MCQ for CA Final Audit - Chapter 8 AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS

Sample Multiple Choice Questions (MCQ's) for CA Final - Paper 3 - Advanced Auditing and Professional Ethics - Chapter 8: AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS - For Practice relevant for May/Nov 23 Examinations

 

Q:1 A Ltd. holds the ownership of 10% of voting power and control over the composition of Board of Directors of B Ltd.

               

  1. A Ltd is required to prepare consolidated financial statements with B Ltd. as B Ltd. is subsidiary of A Ltd.
  2. A Ltd is required to prepare consolidated financial statements with B Ltd. as B Ltd. is associate of A Ltd.
  3. A Ltd. is not required to prepare consolidated financial statements, as it is not in a position to control the B Ltd. being shareholding is B Ltd. is only 10 % of voting power.
  4. A Ltd is not required to prepare consolidated financial statements, as having control over composition of Board of Directors of B Ltd. is of no relevance.

 

Answer: 1

 

Q:2 ANC Ltd., a wholly owned subsidiary of H Ltd., is having two subsidiaries, ANC Ltd. is not a listed company. H Ltd. prepare and files consolidated financial statements with the Registrar. The Auditor of ANC Ltd. insists that the company is required to prepare its consolidated financial statements as it is also the holding company in respect of its subsidiary companies.       

 

  1. ANC Ltd. is required to prepare consolidated financial statements as there is no exclusion under section 129(3) with regard to consolidation.
  2. ANC Ltd. is not required to prepare consolidated financial statements as Para 31 of Ind-AS 110 allows exclusion in this case.
  3. ANC Ltd. is not required to prepare consolidated financial statements as para 11 of AS 21 allows exclusion in this case.
  4. ANC Ltd. is not required to prepare consolidated financial statements as Rule 6 of Companies (Accounts) Rules, 2014 allows exclusion in this case.

 

Answer: 4

 

Q:3 If auditor of parent company is also the auditor of all the components, this association requires the auditor:           

 

  1. to apply the procedures of SA 600 while auditing the consolidated financial statements.
  2. to report whether principles and procedures for preparation and presentation of consolidated F.S. as laid down in the relevant AS(s) have been followed.
  3. to incorporate Emphasis of Matter Paragraph in the audit report to state his association with the component.
  4. Both (a) and (b) above.

 

Answer: 2

 

Q:4 If auditor of parent company is not the auditor of the components, the auditor of parent company while auditing the consolidated financial statements is required to:           

 

  1. apply the procedures of SA 600 while auditing the consolidated financial statements.
  2. incorporate Emphasis of Matter Paragraph in the audit report as per requirement of SA 706.
  3. incorporate Other Matter Paragraph in the audit report as per requirement of SA 706.
  4. both (a) and (c) above.

 

Answer: 4

 

Q:5 When a component's financial statements are prepared under an accounting framework that is different than that of the framework used by the parent in preparing group's consolidated financial statements,      

 

  1. the parent's management perform a conversion of the components' audited F.S. from the framework used by the component to the framework under which the consolidated F.S. are prepared.
  2. Component may prepare financial statements on the basis of the parent's accounting policies, as outlined in the group accounting manual.
  3. both (a) and (b)
  4. either (a) or (b)

 

Answer: 4

 

Q:6 If auditor of component reports under an auditing framework that is different from that of the Parent,      

 

  1. in order to maintain consistency of the auditing framework, the components' financial statements should also be audited under a framework that corresponds to Indian auditing standards.
  2. auditor of the parent company may rely on the audit report of component auditor and include an emphasis of matter para in the audit report.
  3. auditor of the parent company may rely on the audit report of component auditor and include other matter in the audit report.
  4. auditor of the parent company may rely on the audit report of component auditor and include key audit matter in the audit report.

 

Answer: 1

 

CA Final - Paper 3 - Advanced Auditing and Professional Ethics - Chapter 9   

 

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