Title SUGGESTED ANSWERS- AUDIT PAPER 1.pdf ✅

Dheera Test Series Correct Answer: A – Include a separate section under “Material Uncertainty Related to Going Concern” Explanation: As per SA 570 (Revised), when there is a material uncertainty related to going concern, and management has disclosed this appropriately in the financial statements: • Auditor should include a separate section titled “Material Uncertainty Related to Going Concern” in the audit report. • The opinion is not modified if disclosures are adequate. Q6. Opinion when Going Concern Uncertainty Exists but Disclosed Correct Answer: C – Unmodified opinion Explanation: When the going concern basis is appropriate, and management has adequately disclosed the material uncertainty in the financial statements, the auditor should: • Not modify the opinion • Include a Material Uncertainty Related to Going Concern paragraph Therefore, the correct opinion is unmodified. Q7. Litigation Disclosure – Emphasis of Matter (SA 706) Correct Answer: C – Include an Emphasis of Matter paragraph Explanation: As per SA 706: • When a matter is: o Adequately disclosed o Fundamental to users’ understanding
Dheera Test Series o But not a Key Audit Matter → The auditor includes an Emphasis of Matter paragraph referring to the note in the financial statements. No modification in opinion is needed. Q8. Violations in Quality Control – SQC 1 Correct Answer: B – Human Resources and Monitoring Explanation: Based on the case: • Human Resources issues: o Staff deployed without checking qualifications/experience o Ethical declarations not updated • Monitoring issues: o No peer reviews or engagement reviews These indicate a failure in two elements of SQC 1: Human Resources and Monitoring.