Gunjan Mohta

1(a) SQC-1 : Quality Control for firms that Perform Audit and Review of Historical financial information and other assurance and Related Service Engagements As per SQC-1, the firm is required to maintain Monitoring process which include (i) Design and Implementation of firm Quality Control Policies and procedure. (QCPP's) (ii) Assess whether there are New Developement in the firm Quality Control Policies and procedure. New Development appropriately reflected in firm QCPP's (iii) Assign Responsibility of monitoring process to a partner/person with appropriate Experience & authority. (iv) Identify whether deficiency in the design and Control identified. (v) take appropriate remedial Action - Against the person who did not confirm to firm QCPP's - when deficiency in the firm Quality Control identified. In the given case, The CA firm Nest & Co., during the course of Internal Review identified deficiency in its monitoring Process. In the firm, # There was absence of Periodic inspection of audit Engagement for past 2 years (which seems a reasonably long period) # The Responsibility of monitoring process - assigned to In Experienced staff member - who lacked sufficient authority to initiate corrective action # further, for the identified deficiency - No remedial action was taken. Thus, the above points indicate about the Violations or deficient in the firm monitoring process. The firms Monitoring process is NOT appropriate As stated in the provisions of SQC-1 the firm should devise proper Monitoring process in compliance with the provision of SQC-1 and guidelines issued by ICAI & SQC-1.

Q-> 1(b) (i) The Auditor is required to follow the provisions and guidelines as given in SA-700, forming and opinion and Reporting on financial statements. while Performing audit there may be certain matters that in the Auditor's Professional Judgement were most significant in the audit of current Period financial statement that needs to be communicated with the TCWG/management Such matters are reported as key Audit matters (KAM) as per SA 701 to enhance the degree of confidence of intended users of financial statements and to Enhance the communicate value of the financial statements. Key Audit matters are Identified from matter communicated to TCWG, while identifying those matter Auditor should consider the following points - (i) Area of High Assessed Risk of material Misstatement (ROMM) ii) significant Events / Transactions Identified during the Audit. iii) Effect of significant Event & transactions on the auditor's Professional Judgement. Thus, Based upon these facts - matter concerning "Impairment of GOODWILL" should be reported by as a KAM under the respective Heading Key Audit Matter paragraph. Q. Part (ii) [EOM] SA 706 - Emphasis of matter paragraph and other matter (OM) paragraph :- EOM paragraph are the matter that in the Auditor's Professional Judgement most significant in the Audit of FS of current period. Matters that are appropriately presented and disclosed in the financial statements but its is necessary to draw user attention, fundamental to user understanding of financial statement. In the given case, Event of Occurance of fire after the reporting date on 15/4/26 is an Non adjusting Event. Appropriate disclosures --- page 5 --- has also been presented in the financials. sufficiency appropriate Evidence has been obtained and based upon discussion with management the auditor is satisfied with the disclosure which concludes there is No material uncertainty. However, since the matter is fundamental to user's understanding of the financial statement the same should be present under the heading - Emphasis of matter paragraph in the Audit Report .

1(C) SA 720 - Auditor's Responsibility relating to Other Information i) The Auditor is not responsible to report on the matter contained in other information, however he is Responsible to Read and consider other information and Evaluate whether such information has been accurately - presented, Disclosed, Accounted and Reported in the financial statement . ii) The Preparation of other financial information is the Responsibility of the Management . iii) Generally, The Auditor is not responsible for the information obtained after the date of Audit Report. However, it should request management to provide appropriate information to the auditor before finalisation of Audit Report. If such information are not available upto the date of signing of Audit Report, to provide it to Auditor when the same has been finalised. (iv) If an information comes to Notice of Auditor that seems to be incorrect / material misstated the auditor should take appropriate action including preventing Reporting / communicating such inform. to the users of financial statement.

Q2(a) As per chap VI of the Council general guidelines 2008, Each Auditor is allowed only to sign 60 Tax Audit Report on there indiviual profesional capacity. further for counting the limit of 60 Tax Audit only Tax Audit u/s 44AB should be considered and Revised Tax Audit Report should not be considered. In the given case, • The contention of CA Aarav that 60 Tax Audit can be shared among the partners in any Ratio is not CORRECT • CA Bhavna contention that Tax Audit u/s 44AE and 44AD - should also be considered is also INCORRECT As per the Data shared: For calculating limit chap VIA of 60 Tax Audit assigment CA Aarav Conducts 20+42 = 62, which Exceeds the limit. He should take action to maintain limit further, CA Bhavna Conducts Total 22+30 = 52 Tax Audit CA Chirag Conducts Total 12+45 = 57 Tax Audit Both are within limit, they can take more assigment till count reaches to 60.

4(a) ~~Social~~ (i) ESG Pillar - Governance (ii) Non Compliance

Q 4(b) As per first schedule, Part 1, clause 10 of ' The chartered Accountant Act 1949 A chartered Accountant in practice shall be held guilty of Professional Misconduct if, He charges or offers to charge, accepts or offer to accept in the course of his Profession fees based upon Percentage of Profit or contigent upon future transactions In the given case, CA sameer is the statutory Auditor of XYZ for FY 2025-26. His terms of Professional Engagement include : • fixed statutory fee of ₹ 8 lakh. • Further fee 2% based on Profit related to Audit adjustment The management agreed with a condition that it should result in increase in Reported Profit. Further, CA Sameer is also engaged by ABC Ltd which is Non Audit client for litigation support service for commercial dispute. fees based upon succesful outcome of litigation. As per the provision, this is permitted to charge fees based upon outcome of litigation / % of Tax demand Reduced. However, CA sameer will be held guilty for charging 2% of addition fees from XYZ Ltd.

Q 4(c) SAE 3400 : Assurance Engagement to Report on Examination of Prospective financial Information :- Duties of CA Jigar while Examining the Prospective financial Information :- (1) Prospective financial information have been properly prepared and presented as per the applied criteria on Material Basis (2) Management Best estimate assumption are not un Reasonable and Hypothetical assumption are consistent. (3) Proper Disclosure as per applied criteria

5(b) SA 620 using the work of Auditor's Expert : # Requirements to be compiled before using Expert's work 1) Evaluate Competence & capability of expert's work if he is not a member of ICAI. 2) Evaluate the objectivity of Expert's work. 3) Assess the knowledge of Expert work based on his past working paper, published Report. 4) Discuss with other's who are familiar with the work of Expert. 5) Excercise his Professional Judgement when Relying upon the work of Expert, including his Reports, Calculations, assumptions used.

Q 5(c) Clause 9 As per the provisions of the first schedule, Part-1, of The chartered Accountant Act 1949. A chartered Accountant in practice shall be held guilty of Professional Misconduct under clause 9 if Accepts appointment as an Auditor of the company without ascertaining whether the first complying with the provisions of Sec 139 - 141 of the Companies Act 2013. Sec 225 of the Companies Act 1952. related to the Appointment of the auditor. In the given Case, CA Rudra CAIP accept to Provide Services to Jin Ltd relating to improving its internal operations. However, the provisions related to its appointment has not been followed. Thus, CA Rudra will be held guilty under clause 9 of part 1 - first schedule.

6(a) # SA 505 External Confirmations # SA 510 - Initial Audit Considerations (including) opening balance As per the Standards on Auditing a chartered accountant should always remain alert through the audit and Excercise his own professional Judgement. Evaluate the matter which indicate Exsistence of material misstatement or fraud. He should obtain sufficient and appropriate Audit Evidence and seek written Confirmation for all the matters Concerning documentation requirement of the audit. Even balances relates to Prior year, Auditor should Excercise his professional Judgement seek Audit Evidence to Evaluate its accuracy. In the given Case CA Rig's approach is NOT correct. He cannot rely on the management affirmation. Nor can he Excuse himself assuming that the amount pertained to prior year. He should seek valid written Confirmation if same is not provided he should try to perform Alternate Audit procedure, Discuss the matter with those charge with Governance, If the same still remains Unresolved Considere its implication in the Audit Report Including withdrawl if permitted under law & Regulations.

[SA 402] Q6(b) Audit Considerations relating to an Entity using Service Organisation. Audit considerations are as follows:- Type-1 Report (i) Controls are Suitably designed and Implemented (ii) Controls operates as per applicable criteria at specified date. (iii) Controls including control objectives are achieved Type-2 Report (i) Controls operate throughout the specified period (ii) Controls properly and suitably Designed and Implement (iii) Controls including Control objectives are achieved and they are based upon applicable criteria. (iv) Controls are operating effectively In the given case, Comet Logistics Ltd (the User Entity) Outsources its payroll processing function to Propay solution (the service organisation). Hence, the auditor needs to (i) Evaluate the internal controls are operating effectively, (ii) They have been appropriately and suitably designed based upon criteria. (iii) Controls including control objectives are achieved. (iv) The Auditor Can Engage into discussion with the service Auditor, obtain Service Auditor's Report. (v) Auditor has the right to visit Service Auditor component and Evaluate his Competency. (vi) Assess based upon relationship the degree of interaction between User Entity and Service Organisation.

Q 6 (c) As per the first schedule, Part-I, clause 2 A chartered Accountant in practice is deemed guilty of Professional Misconduct if " He pays or allow or agrees to pay or allow directly or indirectly any Share, commission, Brokerage, fees or profit of his professional business to any person other than the Partner, Retired Partner, legal Representive of deceased Member or Member of any other professional body Except as permitted under Regulation 53A. Thus, CA is not allowed to enter into arrangement with articles [illegible] for any additional fees [illegible] which is based upon % of his Share of profit. Such conduct amounts to professional guilty. In the given Case, Mr. Chetan offered his article fees 1% of profit of firm as additional payment citing Poor financial condition of article assistant. Such arrangment are not permitted. CA Chetan would be held guilty of Professional Misconduct under clause 2 of part 1 of 1st Schedule of The Chartered Accountant Act 1956.