Ch 16: PROFESSIONAL ETHICS & LIABILITIES OF AUDITORS — Previous Year Exam Questions (PYQ)

1(a): Non-Compliance with Laws and Regulations (NOCLAR)

5 Marks

Core Limited submitted a credit proposal XYZ Bank Limited for the sanction of a Term Loan of ₹ 150.00 crore required for procuring and installing a latest Plant and machinery for their upcoming project. Based on the application, XYZ Bank Limited approached CA P to investigate the profitability of the business for judging the accuracy of the schedule of repayment furnished by Core Limited, as well as the value of the security in the form of assets of the business already possessed and those which will be created out of the loan. Elucidate the steps that should be undertaken by CA P? (b) CA N is carrying out an audit of restated financial statements of BQR Limited for past 3 financial years i.e. 2025-26, 2024-25 and 2023-24 for onward submission to SEBI pursuant to their upcoming IPO (Initial Public Offer). CA N is planning to issue an Audit Report on 5th August, 2025 covering these restated financial statements. Before issuing the audit report, CA N requested Management Representation Letter from the management of the Company for this assignment. The Management of the Company provided Management Representation Letter dated 1st April, 2025 covering the period of financial year 2025-26 only as they were not in position to provide for the financial year 2025-26 and 2023-24 because they were not in place during that period. How would CA N deal with the above situation as per relevant Standard on Auditing? (c) CA Raj, a practicing chartered accountant, is offered to take up an appointment as a "Secretary" in his professional capacity by the Central Government for a Metro Project for a term of 2 years not on a salary-cum- full-time basis. After giving deep thought to the offer, CA Raj accepted the appointment. Comment in terms of the Chartered Accountant Act, 1949 and Schedules thereto.

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1(b): Fundamental Principles

5 Marks

With reference to the statutory framework governing 'Fundamental Principles' under Advanced Auditing, Assurance & Professional Ethics (CA Final), critically examine the substantive legal provisions, scope, and applicability thresholds. Specifically elucidate: (i) the governing statutory sections/rules/standards; (ii) eligibility conditions, numerical limits, and compliance parameters; and (iii) consequences of non-compliance or procedural default.

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2(a): Threats, Evaluation of Threats and Safeguards

5 Marks

An entity / assessee is subject to statutory and regulatory obligations concerning 'Threats, Evaluation of Threats and Safeguards' under Advanced Auditing, Assurance & Professional Ethics (CA Final). Examine the practical application and computational methodology involved. Specifically elucidate: (i) applicable statutory principles and thresholds; (ii) step-by-step procedural/computational mechanics; and (iii) mandatory documentation and prescribed statutory filings.

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2(b): Non-Compliance with Laws and Regulations (NOCLAR)

5 Marks

Critically evaluate the compliance architecture, reporting mandates, and statutory time limits governing 'Non-Compliance with Laws and Regulations (NOCLAR)' under Advanced Auditing, Assurance & Professional Ethics (CA Final). Specifically discuss: (i) key statutory provisions and recent regulatory amendments; (ii) procedural roadmap and e-filing requirements; and (iii) remedial mechanisms available in the event of administrative or statutory disputes.

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3(a): Membership of the Institute

5 Marks

As a qualified professional consultant, provide a comprehensive advisory analysis on 'Membership of the Institute' under Advanced Auditing, Assurance & Professional Ethics (CA Final). Your advisory opinion must address: (i) statutory prerequisites and criteria; (ii) risk management and internal audit considerations; and (iii) authoritative legal precedents or administrative guidelines governing the issue.

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3(b): Disabilities for the Purpose of Membership

5 Marks

With reference to the statutory framework governing 'Disabilities for the Purpose of Membership' under Advanced Auditing, Assurance & Professional Ethics (CA Final), critically examine the substantive legal provisions, scope, and applicability thresholds. Specifically elucidate: (i) the governing statutory sections/rules/standards; (ii) eligibility conditions, numerical limits, and compliance parameters; and (iii) consequences of non-compliance or procedural default.

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