Group 9: SA 550 / 560 / 570 / 580

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.

AUD-G09-D001 · 3 marks

Ordinary business does not remove related-party understanding A company routinely buys from a related entity. Management says ordinary transactions never require related-party audit work and every related-party transaction is either harmless or fraudulent. Required: Explain normal-course risk, understanding and the conclusion limit. (3 marks)
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MarksCreditCase application / answer
1Many normal-course related transactions may have no higher risk than similar unrelated transactions.Ordinary business does not automatically make the transaction fraudulent or prove it harmless.
1Understand relevant parties, relationships, transaction types/purposes and applicable controls.Normal-course status is not an exemption from relevant identification/accounting/disclosure and risk work.
1Evaluate actual risks and framework treatment using sufficient appropriate evidence.Neither the relationship label nor normal-course description determines fraud or the reporting conclusion.

Non-credit errors

  • No every-related-transaction fraud or exemption rule.
Official ICAI concept source, SA 550 paragraphs 2-9/13-14

AUD-G09-D002 · 5 marks

A familiar name is not a complete related-party list Management gives an unchanged party list. A new significant contract names a company controlled by a director, but no relationship or transaction information is recorded. The applicable framework has related-party requirements. Required: Explain identity/change inquiry, nature/type inquiry, records alertness, circumstances confirmation and the further-work limit. (5 marks)
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MarksCreditCase application / answer
1Inquire about identities and changes from the prior period.An unchanged list is not proof no party was added.
1Inquire into relationship nature and transaction type/purpose.Investigate the director-linked company and significant contract rather than infer the full relationship from a similar name.
1Remain alert in relevant records including confirmations, minutes and other necessary documents.Use actual contract/governance information to investigate the indicator.
1Determine whether the underlying circumstances confirm the unreported relationship/transaction.An indicator requires factual validation, not automatic party classification under an invented framework rule.
1If newly identified, apply required further evaluation and communicate relevant information to the team.Request relevant transactions, investigate identification-control failure and plan appropriate work; do not describe planned checks as performed or prove fraud from omission alone.

Non-credit errors

  • No unchanged list automatically establishes complete identification.
Official ICAI concept source, SA 550 paragraphs 13-17/21-22

AUD-G09-D003 · 5 marks

A significant deal outside ordinary business An entity transfers a major asset to an identified related party outside its normal operations. Management calls approval by the owner sufficient audit evidence. No contract or accounting/disclosure assessment is inspected. Required: Explain risk classification and four applied responses. (5 marks)
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MarksCreditCase application / answer
1Identified significant related transactions outside normal business give rise to significant risks.Do not downgrade the deal merely because an owner approved it.
1Inspect underlying contracts/agreements and evaluate business rationale.Assess whether rationale or lack of it suggests relevant fraud risk, not automatic proven fraud.
1Compare terms with management explanations.Investigate differences rather than accept the deal description uncorroborated.
1Evaluate appropriate accounting/disclosure under the applicable framework.Approval alone does not determine correct measurement/presentation or disclosure.
1Obtain evidence of appropriate authorisation/approval and respond to assessed risks.Inspect actual approvals and relevant substantive evidence; owner status is not a blanket correctness guarantee.

Non-credit errors

  • No owner approval alone closes every related-transaction objective.
Official ICAI concept source, SA 550 paragraphs 18/23

AUD-G09-D004 · 3 marks

Subsequent-event procedures have a period The financial statements are dated 31 March and the auditor's report 20 May. The team stops its event work at 30 April and relies solely on a management statement that nothing happened afterwards. Required: Explain the coverage period, relevant procedures and representation limit. (3 marks)
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MarksCreditCase application / answer
1Cover statement date to report date, or as near as practicable thereto.A silent stop on 30 April leaves the intended later coverage unresolved.
1Use appropriate management-process understanding, inquiries, later minutes and latest interim statements if available.Include matters discussed where minutes are not yet available; perform relevant work for the uncovered interval.
1Request the required subsequent-event representation but do not replace necessary procedures with it.Evaluate events needing adjustment/disclosure under the framework and actual evidence; no event type or amount is supplied here.

Non-credit errors

  • No representation alone closes an unexplained later coverage gap.
Official ICAI concept source, SA 560 paragraphs 6-9

AUD-G09-D005 · 10 marks

A fact arrives after the report but before issue The auditor's report has been provided to the entity, but the financial statements have not been issued to third parties. A new fact becomes known that, if known at report date, may have caused amendment of the report. Management plans an amendment but has not approved it. No law/framework exception permitting restricted amendment has been established. Required: (a) Explain three initial responses. (3 marks) (b) Explain three actions if management amends. (3 marks) (c) Explain refusal/issue safeguards and the routine-procedure limit. (3 marks) (d) State the unsupported reporting boundary. (1 mark)
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MarksCreditCase application / answer
1Discuss with management and, where appropriate, governance.Identify the actual fact and implications rather than ignore it because the report was dated.
1Determine whether the financial statements need amendment.Evaluate under the applicable framework, not automatic amendment from every later event.
1If needed, inquire how management intends to address it.An intention is not approved amended statements or completed work.
1Perform audit procedures necessary on an actual amendment.Obtain evidence about the changed matter, not merely copy management's new text.
1Ordinarily extend subsequent-event procedures to the new report date.No permitted restricted-amendment exception has been established; do not claim dual dating automatically available.
1Provide a new report no earlier than approval of amended statements.An unapproved draft is not a basis for the final new-report date.
1If necessary amendment is refused after the report is provided, notify management and appropriate governance not to issue before amendment.Apply the provided-report branch, not pretend the report was withheld.
1If issued without necessary amendments, take appropriate action to seek to prevent reliance.The actual appropriate action may depend on obligations/circumstances; no invented legal filing is prescribed.
1There is no routine obligation to perform procedures after report date, but qualifying known facts require response.No routine duty is not a licence to ignore this fact.
1No particular opinion or automatic fraud conclusion is established by these facts.Evaluate actual amendment/evidence implications and applicable requirements; proposals are not executed results.

Non-credit errors

  • No dated report permits ignoring a qualifying known fact.
  • No automatic dual dating without permitted conditions.
Official ICAI concept source, SA 560 paragraphs 10-13

AUD-G09-D006 · 5 marks

A six-month forecast does not settle going concern Management's assessment covers six months from the financial-statement date. It excludes known financing pressure beyond that period. Management says the auditor cannot ask for more because only six months were budgeted. Required: Explain evaluation, minimum extension, relevant information, beyond-period inquiry and the no-guarantee limit. (5 marks)
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MarksCreditCase application / answer
1Evaluate management's going-concern assessment.A budget label is not evidence that its scope and assumptions address the audit objective.
1Request extension to at least twelve months from statement date if the assessment is shorter.Also cover the framework/law period where longer; do not replace the stated anchor with report date.
1Consider all relevant information known from the audit.Financing pressure must not be omitted merely because inconvenient.
1Inquire about known events/conditions beyond management's assessment period that may cast significant doubt.A defined assessment horizon does not mean later known pressures are irrelevant.
1Conclude from sufficient appropriate evidence, not a survival guarantee.Absence of a material-uncertainty reference does not guarantee continued operation; no report type is yet established.

Non-credit errors

  • No short budget bars required assessment extension.
Official ICAI concept source, SA 570 paragraphs 6-7/12-15

AUD-G09-D007 · 5 marks

Refinancing is a plan, not cash already received Events cast significant doubt on an entity's going concern. Management relies on unapproved refinancing and a cash-flow forecast using unsupported growth assumptions. No assessment of plan feasibility or subsequent facts is recorded. Required: Explain five applied additional-procedure points. (5 marks)
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MarksCreditCase application / answer
1Obtain/assess management's assessment where needed and consider mitigating factors.Indicators require sufficient appropriate evidence on material uncertainty, not automatic collapse or automatic reassurance.
1Evaluate plans and whether likely to improve the situation and feasible.Unapproved refinancing is not finance already obtained; examine supported ability and timing.
1Evaluate forecast underlying-data reliability where forecast analysis is significant.Validate relevant data rather than rely on an internally consistent total alone.
1Determine adequate support for forecast assumptions and consider later facts/information.Investigate growth support and relevant developments since assessment.
1Request relevant written representations on plans/feasibility, without substituting them for necessary other evidence.Conclude on basis appropriateness and uncertainty using evaluated evidence, not the promise alone.

Non-credit errors

  • No refinancing promise equals funds obtained or uncertainty resolved.
Official ICAI concept source, SA 570 paragraphs 16-18

AUD-G09-D008 · 3 marks

A report is not a promise of survival A lender says an audit report with no material-uncertainty reference guarantees the borrower will continue trading. The lender also says management has no assessment responsibility if the framework is silent. Required: Explain management assessment, auditor responsibility and guarantee limit. (3 marks)
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MarksCreditCase application / answer
1Preparing statements on a going-concern basis requires management to assess ability even without an explicit framework assessment rule.Silence does not remove the responsibility inherent in using that basis.
1The auditor obtains evidence/concludes on basis appropriateness and whether material uncertainty exists.The auditor evaluates evidence, not predicts every future event.
1No uncertainty reference is not a guarantee of continued operation.Future uncertainty and inherent limitations remain; no unprovided lender promise or audit-opinion type is inferred.

Non-credit errors

  • No audit report guarantees future survival.
Official ICAI concept source, SA 570 paragraphs 3-7

AUD-G09-D009 · 5 marks

Representations need the right people and coverage A junior manager without financial-statement responsibility signs a letter after report date covering only the current income statement, though the report refers to full current and comparative statements. Management says any employee signature is enough. Required: Explain appropriate signers, date, periods/statements, form and evidence limit. (5 marks)
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MarksCreditCase application / answer
1Request from management with appropriate financial-statement responsibilities and knowledge.A junior person lacking those responsibilities is not sufficient merely by signing.
1Date as near as practicable to, but not after, the report date.The later-dated letter fails the stated timing requirement; do not pretend it existed earlier.
1Cover all statements and periods referred to in the report.Income-statement-only/current-only coverage does not address the supplied full/comparative report scope.
1Use a representation letter addressed to the auditor.Appropriate public-statement exceptions require an actual applicable law/regulation determination, not any employee signature.
1Representations are necessary evidence but not sufficient alone on the matters concerned.A corrected letter still does not replace necessary other evidence or prove management integrity automatically.

Non-credit errors

  • No any employee signature/later date/narrow scope automatically suffices.
Official ICAI concept source, SA 580 paragraphs 2-4/8/13-14

AUD-G09-D010 · 10 marks

Distinguish core refusals from other representation problems Management refuses the required representations that it fulfilled statement-preparation responsibilities and provided agreed information/access with all transactions recorded. It offers a separate sales representation instead. A second entity provides the core letters but one specific representation conflicts with other evidence. No final management-integrity conclusion is supplied for the second entity. Required: (a) Explain the two core representations and why the sales letter is not a substitute. (3 marks) (b) Explain response to non-provision and the specific required reporting outcome for the first entity. (3 marks) (c) Explain conflict/reliability work and the reporting boundary for the second entity. (3 marks) (d) State the general representation evidence limit. (1 mark)
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MarksCreditCase application / answer
1Request representation of fulfilled financial-statement preparation responsibility under the framework/engagement terms.A sales-only letter does not confirm the supplied statement-preparation responsibility.
1Request representation of all agreed relevant information/access and recording/reflection of all transactions.A narrow sales assertion does not cover the required information and completeness responsibilities.
1Other representations do not substitute for required core paragraphs 9-10 representations.The offered sales letter may address its scope but does not cure the core refusals.
1Discuss non-provision and re-evaluate management integrity/evidence reliability.Investigate actual refusal and implications rather than treat silence as confirmation.
1Take appropriate actions with regard to SA 58019.The specific core-refusal rule must not be reduced to a generic optional report consideration.
1Disclaim an opinion under SA 705 when management does not provide paragraphs 9-10 representations.This first entity supplies that exact condition; do not choose adverse or unmodified instead.
1For the second entity, perform procedures to attempt to resolve inconsistency with other evidence.Do not erase the conflict because core letters were signed.
1If unresolved, reconsider competence/integrity/ethical values/diligence and evidence reliability.Determine actual implications rather than presume the missing integrity conclusion.
1If representations are unreliable, take appropriate actions/opinion assessment; sufficient integrity doubt making core letters unreliable triggers disclaimer.That final core-integrity condition is not supplied for entity 2, so do not automatically disclaim every specific inconsistency.
1Written representations do not provide sufficient appropriate evidence alone.Neither signatures nor substitute letters eliminate necessary other audit work.

Non-credit errors

  • No core-refusal rule treated as an unspecified optional opinion.
  • No every specific representation disagreement automatically triggers disclaimer.
Official ICAI concept source, SA 580 paragraphs 9-10/15-19

AUD-G09-D011 · 3 marks

Dominant influence is a risk factor, not a finding A related party dictates key decisions and pressures management to use unexplained terms. The junior either ignores the influence because transactions were approved or declares fraud proved. Required: Explain influence, risk assessment and the evidence boundary. (3 marks)
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MarksCreditCase application / answer
1Dominant related-party influence may be relevant to fraud risk factors.Approval does not automatically remove the influence or resulting susceptibility.
1Consider identified factors in assessing risks and designing appropriate responses.Investigate actual arrangements, terms and management/control circumstances.
1A risk factor is not itself proven fraud or a selected opinion.Evaluate supported facts and obtain appropriate evidence rather than either dismiss or convict from the influence label.

Non-credit errors

  • No approval erases dominance; no risk factor proves fraud.
Official ICAI concept source, SA 550 paragraphs 18-20/A29-A30

AUD-G09-D012 · 5 marks

Three related-party control objectives are not one approval An owner approves significant deals but the entity has no reliable identification list or disclosure process. Significant non-routine arrangements are not tracked separately. Management calls the approval signature a complete related-party control system. Required: Explain three control-understanding objectives, corroborating work and the limit. (5 marks)
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MarksCreditCase application / answer
1Understand controls identifying, accounting for and disclosing relationships/transactions under the framework.Approval signatures do not establish a complete list or disclosure process.
1Understand authorisation/approval of significant related-party transactions.Investigate actual scope and operation of the owner approval, not merely its existence.
1Understand authorisation/approval of significant transactions outside normal business.Non-routine tracking may matter independently of whether a known related party is already listed.
1Use inquiries of management/others and appropriate other risk-assessment procedures.Corroborate relevant oversight and documentation, including in a less-formal smaller entity.
1Assess actual control design/implementation and risks, not blanket assurance from a signature.Owner involvement may mitigate or increase risks; no automatic all-transactions correctness follows.

Non-credit errors

  • No one owner approval proves identification and disclosure controls.
Official ICAI concept source, SA 550 paragraphs 14/A15-A21

AUD-G09-D013 · 5 marks

Arm's-length wording needs evidence The statements describe a related loan as equivalent to arm's-length terms. Management supports this only with a comparable interest rate, ignoring security, repayment rights and guarantees. Required: Explain the assertion objective, term comparison, evidence scope, alternatives and conclusion limit. (5 marks)
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MarksCreditCase application / answer
1Obtain sufficient appropriate evidence for the arm's-length-equivalence assertion.It is not established simply by management using that wording.
1Evaluate relevant terms and conditions, not only the interest rate.Security, repayment rights and guarantees may affect comparability.
1Assess relevance/reliability of comparables and actual contract evidence.Determine whether the benchmark concerns suitably comparable independent transactions.
1Obtain further appropriate evidence or reconsider unsupported assertion/disclosure.A limited rate comparison may not establish full equivalence; do not invent a universal pricing rule.
1Maintain a fact-specific conclusion.No proved fraud or particular adjustment/opinion follows solely from insufficient support; evaluate actual accounting/disclosure implications.

Non-credit errors

  • No matching rate proves every loan term arm's length.
Official ICAI concept source, SA 550 paragraphs 24/A42-A45

AUD-G09-D014 · 5 marks

Newly identified parties require wider follow-up An omitted related party is confirmed by supported records. The framework requires related-party accounting/disclosure. Management offers one invoice and says the auditor must not look for other transactions or inform the team. Required: Explain five required response areas. (5 marks)
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MarksCreditCase application / answer
1Promptly communicate relevant information to the engagement team.Do not keep the confirmed party isolated from other relevant audit work.
1Request management to identify all transactions with the newly identified party.One offered invoice does not establish the full relevant transaction set.
1Inquire why identification/disclosure controls failed.Investigate process gaps rather than assume the omission accidental or intentional.
1Perform appropriate substantive procedures and reconsider other undisclosed parties/transactions.Obtain necessary additional evidence beyond the single invoice.
1If nondisclosure appears intentional, evaluate implications including fraud risk.Intentionality is an assessed condition, not a supplied fact here; omission alone is not proven fraud.

Non-credit errors

  • No single invoice closes newly identified party response.
Official ICAI concept source, SA 550 paragraphs 21-22

AUD-G09-D015 · 10 marks

A material fact is known after issue Statements and the auditor's report have been issued. A fact becomes known that, if known at report date, may have caused report amendment. Management amends the statements, but plans no notification of previous recipients. No permitted restricted-amendment exception has been established. Required: (a) Explain three initial responses. (3 marks) (b) Explain four actions when amendment is made. (4 marks) (c) Explain the report-note reference, non-cooperation response and routine-duty limit. (3 marks)
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MarksCreditCase application / answer
1Discuss with management and appropriate governance.Issue does not permit ignoring a qualifying known fact.
1Determine whether statements need amendment.Evaluate actual facts and framework rather than assume every later event changes prior statements.
1Inquire how management intends to address the matter.An amendment plan must also address the issued-statement situation.
1Perform necessary audit procedures on amendments.Obtain actual evidence rather than merely accept revised text.
1Review steps to inform recipients of previously issued statements/report.The missing notification plan is part of the required response, not an optional courtesy.
1Ordinarily extend subsequent-event procedures to the new report date.No restricted-amendment exception is established; do not assume limited coverage automatically.
1Provide a new report dated no earlier than amended-statement approval.Do not date from an earlier unapproved draft.
1Include an Emphasis of Matter or Other Matter paragraph referring to the explanatory note and earlier report.The note/report reference concerns reasons for amendment, not a substitute for amendment testing.
1If management fails necessary informing/amendment steps, notify appropriate parties and take appropriate action to seek to prevent reliance if failure persists.Assess exact SA 56017 circumstances; do not invent a universal legal filing or claim action already taken.
1No routine post-issue procedure duty does not remove this known-fact response.The triggering facts and actual results matter; no particular fraud/opinion conclusion is otherwise supplied.

Non-credit errors

  • No issue ends every duty when a qualifying fact becomes known.
Official ICAI concept source, SA 560 paragraphs 14-17

AUD-G09-D016 · 3 marks

Dual dating is not a shortcut for any amendment Management wishes to amend only one subsequent-event note and proposes an additional report date. The auditor has not checked whether law/framework permits restricted amendment/approval. Required: Explain permission conditions, restricted coverage and the default boundary. (3 marks)
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MarksCreditCase application / answer
1SA56012 requires that relevant law/regulation/framework not prohibit restricted amendment and restricted approval.Management preference alone does not establish the permission conditions.
1Where conditions apply, subsequent-event procedures may be restricted to that amendment with prescribed report-date/statement treatment.The report must convey the restricted scope rather than imply all later events were covered.
1Absent established conditions, apply the ordinary required extension/new-report procedures as appropriate.Do not call a proposed extra date completed coverage or universally permitted dual dating.

Non-credit errors

  • No management preference alone permits dual dating.
Official ICAI concept source, SA 560 paragraphs 11-12

AUD-G09-D017 · 5 marks

Material uncertainty with adequate disclosure is a specific branch The auditor concludes going-concern basis is appropriate and material uncertainty exists. Adequate disclosure is established, and no other opinion issue is supplied. The trainee proposes qualified opinion solely for the uncertainty or an ordinary emphasis paragraph instead. Required: Explain the opinion, separate heading, note link, uncertainty wording and no-guarantee limit. (5 marks)
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MarksCreditCase application / answer
1Express an unmodified opinion under the supplied SA57022 conditions.Uncertainty alone with appropriate basis/adequate disclosure does not require qualification in respect of this matter.
1Include a separate Material Uncertainty Related to Going Concern section.Do not substitute a generic emphasis paragraph for the specified section.
1Draw attention to the note disclosing principal conditions and plans.Use the actual adequate disclosure, not invent the note content or identifier.
1State that a material uncertainty exists that may cast significant doubt and opinion is not modified in respect of it.The distinct section is not itself a modified opinion.
1This does not guarantee survival or resolve every other audit issue.The scenario supplies no other issue; any other modification would require its own facts.

Non-credit errors

  • No automatic qualification or generic emphasis substitution here.
Official ICAI concept source, SA 570 paragraphs 19/22

AUD-G09-D018 · 5 marks

Inappropriate basis and inadequate uncertainty disclosure differ For entityA, the auditor concludes going-concern basis was used inappropriately. For entityB, basis is appropriate and material uncertainty exists, but disclosure is inadequate. No pervasiveness conclusion is supplied forB. Required: Explain A's outcome, B's branch, report explanation and two limits. (5 marks)
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MarksCreditCase application / answer
1EntityA requires an adverse opinion under SA57021.The supplied conclusion is inappropriate basis, not merely uncertain future survival.
1EntityB requires qualified or adverse as appropriate under SA705.Inadequate disclosure differs from the adequate-disclosure/unmodified-MURGC branch.
1B's basis-for-modification section states the uncertainty and inadequate disclosure.Do not claim the omission adequately disclosed or merely add the adequate-disclosure section.
1Do not choose B's exact type without appropriate assessed facts.Materiality/pervasiveness and applicable reporting requirements determine qualified versus adverse.
1Do not confuse indicators, evidence inability and concluded accounting/disclosure defects.Here A/B supplied conclusions support these branches; other scenarios require their own evaluation.

Non-credit errors

  • No every going-concern problem uses one opinion type.
Official ICAI concept source, SA 570 paragraphs 21-23

AUD-G09-D019 · 5 marks

No material uncertainty does not mean no disclosure work Events cast significant doubt, but after appropriate evidence the auditor concludes no material uncertainty exists. Management says that permits removal of every related disclosure. Approval of statements is also significantly delayed for unexplained reasons. Required: Explain disclosure evaluation, delay inquiry, additional-work trigger, governance topics and reporting limit. (5 marks)
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MarksCreditCase application / answer
1Evaluate adequate event/condition disclosures under the applicable framework despite no material uncertainty.SA57020 does not automatically remove all disclosure requirements.
1Inquire into reasons for significant approval delay.An unexplained delay is not evidence that going-concern work is complete.
1If delay may relate to going-concern conditions, perform necessary additional procedures and consider uncertainty implications.Do not presume the cause or existing conclusion remains supported without new relevant facts.
1Communicate relevant events/conditions and basis, uncertainty, disclosure and report implications to governance unless all are managing.Use actual evaluated matters, not a guarantee from the no-uncertainty conclusion.
1A no-material-uncertainty conclusion does not automatically select a modified opinion.Evaluate relevant disclosures/new evidence and actual reporting requirements; no inadequacy finding or delay cause is supplied.

Non-credit errors

  • No no-uncertainty conclusion eliminates all disclosure evaluation.
Official ICAI concept source, SA 570 paragraphs 20/25-26

AUD-G09-D020 · 10 marks

New management, old periods and inconsistent letters New responsible management says it need not represent periods before appointment, even though the report covers comparative statements. It provides current-only core letters and a specific letter contradicting supported records. The auditor has not resolved the conflict or concluded sufficient integrity doubt. No permitted public-statement substitute is established. Required: (a) Explain four signer/period/core-evidence points. (4 marks) (b) Explain three inconsistency/reliability responses. (3 marks) (c) Explain the specific core-unreliability/non-provision reporting conditions and the present limit. (3 marks)
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MarksCreditCase application / answer
1Request representations from appropriate responsible, knowledgeable management.Appointment timing does not remove current management's statement-preparation responsibility.
1Cover all statements/periods referred to in the report.Current-only letters do not establish required comparative-period coverage.
1The requirement to obtain whole-period coverage still applies when current management was not in place earlier.Investigate relevant responsibilities/inquiries rather than exempt all prior periods automatically.
1Representations do not replace necessary other evidence.The corrected letters would not independently prove the old records or contradictory assertion.
1Attempt to resolve inconsistency with appropriate audit procedures.Compare actual supporting records and management explanations rather than choose the signed letter automatically.
1If unresolved, reconsider management competence/integrity/values/diligence and evidence reliability.The supplied absence of a final integrity conclusion must not become a fabricated finding.
1If representations are unreliable, take appropriate actions and evaluate opinion implications with regard to SA 58019.Distinguish a specific contradiction from the required core representations being unreliable.
1Sufficient integrity doubt making required 9-10 representations unreliable requires disclaimer under SA 705.This precise condition must be established, not inferred automatically from appointment timing.
1Non-provision of required 9-10 representations also requires disclaimer.Discuss and address missing required coverage; do not relabel the current-only letter as a complete comparative representation.
1No automatic disclaimer from every unresolved specific contradiction alone is supplied.Determine actual provision and final reliability conditions; document gaps rather than claim whole-period letters received.

Non-credit errors

  • No new appointment exempts required comparative coverage.
  • No fabricated integrity conclusion from a specific conflict.
Official ICAI concept source, SA 580 paragraphs 8-19/A17-A18

AUD-G09-D021 · 3 marks

A minimal framework is not a related-party exemption Management says its framework has minimal related-party requirements, so the auditor need not understand related relationships at all. Required: Explain understanding, presentation objective and fraud-risk limit. (3 marks)
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MarksCreditCase application / answer
1Understanding remains necessary even with minimal or no specific framework requirements.Do not omit the relationship/transaction work merely because detailed disclosure rules are limited.
1Evaluate whether affected statements achieve true/fair presentation or are not misleading, as relevant.Apply the actual framework rather than invent universal disclosure rules.
1Understanding also supports identification/assessment of fraud risk factors.No specific rules does not imply no fraud risk, but the relationship alone is not proven fraud.

Non-credit errors

  • No minimal framework means no related-party understanding.
Official ICAI concept source, SA 550 paragraphs 4-9

AUD-G09-D022 · 5 marks

Names without relationship nature leave a gap The audit file lists related-party names only. Significant matters were not communicated to governance, whose members are not involved in management. Management signs a representation that all relationships were disclosed and properly accounted for. Required: Explain documentation, governance communication, two representation elements and the evidence limit. (5 marks)
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MarksCreditCase application / answer
1Document identified party names and the nature of related relationships.A names-only list omits the relationship nature required by SA55028.
1Communicate significant related-party audit matters to governance unless all are involved in management.The stated governance is not managing; management receiving information does not automatically satisfy this communication.
1Obtain required identity/relationship/transaction disclosure representation where framework requirements apply.It concerns what management/governance know and disclosed to the auditor, not a substitute for identification work.
1Obtain required appropriate accounting/disclosure representation under the framework.Evaluate actual supporting evidence rather than treat a signed assertion as proof of correct treatment.
1Representations do not cure missing documentation/communication or other necessary evidence.Record actual work and gaps, without a predetermined fraud/opinion conclusion from the omissions.

Non-credit errors

  • No names-only list or signed letter closes all related-party duties.
Official ICAI concept source, SA 550 paragraphs 26-28

AUD-G09-D023 · 5 marks

An unusual arrangement needs its actual substance A special-purpose arrangement has little equity held by the entity, but the entity may control its activities in substance. Management excludes it from the related-party review solely because shareholding is small. The applicable framework's classification has not yet been checked. Required: Explain shareholding limit, factual understanding, framework classification, transaction/control work and the conclusion boundary. (5 marks)
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MarksCreditCase application / answer
1Small or absent equity ownership does not automatically exclude a controlled arrangement.Substance and actual relevant relationships can matter to related-party identification.
1Investigate supported facts about control/significant influence and arrangements.Understand decision rights, purposes and actual involvement rather than classify from an unverified label.
1Determine related-party status under the applicable framework/SA definitions.No full framework classification is supplied; do not invent a universal percentage threshold.
1If relevant, investigate transactions/purposes and actual identification/accounting/disclosure/approval controls.A small equity number does not substitute for the appropriate risk response.
1Complexity/control indicators are not themselves proven fraud or a particular opinion.Obtain sufficient appropriate evidence and document actual conclusions and unresolved scope.

Non-credit errors

  • No low ownership percentage automatically excludes substance-based relationship.
Official ICAI concept source, SA 550 paragraphs 10/13-16/A7

AUD-G09-D024 · 5 marks

Missing minutes still leave questions to ask Subsequent-event work finds that governance met after year-end, but minutes are not yet available. The team omits the meeting and reads no latest interim information, relying only on last year's event checklist. Required: Explain management-process understanding, inquiries, unavailable minutes, interim information and reflection/representation work. (5 marks)
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MarksCreditCase application / answer
1Understand management's current procedures to identify subsequent events.An old checklist is not evidence that the current process operated through the relevant period.
1Inquire of management and appropriate governance about events affecting the statements.Target actual current events and intended statement-to-report coverage.
1Read available later minutes and inquire about matters discussed where minutes are unavailable.Missing minutes are not permission to omit the known meeting.
1Read latest subsequent interim statements, if any.Assess their availability/relevance rather than silently omit them or invent a nonexistent interim statement.
1Determine appropriate reflection of identified adjustment/disclosure events and obtain required representation.Framework/evidence drive treatment; the representation does not replace necessary event procedures.

Non-credit errors

  • No unavailable minutes remove inquiry about the known meeting.
Official ICAI concept source, SA 560 paragraphs 6-9

AUD-G09-D025 · 10 marks

The same fact arrives at three different stages Assume in each independent situation a fact, if known at report date, may require amendment of the report. SituationA: statements have not been issued and the report has not been provided to the entity. SituationB: report has been provided but statements remain unissued. SituationC: statements/report have been issued. Management refuses necessary amendment inA/B. InC it refuses both necessary amendment and informing earlier recipients. No universal statutory remedy is supplied. Required: (a) Explain three common initial actions. (3 marks) (b) Apply the distinct A/B/C non-cooperation branches. (4 marks) (c) Explain three timing/evidence limits. (3 marks)
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MarksCreditCase application / answer
1Discuss the qualifying fact with management and appropriate governance.The stage does not erase the need to respond once the fact becomes known.
1Determine whether statements need amendment.The scenario supplies necessary refusal branches but actual treatment still follows framework and supported fact.
1Inquire how management intends to address the fact.An intention is not amendment performed or notification delivered.
1A: if report not yet provided and necessary amendment refused, modify opinion under SA 705 then provide it.Do not apply the already-issued-report notification branch to an undelivered report.
1B: notify management and appropriate governance not to issue before necessary amendment.The already-provided report cannot simply be treated as withheld.
1B: if nevertheless issued unamended, take appropriate action seeking to prevent reliance.This follows the actual subsequent issue condition, not a fabricated action completed now.
1C: notify appropriate parties of seeking to prevent future reliance, and take appropriate action if failures persist.Here both needed recipient-information and amendment steps are refused; apply the post-issue branch.
1No routine post-report/post-issue audit duty does not permit ignoring qualifying known facts.Distinguish ongoing procedures from response to a fact actually learned.
1Earlier recipients and amendment approval/report dating matter in actual amendment cases.Do not report old statements replaced or a new report signed when no amendment happened.
1Exact legal action/opinion type is not supplied for every branch.Assess applicable obligations and SA 705 facts rather than invent a universal filing or identical report outcome.

Non-credit errors

  • No one report-provided/issued branch applies at every stage.
Official ICAI concept source, SA 560 paragraphs 10-17

AUD-G09-D026 · 3 marks

Signed statements are not the representation letter Management hands over signed statements and ledgers but refuses a representation letter, claiming the signatures meet every written-representation requirement. Required: Explain the definition, appropriate form and the core-condition boundary. (3 marks)
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1Written representations under SA580 do not include statements, assertions in them or supporting books/records.Those signed documents do not automatically constitute the requested representation.
1Use the required representation letter addressed to the auditor unless a valid applicable public-statement determination covers relevant matters.No such exception is supplied; a signature on ledgers is not the representation-letter form.
1Address actual requested non-provision and the specific core9-10 rule.If required core representations are not provided, disclaimer under SA58019 follows; do not label the financial statements themselves as supplied core letters.

Non-credit errors

  • No signed statements equal the required core representation letter.
Official ICAI concept source, SA 580 paragraphs 6/14/18-19

AUD-G09-D027 · 5 marks

A public statement can cover only what it actually confirms An applicable regulation requires management to publish a responsibility statement. The auditor finds it given by the appropriate responsible people and covering preparation responsibility, but it says nothing about agreed information/access or all transactions recorded. Required: Explain the form exception, covered matter, missing matters, responsibility description and evidence limit. (5 marks)
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1The auditor may determine a legally required public statement supplies some or all required9-10 representations.This is a scoped determination, not permission to substitute any publicity statement.
1The relevant covered preparation matter need not be repeated in the letter if that determination is supported.Actual authors/approval and content are supplied for that matter.
1Request missing information/access and transaction-completeness representations.A preparation-only statement does not cover paragraph10 automatically.
1Describe responsibilities consistently with the engagement terms.Do not widen the public statement's words to responsibilities it did not confirm.
1Public form does not make representations sufficient evidence alone.Obtain/evaluate necessary other evidence and address actual missing core matters; no blanket exception to SA58019 is created.

Non-credit errors

  • No partly covering public statement supplies every required representation.
Official ICAI concept source, SA 580 paragraphs 9-14/A19-A21

AUD-G09-D028 · 5 marks

Declining to assess is not evidence that conditions are harmless Events suggest financing difficulties. Management has made no going-concern assessment and refuses the auditor's request to make one. It offers only an informal assurance that the business always survives. Required: Explain assessment request, basis/events discussion, further evidence, report implications and the limit. (5 marks)
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1Discuss intended basis and relevant events when no preliminary assessment exists.Historical survival is not an assessment of current conditions.
1Where relevant events exist and management has not assessed, request an assessment.Do not silently perform management's responsibility or treat the refusal as compliance.
1Obtain appropriate further evidence on plans, data, assumptions and mitigating factors.An informal assurance alone does not determine uncertainty or basis appropriateness.
1If management is unwilling to make/extend assessment, consider report implications.SA57024 requires evaluated implications, not a universal adverse opinion from refusal alone.
1Distinguish refusal/evidence gaps from concluded inappropriate basis or established disclosure failure.No final uncertainty/basis/evidence conclusion is supplied to choose a specific report branch.

Non-credit errors

  • No history of survival substitutes for current assessment.
Official ICAI concept source, SA 570 paragraphs 10/16/24

AUD-G09-D029 · 10 marks

Forecast arithmetic can be correct and still unsupported For this exercise, opening cash is Rs 8 lakh. Monthly receipts are Rs 6 lakh and operating payments Rs 7 lakh for six months. A Rs 5 lakh debt payment falls at month 6. Management adds Rs 9 lakh proposed financing, with no commitment evidence, and concludes the forecast proves survival. These are supplied assumptions, not verified audit facts. Required: (a) Compute six-month closing cash excluding and including proposed financing. (2 marks) (b) Explain four distinct evidence/planning points. (4 marks) (c) Explain horizon/beyond-period work. (2 marks) (d) Explain conclusions/reporting and the representation limit. (2 marks)
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1Before proposed financing:8 +6(6-7)-5 = minus Rs 3 lakh.The supplied six-month assumptions imply a shortfall, not positive closing cash.
1Including proposed financing:minus 3 +9 = Rs 6 lakh.This arithmetic assumes the Rs 9 lakh actually arrives when needed; it is not evidence of commitment or feasibility.
1Evaluate underlying forecast-data reliability.Validate relevant opening cash, receipts, payments and debt information rather than accept supplied assumptions as audited facts.
1Obtain adequate support for forecast assumptions.Investigate receipt/payment expectations and timing, not only a final total.
1Evaluate plan feasibility and whether likely to improve the position.Seek relevant financing support; a proposal is not cash received or an enforceable commitment proved.
1Consider mitigating factors and facts since assessment.Investigate actual available changes and timing without inventing a loan approval.
1If assessment covers less than twelve months from statement date, request extension to at least twelve months.The six-month exercise is not a sufficient minimum assessment horizon; longer framework/law periods may apply.
1Inquire about known events/conditions beyond assessment that may cast significant doubt.Month 6 arithmetic does not establish all later financing pressures resolved.
1Conclude on basis and material uncertainty from sufficient appropriate evidence.Shortfall/positive alternative alone does not automatically choose adverse or unmodified opinion; apply actual assessed facts/disclosures.
1Request relevant plan/feasibility representations, without replacing necessary other evidence.Neither the forecast nor a letter guarantees survival or proves financing obtained.

Non-credit errors

  • No positive forecast with unsupported financing proves survival.
Official ICAI concept source, SA 570 paragraphs 12-18

AUD-G09-D030 · 10 marks

Core letters signed, but integrity doubt is sufficient Core paragraph 9-10 representations are signed. After appropriate investigation, the auditor concludes there is sufficient doubt about management integrity such that those core representations are not reliable. A separate estimate-intent letter was obtained early in the audit and conditions later changed. The trainee says signatures prevent disclaimer and the early letter cannot be updated. Required: (a) Explain four reliability/action/reporting points. (4 marks) (b) Explain early-intent, update, timing and period points. (4 marks) (c) Explain two evidence/conclusion limits. (2 marks)
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1Concerns about integrity affect representation and general evidence reliability.Signed form is not a guarantee of reliable content.
1Take appropriate action on unreliable representations with regard to SA 58019.Do not treat signature receipt as the end of the reliability assessment.
1Sufficient integrity doubt making required 9-10 representations unreliable requires disclaimer under SA 705.The exact condition is concluded in this case; it is not merely an unresolved specific disagreement.
1Distinguish non-provision from unreliability of supplied core letters.Both precise SA 58019 branches can require disclaimer; supplied signatures do not immunise the integrity branch.
1A specific intent representation may be appropriate during the audit.It can support other evidence on relevant intent, not establish all accounting assertions.
1Conditions changing may require an updated specific representation.The early letter is not permanently current because it was once signed.
1Required representations are dated near as practicable to, but not after, the report date.The report cannot be dated before necessary representation evidence; do not backdate an updated letter.
1Cover all statements and relevant periods referred to in the report.A specific early letter does not replace the full required coverage.
1Representations never provide sufficient appropriate evidence alone on their matters.Other necessary evidence remains required even when a letter is updated.
1Do not generalise this concluded integrity condition to every minor conflict.This case supplies sufficient doubt/core unreliability; cases without that finding need their own assessment.

Non-credit errors

  • No signed core letters prevent the specified integrity-condition disclaimer.
Official ICAI concept source, SA 580 paragraphs 3/13/15-19/A13/A15-A18