For conducting the statutory audit for the financial year 2024-25, CA P has been appointed by SEA Ltd., which is on the verge of becoming sick unit…
CA Final · Advanced Auditing, Assurance and Professional Ethics · PYQS · November 2024
For conducting the statutory audit for the financial year 2024-25, CA P has been appointed by SEA Ltd., which is on the verge of becoming sick unit and has accumulated losses but the said losses are not equal to or exceeding its entire net worth as per last audited accounts for the year 2023-24. The audited accounts for the year 2021-22, 2022-23 were showing liability for payment of undisputed audit fees payable to predecessor auditors but were settled completely during last F.Y. 2023-24.
Suggested Answer and Working Notes:
Correct Answer: Option (C)
CA P would not be held guilty of professional misconduct as he has accepted the appointment as auditor of SEA Ltd., which is not a sick unit, whose accumulated losses are not equal to or exceeding its entire net worth as per last audited accounts for the year 2023-24 and there are no unpaid undisputed audit fees of predecessor auditors.
Topics: Professional Ethics & Liabilities of Auditors, Special Features of Audit of Banks & Non-Banking Financial Companies
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