You have as of late joined as an Audit Partner in M/s. XYZ and Co., Chartered Accountants ("the Firm") based out of Mohali which has an assortment of customers in the Technology, Software and Media fragments. Every one of their customers are based out of Mohali and Chandigarh. One of the critical customers of the firm is Superstar Group which has a few auxiliaries and your Firm does the review and tax assessment work for every one of these elements. You have been allocated to help the Lead Client Service Partner for the Super Star Group, Mr. Madhav Mahajan, Partner, in the review of Rising Star Limited. You have been given the underneath data to encourage your review.

Organization Information

Rising Star Limited (the Company), which is an auxiliary of Super Star Limited, a Public Company (unlisted), was consolidated on first February, 2007 under the Indian Companies Act, 1956. It has some expertise occupied with creating graphical pictures for its different customers spread across the world. The shareholding example of the Company as at 31st March, 2017 are as under:

Particulars No. of Shares (in

$)** Total settled up Equity Share Capital (' In $)

Hotshot Limited 45.00 450.00

Mr. Thomas Edison (as a chosen one of Super Star Limited)* 32.50 325.00

Mrs. Morgrate Edison (as a chosen one of Super Star Limited* 22.50 225.00

Total 100.00 1000.00

*The Company has consented to the necessities of the Companies Act, 1956/2013 regarding observing/documenting the gainful interest of Super Star Limited in the Company with the Registrar of Companies.

**Face Value of '10 each.

While the Company was doing admirably in the underlying time frames, because of worldwide downturn in this section, the business execution has gone South as of late.

The Finance Director of the Company, Mr. Mangesh has mentioned the Statutory Auditors. M/s. XYZ and Co; Chartered Accountants to take up the review and issue the review report previously

the Board meeting planned for the long stretch of June, 2017 dependent on which certain basic choices affecting the future activities of the Company would be taken including a plausible consolidation The CEO of the Company, Mr. Stanley is in dynamic conversation with the parent organization and the Board of Directors. This data is proposed to be kept classified as at this stage.

(1) Certain PCs were gotten from the parent organization liberated from cost, the estimation of which is ' 0.23 $ and no bookkeeping or divulgence of the equivalent has been made in the notes on records.

(2) The credit benefited from Chevy Chase Bank stayed exceptional to the degree of ' 12 $ barring the reformatory premium charged by the bank summing to0.23 $ for default in reimbursement for 2 quarters, forthcoming to be accounted by the Company. The Management has likewise educated that this isn't a data to be unveiled in the fiscal summaries and doesn't have any bearing on the detailing of Auditors by the same token.

(3) TDS receivable according to books is more than the combined equilibrium according to Form 26AS by

14.50 $. No legitimate clarification was had accessible for the effect sum.

(4) The Company has not accommodated any assessment cost in the books of records because of expense misfortunes. The Company has perceived conceded charge resource on the unabsorbed Business misfortunes dependent on administration appraisal.

(5) The Company follows the strategy for giving deterioration according to Section 123 of the Companies Act, 2013 utilizing the valuable lives recommended according to Schedule II of the Companies Act, 2013. It has given deterioration on PCs which are utilized during all the 3 movements utilizing the rates specified for nonstop cycle plant since these resources are utilized for 24 hours (3 movements).

(6) The measure of confined bank adjusts as at 1-4-2016 and 31-3-2017 was ' 120 $ and the Company doesn't accept equivalent to meeting all requirements for revelation under Cash and Cash Equivalents.

(B) Review of Board Minutes

While the Audit group has distinguished different issue, they need y

our recommendation to close on the equivalent. You have requested that they survey the Board minutes and other secretarial/administrative records dependent on which the accompanying extra matters were drawn out into the open: -

(10) The long haul borrowings from the parent has no concurred terms and neither the interest nor the chief has been reimbursed up until now.

(11) An measure of ' 1.22 $ has been paid under dissent against certain expense guarantees under

debate where the Company trusts it has a reasonable possibility and henceforth not accommodated in the budget reports nor was it revealed as unexpected liabilities. During the conversations, the Company has additionally referenced that since they have not accommodated the equivalent, this would not be a thing in the Companies (Auditor's Report) Order, 2016 (CARO, 2016) revealing by the Auditors as questioned duty.

(12) The Company is currently selling its office alongside the freehold land accessible at Chandigarh and regularly uses the post for expected purchasers. While the equivalent was bought at ' 25 $ in 2008, the current market esteem is ' 250 $,

This property is forthcoming to be enlisted for the sake of the Company, because of certain procedural issues related with the Registration however the Company is having a substantial belonging and has settled up on its buy cost completely. The Company has unveiled this sum under Fixed Assets however no exposure of non-enlistment is made in the notes framing part of the records.

(13) An measure of ' 3.25 $ each month is paid to M/s. WE CARE Associates, an organization firm, which is a 'related gathering' as per the arrangements of the Companies Act, 2013 for the advertising administrations delivered by them. In view of an autonomous evaluation, the thought paid is higher than the a manageable distance valuing by ' 0.25 $ each month. While the exchange was accounted in the budget summaries dependent on the sums' paid, no different exposure has been made in the notes shaping piece of the records featuring equivalent to a 'related gathering' exchange.

Ms. Manasa Maheshwari, your Audit Manager has announced that she had requested certain data identifying with another 'related gathering' exchange (quantum liable to be about ' 47 $) and the CFO has would not give the equivalent since the equivalent is seen to be secret and can't be imparted to Auditors.

(14) The Internal Auditor of the Company has recognized a misrepresentation in the enrollment of representatives by the HR division wherein certain wholes were asserted to have been taken as kick - back from the workers for accepting them with the Company. After due examination, the concerned HR Manager was sacked. The measure of such payoffs is required to be in the scope of ' 12 $.

(15) Right International Inc., has served a lawful notification on the Company asserting ' 250 $ for patent encroachment and the Company has tested the notification through its legitimate direction. An 'autonomous legitimate assessment acquired on this matter recommends that the chance of a money outpouring is almost certainly under the current lawful structure/accessible proof as made accessible to the lawful guidance.

(16)The compensation for the inspectors has been fixed by the investors as a fixed whole and a rate dependent on the productivity of the Company.

(17) CEO of the Company, Mr. Stanley has advanced a proposition to deliver profits to t he investors despite the current monetary condition. He proposes to deal with the incomes by getting from the bank. He might likewise want to accommodate the equivalent in the

budget summaries for the year finished 31st March, 2017 on endorsement by the Board.

(18) The Management has educated that it feels that the economic situations will improve and the Company would be absolutely productive in the following 3 years' time and anticipates new requests/higher incomes in the coming a long time to fuel higher benefit. During conversations on this subject, Mr. Stanley educated that while there are no firm agreements/projects that are

accessible available to illustrate, Management is completely mindful of their business climate and their evaluation can be taken as hallowed.

Section A

Answer the accompanying inquiries with reasons, In short and suitable specialized references

(1) Whether Superstar Limited requirements to solidify the budget summaries of Rising Star Limited under the Companies Act 2013?

(A) No

(B) Yes, for 100%

(C) Yes, yet just to the degree of 45%

(D) Consolidation necessity itself isn't relevant under the Companies Act, 2013 being an unlisted entity. (2 Marks)

(2) What is the Net Worth of the Company according to the Management arranged fiscal summaries as at 31st March, 2017? (' in $)

(A) 887

(B) 1137

(C) 1015

(D) 1125 (2 Marks)

(3) What is the aggregate sum of unforeseen liabilities of Rising Star Limited as at 31st March, 2017? (' in $)

(A) 122

(B) 178.22

(C) 123.22

(D) 213.22 (2 Marks)

(4) What is the measure of Cash and Cash Equivalent to be revealed in the Cash Flow Statement as at 31st March, 2017? (' in $)

(A) 241

(B) 723

(C) 149

(D) 273 (2 Marks)

(5) The sum at which the Chandigarh property to be accounted in the books of record as at 31st March, 2017 is(' in $)

(A) 250

(B) 275

(C) 25

(D) 225 (2 Marks)

(6) Do you believe that the ''Deferred Tax Asset" acknowledgment on the unabsorbed business misfortunes is proper:-

(A) Yes

(B) No

(C) Yes, since it depends on Management appraisal and the equivalent is according to the AS 22.

(D) It depends/in view of the choice to be taken by the CEO with respect to the likely merger. (2 Marks)

(7) Whether increase discounted of land at Kurukshetra accounted as an extra-standard pay is adequate under the Companies Act, 2013 detailing structure?

(A) Yes, it is proper.

(B) No, this might be accounted as an extraordinary thing.

(C) No, this ought to be accounted as 'pay from tasks'.

(D) It relies upon the choice to be taken by the CEO in regards to the plausible consolidation.

(2 Marks)

(8) Certain data considered as private by the Management for delicate purposes can be legitimately denied to the evaluators.

(A) Yes, for legitimate reasons as surveyed by the Management.

(B) No, it can't be denied; else this would bring about conceivable extent of making review capabilities for the Auditors.

(C) Can be denied subsequent to taking the assent from the Board.

(D) Can be denied in the wake of educating the Regulators. (2 Marks)

(9) In perspective on the conversations by the Finance Director with you, reference to negative or qualified answers in the Companies (Auditor's Report) Order, 2016 (CARO, 2016) where relevant might be kept away from.

(A) Yes, in light of the solicitation from the customer.

(B) No, where needed, due exposure as needed under the Companies Act, 2013 should be made.

(C) Considering the consolidation plausibility, such matters might be accounted for to the Board and can be stayed away from in CARO, 2016.

(D) Entire announcing under CARO, 2016 might be dropped. (2 Marks)

(10) Whether Auditors' compensation as proposed by the investors is adequate to you?

(A) Yes

(B) No

(C) Permissible since the investors have endorsed the compensation

(D) Cannot choose dependent on accessible information. PART-B

Answer the accompanying:

(1) Are there any matter(s) that should be accounted for with negative reaction under the Companies (Auditor's Report) Order, 2016-(CARO, 2016)? Provided that this is true, clarify the equivalent with applicable rationale. (8 Marks)

(2) Summarise the material errors, assuming any; on the administration arranged budget reports which could affect the valid and reasonable perspective on the fiscal summaries. Kindly give the premise to your appraisal momentarily.