Maya & Associates, a Chartered Accountant firm is appointed as an auditor of ABC Pvt. Ltd. CA Maya, partner of the firm, has recently bought…

Maya & Associates, a Chartered Accountant firm is appointed as an auditor of ABC Pvt. Ltd. CA Maya, partner of the firm, has recently bought stock in ABC Pvt. Ltd. She believes that the company's goodwill will increase after the audit report is finalised, which could lead to a rise in stock price. As she reviews the company's financial statements, Maya decides to give unmodified opinion to help her investment. Puneet, the CEO of ABC Pvt. Ltd., has requested them to modify certain disclosures in the financial statements in a way that could mislead stakeholders. He argues that a more favourable presentation will help the company secure additional investments. Ashi, another Partner of Firm, feels that complying with this request would compromise ethical standards and worries about potential conflicts with the client. Maya & Associates has also been appointed as the statutory branch auditors of Delhi branch of CIC Bank. While carrying out the audit, the following key issues were identified: Issue 1: PV Ltd.'s account has seen no recovery for the past 18 months. However, the bank has not applied NPA norms or income recognition norms to this account. The management justifies this by stating that the account is guaranteed by the Central Government and that NPA and income recognition norms are not applicable. Government has not invoked the guarantee. Issue 2: CWP Traders has applied for a cash credit limit from CIC Bank for supporting working capital requirements on account of business expansion. In discussions with CWP Traders, CIC Bank has requested different forms of security, depending on the nature of the assets offered, which includes immovable property (warehouse), goods in stock, accounts receivable, and insurance policies. Borrower provided the security and was sanctioned cash credit limit of 4.50 Crores.