Interesting Audit Updates

Audit reports of FY 15-16, will have a New Annexure to Independent Auditor Report for all companies.

Infact it is not just such annexure it is full fledged separate report in itself.

“Report on the Internal Financial Controls(IFC)”

Following will be the key components of this report as per Guidance Note on IFC

2.Management Responsibility for IFC
3.Auditor Responsibility
4.Meaning of IFC over Financial Reporting
5.Inherent Limitations of IFC over FR

Happy Additional Responsibilities !!!

If report is in appropriate happy exorbitant fines and damages!!!

I hope client pays additional fees!!!


As per Para A11, SA 230, auditor CAN prepare Completion Memorandum or Audit Summary, its optional not at all compulsory.

It is advisable to prepare it in large and complex audits.

Because it helps efficient and effective reviews (by seniors of juniors work) and inspections (after completion for quality testing).

Auditor records significant matters encountered during audit and how they were resolved. It can be prepared in any format, need not be understandable by experienced auditor as it is voluntary.

It also helps next year team to get birds eye view of audit, so they can plan next years audit.

Further I will sending amendments for Nov 15 by month end.

CA Ravi Taori


Interesting Audit Update

As per SA 330 it is not mandatory to perform test of controls each year, it should be done once in 3 years.

Provided there is no change in controls from the previous year in which it was last checked.

But there is one important EXCEPTION , controls which are working to protect against “Significant Risk” ( where likely hood and impact of misstatement is high) should be checked “each year”.
CA Ravi Taori


Hello everyone, want to share a interesting point, some of you must have noticed it, its relevant for CARO. It can be used to get many advantages.

Private company which is subsidiary of public company will be deemed to be public company taking away all benefits of private company.

But to boost foreign companies and increase ease of doing business in India, MCA clarified that status of private company which is subsidiary of foreign holding company will not change that means deeming provisions will not be applicable to them. (Earlier 100% should be held by one or more foreign bodies was required, now there is no such condition )

so be careful in exams in such cases company can get exemption from CARO. And in practical life you can have added advantage.


Out of the box by ICAI (CA Final Audit Nov 16 Paper Analysis) “Though not difficult but definitely out of the box paper by ICAI”

• Only 37 marks out of 116 from Practice Manual / Past Papers last time it was around 60

• No question was asked from Nov 16 RTP, last time around 12 marks were asked

• Case Study of only 4 marks from Professional Ethics, generally it is 16 marks case studies which are most scoring, Other 2 questions were simple but theory based.

• Company Audit & CARO accounted for 16 marks which were for 28 marks last time.

• Around 60 marks questions from small chapters which were asked for 40 marks last time. But the big change is many questions were new from remote corners of module, last time they were from PM.

• Once in 3-4 attempts you get such paper.

• If some has good conceptual knowledge they would have written good answers, may not be exact as expected, but they can expect reasonable marks.

• All above things are justified by ICAI as it is a CA Final examination, which is one of the toughest in the world.

• It appears as if, examiner studied books & notes of all popular professors, then marked areas of module (2073 Pages) which were left out by all, as they were never asked for so many exams. And then many questions were asked from such remote corners of module.

• I expect checking will be lenient.

Read more at:


#‎Audit‬ Updates

‪#‎SA260‬ says that it is related to communication of auditor with ‪#‎TCWG‬ and not with management. So SA 260 specifically guides what to communicate when to communicate with TCWG. Now in some organisations TCWG and management are same. They only work and they only supervise. So TCWG = Management. Then in such case are we still suppose to communicate, or management must be aware about all things, no need to have again communication??? Answer is as per SA 260 if both are same we have to do all communications as required by standard with Management only which is even TCWG. But communication is must we cannot ignore, even if both are same. Be careful, else it will lead to deviation from requirement of SA 260.

CA Ravi Taori


Interesting Audit Update

As per SA we have to perform risk based audit that means where there is more risk then more audit efforts, we don’t treat all areas equally while selecting audit procedures.

Many researches has identified that revenue recognition is very sensitive area and it is prone to misstatement.

Hence when #SA240 was drafted, it is specifically mentioned in Para 26 that PRESUME that there will be risks (Not high risk just risks) in revenue recognition, so automatically we pay more attention to revenue recognition checking.

But this presumption is rebuttable that means if we have reason to justify no risk, then we can ignore this presumption and go for simple / limited audit procedures and we have to document reasons.

For example if company get revenue from single leasehold property and there is long term agreement for many years then there is no risk in revenue recognition of rent.

CA Ravi Taori


We are taking initiative to bring CA Firms & Students closer to reach other. So that firms get good articles and students can get suitable firms.

CA Firms can fill up small form about contact details, location and expected work in this link

above form can be filled up by partners, employees and existing articles or any known person of firm.

CA Students can fill up their contact details and location in the given so that we can send list of firms with area of work expected during article-ship.

So help each other for betterment of article-ship

CA Ravi Taori


It’s regarding audit of Insurance companies.

Earlier government was very cautious with share capital of Insurance company hence, Insurance companies could have only “Equity Shares”

But not after amendment of 2015 which is applicable in Nov 15 exams.

Government has given power to IRDA to prescribe other types of shares also.(No announcement from IRDA yet)

Further limit of 49% (26% automatic without approval and above 26% with CG approval) is applicable only to Equity shares.

So plan is clear in some time IRDA will allow preference shares and foreign companies will be able to buy even 100% of preference shares.

Loads of money will flow to Insurance sectors.


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Many students keep asking this question that why I score between 150-200 in a group or 30-40 in a particular subject? Why I can’t score more? I have done my classes. I was serious in my studies & during exams also. I have sacrificed lots of things. I was good in IPCC. But why I am not able to crack finals or particular group? Why Why Why Why Why?

Ok guys point is
You all know about it…
You don’t know you are not having it….
You don’t know how to get it….
You work less for it….
Ok so it is a biggest killer is…..

So what is it?? Let’s analyse few things first.


In financial reporting you know proposed dividend should “not” be deducted for computing capital employed but it “should” be deducted for computing net assets. But why this distinction is there??

Sometimes we have to take weighted average and sometimes simple but Why??
Proposed dividend is not a liability but it is written in short term provision. But Why??


We know what Walter’s formula is, we have practiced 20 problems but we don’t why it is like that , why it is different from Gordon formula and we get confused or make silly mistake at last moment in exams…


We know there is peer review, quality review, review v/s audit, review by senior but we don’t know what the difference between them is. We know risk at financial statement level and assertion level but we don’t know when to apply & where to apply.


We know formulas for standard costing but we don’t know why we multiply by actual rate and why we multiply by standard quantity??

And list goes on and on and on and on…..

So problem is
We don’t ask “why” on each step?
We don’t compare things and ask why there is a difference?

This is because
We don’t have time to go in-depth?
We want to give both groups, we want to do multiple revisions & hence we don’t time to ask why!!!

We want to run very fast achieve very fast? Point is you need to slow down learn slowly step by step make strong foundation and then conquer exams.

We get tensed when we spend more time on concept, hence we don’t ask why???
We lose interest when we don’t crack something, hence we leave Why???
We don’t know how to understand something, hence we leave the concept.
We don’t ask doubts because people will think I am a fool!!!
There is no one to solve high level doubts / why

We simply read and solve again & again and remember things and produce it from memory.

Memory is bad 50% of times, we get confused many times; we do silly mistakes and we keep scoring low.

Guy’s the biggest reason is we don’t ask “WHY”???

So What is the solution?? What to do???

If you Score below 180 go for one group.
Target next 100 days for in-depth studies.
For one week study, the first half day one subject and the other half another subject.
Revision and cumulative revision on Sundays with suggested answers or Scanner?

Take guidance from professors for each subject. Ask this “why” to each one of them again and again without hesitation, after you try to think about these doubts for at-least 2-3 days on your own? This will develop your thought process?

Study Methodology

Step 1: Why this concept is there? Read all the “questions” only questions not answers related to this concept at the start to increase curiosity

Step 2: Read whole concept at one stretch? Then ask why I was not able to think on my own, where I was lacking in the thought process?

Step 3: How to remember? Which flow is good, diagram is good, story is good, mnemonic etc

Step 4: Write key words in sequence to remember, don’t make bulky summary.

Target weekly Sunday revision and only one revision of all 4 subjects in last 20 days? Till that time keep asking why?

Study with slow and steady speed, ask rationale behind each step, take guidance from knowledgeable people, and aim quality not quantity

Good luck!! for guidance contact or whatsapp 9096000033