Question

Subject Auditing 100C0202A)
Date of Submission: 27th July 2021
Marks: 15
PVR Ltd is a chemical manufacturing company. They have appointed an auditor for Financial Year 2020-21
New auditor is a relative of one of the executive director of a company. Auditor also holds 300 shares of a
company
Company has 10 branches all over the India. In last year because of pandemic 2 branches did not have any
transactions? But rest of the branches were working to 80% capacity, Company is saying to new auditor that
since 2 branches are dormant, you are not required to audit the same. Also company is saying that additional 2
branches where transactions were there at 80% capacity, no accounting records kept & hence new auditor
should not check or examine those branches as well,
Company has also taken an investor for Rs 250/- crores in last year, New investor wants to check companies
audit report. Investor is of the opinion that since audit was performed by an independent entity, there will not
be any fraud or error accounting records
You are required to comment on following:
1. Was company's appointment of new auditor was as per legal framework?
2. Was auditor correct in accepting audit assignment?
3. What auditor should do about dormant branches branches where accounting records are not kept by
company?
4. How will you tackle investors about their assumption of NO Frauds or errors in books?
>

Answer 1

Answer:

4 How will you tackle investors about their assumption of no frauds or errors in books