ROYAL UNIVERSITY OF BHUTAN

GAEDDU COLLEGE OF BUSINESS STUDIES

GEDU: CHUKHA

Module : ACT 603 Auditing

Type of Assignment : Individual
Level : BBA (VI Semester)
Weghtage : 10 % (25 marks will be converted into 10%)
Due date & Time : March 25, 2011 (4.30 PM)

Objectives
After successfully completing this assignment student should be able to:

 Discuss audit functions as to give reasonable assurance about the financial

reports of a company
 Discuss economic benefits of audit functions
 Interpret concept of ‘true and fair view’ of auditors
 Assess limitations of audit functions

Instruction
You are required to read the information given in electronic folder (Objective and
General Principles Governing an Audit of a Financial Report) and a copy of
auditor’s report for the year 2009 of Bhutan Power Corporation Limited to answer
the following questions:

Q1
Discuss in not more than 250 words what does ‘reasonable assurance’ mean in audit
function? (5 Marks)

Q2
Management of Bhutan Solutions an IT company decides to move ahead with the
next financial year without auditing its financial statements for the current year. CFO,
Mr. Dalit opinions “After all we did our best to comply with relevant legislations, and
used appropriate accounting policies in preparing and providing reliable and relevant
accounting information to our users. They will have same confidence in our work as
in the past. Audit adds only to cost and that really affects our net profit which market
values”.

Comment on CFO’s opinion. (5 Marks)

1
 ROYAL UNIVERSITY OF BHUTAN
GAEDDU COLLEGE OF BUSINESS STUDIES

GEDU: CHUKHA

Q3
Which accounting and auditing standards P.K. Bhattacharya, partner of Kolkatta
based Audit firm is referring to in his audit report? Give reference to any such
accounting and auditing standards. (5 Marks)

Q4
What is ‘true and fair view’ mean in auditor’s report? How is the user of accounting
information likely to interpret this to arrive at certain key investment decisions based
on such information?

Q5
Discuss in not more than 250 words limitations of financial statements audit. What
measures can improve audit functions as to add credibility to the financial
information? (5 Marks)

Assessment
1. Weighting for each question is given in brackets .

2. Marking will be based on critical analysis, well organised and demonstration

of reading and comprehension of suggested reading materials.

3. You may be penalized for lack of reading and not adhering to proper discipline
of academic writing which include any form of plagiarism and delay in the
submission of work on time.