closing count alone gives little opening evidence.
1Investigate suspected misstatements with additional appropriate procedures.Determine actual current-period effects rather than presume a material amount from suspicion.
1Communicate concluded current-period misstatements to appropriate management and governance.Distinguish suspicion, evidence obtained and evaluated conclusion.
1Evidence inability leads to qualified or disclaimer opinion as appropriate under SA 705.Do not substitute an adverse opinion merely because opening evidence is lacking.
1Material uncorrected current effects or improper policy accounting/disclosure may require qualified or adverse opinion as appropriate.No materiality/pervasiveness or final facts are supplied to choose one; apply framework and SA 705 requirements to evaluated evidence.

Official standard, paragraphs 5-13/A3

Non-credit errors

  • No receivable collection proves every opening balance.
  • No adverse opinion automatically from missing opening evidence.
Official ICAI concept source

AUD-G08-D011 · 3 marks

Inconvenience is not impracticability A warehouse is accessible safely, but attendance would take a full day and delay other work. The auditor proposes calling attendance impracticable and accepting management's count sheet. Required: Explain the excuse, alternatives and evidence/reporting boundary. (3 marks)
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MarksCreditCase application / answer
1General inconvenience or time/cost alone does not establish impracticability.The accessible warehouse is not made impracticable simply by a busy schedule.
1When attendance is genuinely impracticable, perform appropriate alternatives for existence and condition.Management's sheet alone is not automatically sufficient; alternatives must actually meet the evidence objective.
1If sufficient appropriate evidence cannot be obtained, modify under SA705 as appropriate.Do not select an opinion type or invent inability before evaluating circumstances and evidence.

Official standard, paragraphs 7/A12-A14

Non-credit errors

  • No busy schedule equals impracticability.
Official ICAI concept source

AUD-G08-D012 · 5 marks

A third-party receipt does not settle condition Material inventory is held by a warehouse operator. The entity has receipts listing quantities but no current condition information. The auditor proposes no further work because custody is external. Required: Explain five applied evidence points. (5 marks)
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MarksCreditCase application / answer
1Material third-party inventory needs sufficient appropriate existence and condition evidence.External custody is not an exemption from the inventory objective.
1Request confirmation of quantities and condition as appropriate.Use a relevant knowledgeable third party and evaluate the response rather than merely the receipt label.
1Inspection or other appropriate procedures may be used, alone or with confirmation.Determine what is needed for the circumstances; SA501 permits one or both routes, not mandatory blind reliance on a receipt.
1Evaluate relevant documentation and available other evidence.Warehouse receipts or suitably relevant count/control evidence may help, but inspect what they actually support.
1Resolve missing condition evidence and retain assertion limits.A quantity receipt does not prove condition, ownership or valuation; obtain relevant additional evidence without inventing damaged amounts.

Official standard, paragraphs 8/A15-A16

Non-credit errors

  • No external custody proves inventory condition.
Official ICAI concept source

AUD-G08-D013 · 5 marks

Changed segment allocations require more than last year's label Management changes the method of allocating shared assets and costs between segments. Intersegment transfers are not eliminated and disclosures say the method is unchanged. The trainee proposes repeating last year's procedures without understanding the new method. Required: Explain understanding, framework evaluation, method testing, other procedures and responsibility scope. (5 marks)
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MarksCreditCase application / answer
1Understand management's actual method of determining segment information.Investigate changed allocations and treatment of intersegment amounts, not the unchanged-method label.
1Evaluate whether the method is likely to produce disclosure under the applicable framework.Check relevant requirements and adequacy of disclosure about inconsistencies rather than invent a universal allocation rule.
1Where appropriate, test application of the method.Inspect/reperform relevant allocation and elimination processing and investigate discrepancies.
1Perform analytical or other procedures appropriate in the circumstances.Use relevant segment comparisons or other evidence directed to the disclosure objective, not an unrelated generic ratio.
1Responsibility relates to the financial statements as a whole.SA501 does not require work to express a standalone segment-information opinion; this does not permit omitting relevant segment evidence.

Official standard, paragraphs 13/A26-A27

Non-credit errors

  • No old method label substitutes for changed allocation understanding.
Official ICAI concept source

AUD-G08-D014 · 5 marks

Counsel communication has a defined route A material claim requires direct external-counsel communication. Management offers to send the inquiry and forward the answer itself. The legal professional body prohibits direct replies in this circumstance, but possible alternative evidence has not been tested. Required: Explain inquiry preparation/sending, response route, alternatives, representation and the reporting condition. (5 marks)
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MarksCreditCase application / answer
1The inquiry letter is prepared by management and sent by the auditor.Management preparing the content does not mean it controls sending and forwards all evidence itself.
1The request asks counsel to communicate directly with the auditor.Indirect forwarding is not a substitute for the required route without addressing evidence needs and restrictions.
1Where relevant law/regulation/professional rules prohibit direct communication, perform alternatives.Assess the actual prohibition and relevant alternative evidence rather than presume the matter established or untestable.
1Request relevant litigation/claims written representations from management and, where appropriate, governance.Representations cover known actual/possible claims and appropriate accounting/disclosure; they do not automatically replace other necessary evidence.
1If sufficient appropriate evidence cannot be obtained through alternatives in the refusal/prohibition circumstances, modify under SA705.The supplied facts do not determine a particular opinion before alternative work and assessed implications.

Official standard, paragraphs 10-12

Non-credit errors

  • No prohibition automatically selects an opinion before alternatives.
Official ICAI concept source

AUD-G08-D015 · 10 marks

Who controls the confirmation process? Internal audit chooses customers, copies addresses from a contact list without checking them, writes requests only for net balances despite concern about side agreements, sends them and receives answers in its own mailbox. The external auditor receives only a summary headed "all agreed". No underlying responses are inspected. Required: (a) Apply the four elements of external-auditor control. (4 marks) (b) Explain three design/reliability issues. (3 marks) (c) State three evidence/conclusion boundaries. (3 marks)
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MarksCreditCase application / answer
1The auditor controls determining information requested.A net-balance-only request may not address the side-agreement concern; define relevant requested terms/information.
1The auditor controls selection of appropriate confirming parties.Choose relevant knowledgeable parties rather than adopt internal audit's list without assessment.
1The auditor controls request design, proper addressing and direct return information.Check relevant address validity and specify responses directly to the external auditor.
1The auditor controls sending and relevant follow-up.Do not transfer the whole confirmation process and response receipt to internal audit.
1Design should reflect assertions, identified risks and recipients' ability to respond.Net balances alone can leave relevant contractual terms unaddressed; use appropriate requests for the objective.
1Indirect summary evidence is not the direct written third-party response.Obtain and evaluate relevant actual responses and investigate source/contents where necessary.
1Agreement still needs evaluation of source and reliability.An all-agreed heading cannot establish knowledgeable authorised replies or protect against interception/alteration.
1Management authorisation may help willingness to respond but does not transfer auditor control.Distinguish useful authorisation from management/internal-audit ownership of evidence channels.
1Assess whether relevant reliable evidence is actually obtained and perform further work as necessary.The summary alone does not close the balance or side-agreement objectives.
1Weak process is not proof of fraud or an automatic opinion type.Document actual scope/results and evaluated implications without inventing confirmations or conclusions.

Official standard, paragraphs 7/A1-A7/A11-A14

Non-credit errors

  • No internal-audit summary equals auditor-controlled direct confirmation.
Official ICAI concept source

AUD-G08-D016 · 3 marks

Difference is not automatically a projected error A customer replies that its balance is lower because a payment in transit is not yet recorded by the entity. A trainee multiplies the difference across every customer without examining dates or records. Required: Classify the result, investigate it and state the projection boundary. (3 marks)
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MarksCreditCase application / answer
1A response indicating a difference is an exception.It differs from silence or an undelivered positive request.
1Investigate whether it indicates a misstatement.Check the payment, dates, relevant ledger/bank information and accounting treatment before concluding on the difference.
1Do not automatically treat every exception as a misstatement projected across all customers.Source hold: module p78 population wording is not a blanket estimator rule; SA50514 requires investigation, and broader conclusions need an appropriate separate basis.

Official standard, paragraphs 14/A21-A22

Non-credit errors

  • No exception automatically equals population-projected misstatement.
Official ICAI concept source

AUD-G08-D017 · 5 marks

A dispute may explain refusal but needs evidence Management refuses a customer confirmation during settlement negotiations, offering only an oral assertion that contact would damage the deal. No correspondence or alternative balance evidence has been examined. Required: Explain reasons/validation, risk implications, alternatives, governance communication condition and opinion limit. (5 marks)
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MarksCreditCase application / answer
1Inquire into reasons and seek evidence of validity/reasonableness.Verify relevant negotiation/dispute facts rather than automatically accept or reject the oral explanation.
1Evaluate implications for relevant misstatement risks including fraud risk and other procedures.Consider changes in nature/timing/extent without declaring proven fraud merely from refusal.
1Perform alternatives designed to obtain relevant reliable evidence.Examine appropriate receipts, shipping or other balance/transaction information aligned with the objective.
1Communicate with governance if refusal is unreasonable or alternatives do not yield relevant reliable evidence.Apply the stated condition after evaluation, not only when management admits a problem.
1Determine audit/opinion implications under SA705 from evaluated facts.A refusal alone does not identify materiality/pervasiveness or a predetermined opinion; proposed alternatives are not completed evidence.

Official standard, paragraphs 8-9/A8-A10

Non-credit errors

  • No oral negotiation claim automatically justifies refusal or proves fraud.
Official ICAI concept source

AUD-G08-D018 · 5 marks

The reply address is unfamiliar A positive-confirmation answer arrives through management from an unfamiliar address and names no authorised respondent. The amount agrees. A trainee says agreement eliminates all reliability concerns. Required: Explain source, authority, transmission, further evidence and risk response. (5 marks)
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MarksCreditCase application / answer
1Indirect receipt or an unexpected source can raise reliability doubts.Agreement of amount does not prove who sent the reply.
1Assess whether the respondent is knowledgeable and authorised.Verify the relevant party and capacity through appropriate source evidence rather than a name claim alone.
1Consider integrity/interception/alteration risk.Paper or electronic form can carry risk; an email address or matching amount is not a guarantee.
1Obtain further evidence to resolve doubts, including appropriate source/content verification or direct written reply.Contact the intended confirming party through a grounded route and evaluate actual response evidence.
1If determined unreliable, evaluate risk and related procedural implications.Revise relevant work as appropriate, including fraud-risk assessment, without asserting actual fraud or an automatic opinion.

Official standard, paragraphs 10-11/A11-A17

Non-credit errors

  • No matching amount authenticates an indirect unfamiliar-source reply.
Official ICAI concept source

AUD-G08-D019 · 5 marks

Sometimes an alternative cannot replace a necessary reply The auditor has determined that a positive response about a specific side agreement is necessary for sufficient appropriate evidence. The counterparty does not reply. Management supplies its own contract copy and asks the auditor to call the missing confirmation complete. Required: Explain the necessary-response judgement, non-response, alternative limit, opinion implications and documentation. (5 marks)
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MarksCreditCase application / answer
1Identify the specific evidence need behind requiring a positive response.This case supplies that determination; do not generalise it to every confirmation.
1A missing positive response remains a non-response.Management's own copy is not the direct written third-party response.
1When the positive response is determined necessary, alternatives will not provide that required evidence.The copy cannot simply relabel the missing required response as obtained, even though it may supply other information.
1If the necessary confirmation is not obtained, determine audit and opinion implications under SA705.No particular type follows without the relevant assessed effects/materiality/pervasiveness.
1Document actual requests, follow-up, evidence and unresolved need.Do not record confirmation complete or planned follow-up performed; evaluate other information within its scope.

Official standard, paragraphs 12-13/A20

Non-credit errors

  • No entity contract copy becomes a required positive reply.
Official ICAI concept source

AUD-G08-D020 · 10 marks

A predecessor modification needs current evaluation The previous auditor qualified the report for missing inventory evidence. In the new initial audit, management says every previous qualification disappears automatically on changing firms. Relevant prior statements and schedules are available, but no assessment of the old issue's current significance is recorded. Current procedures suggest opening quantity differences, while the accounting policy is unchanged. Required: (a) Explain three relevant reading/evidence actions. (3 marks) (b) Explain risk and current-effect investigation/communication. (3 marks) (c) Explain predecessor-modification and reporting distinctions. (3 marks) (d) State the policy/evidence boundary. (1 mark)
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MarksCreditCase application / answer
1Read most recent statements and the predecessor's report.Understand the inventory matter behind the qualification rather than ignore it on changing firms.
1Peruse audited statements and relevant prior documents/schedules as appropriate.Use the India-specific route; do not claim an automatic entitlement to predecessor working papers.
1Check brought-forward balances and obtain relevant opening evidence.Evaluate current procedures and specific opening inventory work rather than treat prior qualification as either full proof or total prohibition.
1Evaluate the prior modified matter in current risk assessment.Determine its current relevance and implications for planned evidence work.
1Investigate indicated opening differences and current effects with appropriate additional procedures.Do not assume the prior evidence limitation proves a current material misstatement.
1Communicate concluded current-period misstatements appropriately.Differentiate the old qualification, present suspicion and actual evaluated current errors.
1If the predecessor modified matter remains relevant and material, modify the current opinion under SA 705/SA 710.Changing firms does not automatically erase the underlying matter.
1Current inability to obtain sufficient appropriate opening evidence points to qualified or disclaimer as appropriate.Do not automatically select adverse solely for an evidence limitation.
1An established materially affecting uncorrected current misstatement may require qualified or adverse as appropriate.No final materiality/pervasiveness/current-error conclusion is supplied to select the type.
1Unchanged policy is not a substitute for quantity/evidence work.Assess appropriate consistency, but a stable policy label does not resolve missing inventory evidence or differences.

Official standard, paragraphs 5-13/A1-A3

Non-credit errors

  • No change of auditor automatically erases predecessor qualification.
Official ICAI concept source

AUD-G08-D021 · 3 marks

A scanned original still has preparation controls The entity destroys original invoices after scanning. A trainee says the PDF label makes each scan as reliable as an independently verified original, regardless of scanning controls. Required: Explain documentary form, transformation controls and the evidence response. (3 marks)
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MarksCreditCase application / answer
1Documentary evidence is generally more reliable than oral evidence, subject to circumstances.A PDF is documentary evidence, not automatic proof of authenticity or completeness.
1Reliability of transformed documents may depend on preparation/maintenance controls.Investigate scanning integrity, coverage and relevant storage/change controls rather than assume the label validates the content.
1Evaluate relevant reliability and obtain appropriate corroboration where needed.Do not universally reject every scan or automatically equate it to an independently verified original.

Official standard, paragraphs 7/A31

Non-credit errors

  • No PDF label guarantees original-document reliability.
Official ICAI concept source

AUD-G08-D022 · 5 marks

Last year's work does not become this year's evidence unchanged The auditor plans to reuse prior evidence about customer terms. New contracts and sales channels were introduced this year, but the file contains no assessment of changes. Management says past evidence must remain relevant because the entity name is unchanged. Required: Explain cumulative evidence, change assessment, current relevance, corroboration and documentation limit. (5 marks)
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MarksCreditCase application / answer
1Evidence may include prior-audit information as well as current work.Reuse is not prohibited merely because information is old.
1Determine whether changes affect relevance to the current audit.New contracts/channels need actual evaluation rather than reliance on the same entity name.
1Align evidence with current purpose and assertions.Prior customer terms may not support revised current terms or new-channel transactions.
1Obtain appropriate current evidence and investigate differences.Inspect relevant new contracts/process information and corroborate what applies, not just repeat old conclusions.
1Record actual evidence scope and unresolved changes.A plan to inspect new terms is not inspection performed; neither automatic reuse nor universal rejection is justified.

Official standard, paragraphs 6-7/A1

Non-credit errors

  • No unchanged entity name proves unchanged evidence relevance.
Official ICAI concept source

AUD-G08-D023 · 5 marks

Testing recorded liabilities cannot find everything omitted The objective is completeness of year-end payables. The team checks only entries already in the payable ledger and calls every omitted liability ruled out. Required: Explain relevance/direction, omitted-item limit, two relevant evidence directions and the assertion boundary. (5 marks)
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MarksCreditCase application / answer
1Relevance depends on logical connection to the objective and testing direction.Recorded-payable checks may suit overstatement concerns but do not alone address omitted liabilities.
1An omitted liability may be absent from the recorded list.All recorded entries can be tested without reaching the unrecorded item.
1Examine relevant subsequent disbursements or unpaid invoices.Trace appropriate underlying obligations to year-end recording, with relevant period/cut-off evidence.
1Examine relevant supplier statements or unmatched receiving reports.Investigate obligations missing from the ledger rather than simply increase recorded-entry work.
1Evidence for one assertion is not all-assertion assurance.Evaluate actual results and further evidence needed; no liability amount, fraud or reporting conclusion is supplied.

Official standard, paragraphs 7/A26-A28

Non-credit errors

  • No complete examination of a recorded list proves no omissions.
Official ICAI concept source

AUD-G08-D024 · 5 marks

A signed valuation contradicts its source data Management's valuation expert reports strong asset condition, while a recent supported inspection identifies major damage. Management wants the auditor to discard the inspection because the expert is qualified. Required: Explain expert competence, work understanding, appropriateness, conflict resolution and the judgement boundary. (5 marks)
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MarksCreditCase application / answer
1Evaluate competence, capabilities and objectivity as necessary.Qualifications matter but do not erase contradictory evidence or establish every finding correct.
1Understand the expert's work and relevant basis.Determine what inspection/source data, assumptions and methods informed the condition conclusion.
1Evaluate appropriateness for the relevant assertion.Assess whether the valuation uses supported current condition information and relevant methods/assumptions.
1Determine necessary additions/modifications to resolve inconsistent evidence.Investigate the damage, timing and expert response and consider effects on other audit aspects.
1Retain auditor evaluation rather than automatically prefer either source.No adjusted value or final opinion is supplied; document actual evidence and unresolved matters.

Official standard, paragraphs 8/11/A48

Non-credit errors

  • No expert qualification erases supported contradictory evidence.
Official ICAI concept source

AUD-G08-D025 · 10 marks

Count planning across unlike locations An entity holds finished goods at its main store, work in progress at a remote plant and consigned goods mixed with its own stock. The remote plant has weak movement controls and unusual quantity estimates. Management asks the auditor to attend only the main store because it is convenient and infer the rest. Required: (a) Apply four location/count planning factors. (4 marks) (b) Explain three instruction/performance checks. (3 marks) (c) Explain test-count directions, final-record work and the evidence limit. (3 marks)
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MarksCreditCase application / answer
1Consider inventory nature and work-in-progress stages.Finished goods and WIP need relevant different understanding, not a single generic main-store assumption.
1Consider location materiality and misstatement risks.Select appropriate attendance coverage using actual significance/risks, not convenience alone.
1Consider controls, expected instructions and timing/perpetual records.The remote movement weakness needs relevant assessment and evidence planning.
1Consider whether expert assistance is needed for unusual quantities.Assess the estimation problem; this is not an automatic specialist requirement or a substitute for evidence.
1Evaluate identification of WIP stage, damaged items and third-party-owned stock.Distinguish consigned goods and relevant condition/completion information rather than count all as owned finished goods.
1Evaluate count-sheet/recount and quantity-estimation procedures.Inspect control of used/unused sheets and supported measurement methods; do not accept unusual estimates untested.
1Observe relevant movements and actual compliance.Obtain relevant movement/cut-off information to support later work rather than merely read instructions.
1Use relevant record-to-floor and floor-to-record test counts.Both directions can support completeness/accuracy of count records; one main-store direction does not cover every location.
1Retain count evidence and test final inventory records against actual count results.Investigate differences and ensure the final records reflect the count evidence obtained.
1Attendance does not itself establish ownership or every valuation assertion.Obtain appropriate further evidence and document location/scope limits without an automatic fraud or opinion conclusion.

Official standard, paragraphs 4/A3-A8

Non-credit errors

  • No convenient location automatically represents all unlike inventory.
Official ICAI concept source

AUD-G08-D026 · 3 marks

An oral answer is not a direct written confirmation A bank employee phones the auditor to state a loan balance. No written response is received. The trainee records external confirmation completed. Required: Explain the definition, follow-up and other-evidence limit. (3 marks)
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1External confirmation is a direct written response from the third party.An oral call alone does not meet that definition, even if it supplies useful information.
1Request an appropriate written direct response depending on circumstances.Verify the relevant source and obtain the required form rather than silently relabel the call.
1If no written response is received, seek other relevant evidence under the non-response requirements.Evaluate oral information within its scope; where a positive response is specifically necessary, alternatives do not replace that required evidence.

Official standard, paragraphs 6/12-13/A15

Non-credit errors

  • No oral call equals completed direct written confirmation.
Official ICAI concept source

AUD-G08-D027 · 5 marks

Blank positive requests have a trade-off Past customers signed prefilled confirmations without checking them. The auditor considers requests asking customers to fill in the amount, but management says blank requests guarantee complete responses and eliminate all reliability risk. Required: Explain the request type, benefit, response-rate trade-off, design considerations and evaluation limit. (5 marks)
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1A blank request asking for information is still a positive request.It requires a direct reply rather than silence unless disagreement.
1It may reduce the risk of agreement without verifying the stated information.Having the respondent supply the amount avoids simply signing the auditor's prefilled figure.
1Additional effort may lower response rates.The design does not guarantee complete replies; plan appropriate follow-up and non-response work.
1Consider assertions, risks and respondent ability/method when designing requests.Choose a relevant knowledgeable party and useful information format, not blankness as a universal best method.
1Evaluate actual response relevance/reliability and further work needed.A supplied amount still needs source/authority evaluation and exception investigation; no zero-risk guarantee follows.

Official standard, paragraphs 7/A3-A6

Non-credit errors

  • No blank request guarantees replies or reliability.
Official ICAI concept source

AUD-G08-D028 · 5 marks

Opening disclosures are opening matters too A first-year auditor checks brought-forward account totals but ignores a commitment existing at the start of the year because it had no ledger balance. Opening long-term debt is also accepted without inspecting underlying records. Required: Explain opening scope, evidence objective, two debt-evidence directions and the conclusion limit. (5 marks)
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1Opening balances include matters requiring disclosure at the beginning, such as commitments/contingencies.No ledger amount does not automatically exclude the opening commitment.
1Obtain relevant opening evidence and assess current effects and appropriate policy treatment.Check disclosure/recognition requirements under the applicable framework rather than invent a universal amount.
1Inspect underlying records and information for non-current opening balances.Examine relevant loan agreements/records and carried-forward terms/amounts, not merely current totals.
1Third-party confirmation may provide some relevant long-term debt evidence.Use appropriate requests and evaluate their scope; additional work may still be needed.
1Numerical carry-forward agreement is not all-purpose opening evidence.Evaluate missing disclosure/debt evidence and actual current implications without automatically selecting a reporting type.

Official standard, paragraphs 1/4/6/A4

Non-credit errors

  • No zero ledger balance excludes an opening commitment.
Official ICAI concept source

AUD-G08-D029 · 10 marks

An opening quantity reconstruction has a stated arithmetic limit For this exercise only, quantities are in one comparable unit. A supported current count is 1,200 units. Records show 5,000 receipts and 4,300 issues between opening and current count. A trainee reconstructs opening quantity as 900 and values it using the current unit price without checking historical values. Movement completeness, goods ownership and opening condition are not yet established. Required: (a) Reconstruct opening quantity under the supplied movement assumptions and explain the trainee's error. (2 marks) (b) Explain four distinct evidence checks. (4 marks) (c) Explain why current-price valuation and current-count evidence are limited. (2 marks) (d) Explain current-effect follow-up and reporting boundaries. (2 marks)
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1Opening quantity = current quantity - intervening receipts + intervening issues.Under the supplied assumptions: 1,200 - 5,000 + 4,300 = 500 units.
1The trainee's 900 is inconsistent with the supplied roll-back relation.This arithmetic reconstruction is conditional on the comparable-unit/movement assumptions, not independent proof of historical stock.
1Validate relevant movement completeness.Investigate missing receipts/issues and intended opening-to-count period coverage.
1Validate movement accuracy, timing and classification.Trace relevant records and cut-off; quantities must concern the defined period and comparable units.
1Obtain relevant ownership evidence separately.A current count or movement calculation does not itself prove opening rights over every item.
1Obtain relevant opening condition/valuation evidence.Assess supported historical item information rather than assume present appearance proves opening condition.
1Current unit price is not automatically appropriate opening valuation.Determine supported historical amounts and applicable framework treatment; no price or valuation amount is supplied.
1Current closing-count procedures give little evidence of opening inventory by themselves.Reconciliation plus relevant valuation and other opening procedures may help; arithmetic alone is insufficient.
1Investigate indicated opening misstatements to determine current effects.Communicate concluded current-period misstatements appropriately; do not invent current cost-of-sales amounts.
1Reporting depends on actual evidence inability or established uncorrected current effects.Qualified/disclaimer versus qualified/adverse are conditional branches under SA 705, not a predetermined opinion from the exercise.

Official standard, paragraphs 6-11/A3

Non-credit errors

  • No conditional quantity calculation proves ownership, valuation or completeness.
Official ICAI concept source

AUD-G08-D030 · 10 marks

Representations do not close unresolved litigation evidence Management signs a representation that all claims are disclosed. Board correspondence identifies another claim, and external counsel's specific reply omits it and disagrees with management on a supplied claim assessment. Management refuses a proposed meeting; no alternative evidence about the omitted claim has been obtained. No actual loss estimate or pervasiveness finding is supplied. Required: (a) Explain three completeness/conflict responses. (3 marks) (b) Explain three specific-inquiry/communication points. (3 marks) (c) Explain alternatives, representation limit and reporting condition. (3 marks) (d) State the unsupported-conclusion boundary. (1 mark)
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1Investigate the claim identified in correspondence.Use relevant inquiries, minutes/counsel correspondence and legal expense evidence rather than treat the signed list as complete proof.
1Resolve inconsistent evidence with necessary additions/modifications.Determine why counsel omitted the claim and why assessments differ, and consider effects on other audit aspects.
1Evaluate completeness and relevant accounting/disclosure evidence under the framework.Do not invent a settlement estimate or assume every claim must receive identical treatment.
1A specific inquiry includes the relevant claim list.Include the omitted claim for direct clarification rather than omit it because management's list did.
1It includes available management outcomes/financial implications and requests assessment confirmation/further information.Seek counsel's response on reasonableness and whether the list is incomplete or incorrect.
1A meeting may be appropriate for significant/complex matters or disagreement, ordinarily with management permission/attendance.Assess the refusal rather than pretend a proposed meeting happened.
1Perform appropriate alternatives where direct communication/meeting is blocked.Evaluate whether actual other evidence resolves the omitted claim and disagreement.
1Required representations supplement but do not replace necessary other evidence.The signature does not erase contradiction or provide missing counsel/alternative evidence automatically.
1If refusal/nonresponse/prohibition and inability through alternatives leave insufficient appropriate evidence, modify under SA 705.Apply the actual evidence condition rather than select a report from a refusal label alone.
1No actual fraud, quantified loss or particular opinion type is established.Document actual work/results and determine appropriate reporting from assessed evidence/materiality/pervasiveness.

Official standard, paragraphs 9-12/A21-A25

Non-credit errors

  • No signed representation erases contradictory or missing litigation evidence.
Official ICAI concept source

Source hold

Confirmation exceptions require investigation, not blanket projection. Official SA505 paras12-15. Official India SA510 paras5-13 supplements opening-balance cases. Framework-specific adjustments are not universal rules.