While auditing a charitable trust for the year ended 31 March 2025, the auditor obtained a list of books and records maintained by the trust and…

CA Intermediate · Auditing and Ethics · RTP · May 2026
While auditing a charitable trust for the year ended 31 March 2025, the auditor obtained a list of books and records maintained by the trust and verified them with the mandatory records prescribed. Based on his evaluation of internal controls, he applied test checks, complied with the applicable Accounting Standards and Standards on Auditing, considered materiality while performing audit procedures and maintained detailed working papers documenting the audit evidence relied upon for forming his opinion. Which of the following actions of the auditor in the above case is most appropriate as per generally accepted auditing practices?
(A) Using professional judgment to determine audit tests, applying test checks based on internal control evaluation, considering materiality and maintaining working papers to support the audit opinion.
(B) Applying test checks irrespective of internal control evaluation, since trust audits are not governed by internal control considerations.
(C) Restricting compliance to Accounting Standards only, as Standards on Auditing are recommendatory in case of trust audits.
(D) Maintaining working papers only for material items, as immaterial matters do not require audit documentation.

Suggested Answer and Working Notes:

Correct Answer: Option (A)

Using professional judgment to determine audit tests, applying test checks based on internal control evaluation, considering materiality and maintaining working papers to support the audit opinion.

Topics: Audit Evidence, Risk Assessment and Internal Control

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