The firm from which you are pursuing your articleship training is the internal auditor of Sukh Ltd. While conducting the audit of the medical…

CA Final · Advanced Auditing, Assurance and Professional Ethics · MTP · May 2025
The firm from which you are pursuing your articleship training is the internal auditor of Sukh Ltd. While conducting the audit of the medical expense reimbursements of the company employees, you come across some bills which are clearly not medical in nature, and some others which have been overwritten. During the discussions, the accountant points out that the employee is a functional head who enjoys a significantly higher medical expense reimbursement limit, and that you should ignore those bills as the amount is not material. You will:
(A) Accept the explanation and the bills.
(B) Recommend that the claim should be reduced, and clear guidelines should be issued to all employees on the matter, with a provision for disciplinary action.
(C) Recommend that the employee be asked to submit fresh bills to avail the tax benefit.
(D) Recommend that the employee be taxed on the aggregate amount of the suspect bills.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

Recommend that the claim should be reduced, and clear guidelines should be issued to all employees on the matter, with a provision for disciplinary action.

Topics: Group Audits

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