CA Final PAPER 6: INTEGRATED BUSINESS SOLUTIONS Syllabus

List the four levels of management's audit assertions tested for transactions.

Occurrence, Completeness, Accuracy, Cutoff, and Classification (assertions about classes of transactions).

Under SA 700, name the four types of audit opinions.

Unmodified (clean), Qualified, Adverse, and Disclaimer of opinion.

When does an auditor issue an Adverse opinion versus a Disclaimer?

Adverse: misstatements are both material and pervasive. Disclaimer: auditor cannot obtain sufficient appropriate evidence and possible effects are material and pervasive.

What is the relationship between audit risk, inherent risk, control risk, and detection risk?

Audit Risk = Inherent Risk × Control Risk × Detection Risk. Detection risk is set inversely to assessed risk of material misstatement (IR × CR).

Per SA 240, who is primarily responsible for the prevention and detection of fraud?

Those charged with governance and management of the entity; the auditor's responsibility is to obtain reasonable assurance that financial statements are free from material misstatement due to fraud or error.

Distinguish a 'Key Audit Matter' (SA 701) from an 'Emphasis of Matter' (SA 706).

KAMs are matters of most significance in the audit, selected from those communicated to TCWG (does not modify opinion). EOM draws attention to a matter already disclosed in the financial statements that is fundamental to users' understanding.

State the five fundamental principles of the ICAI Code of Ethics for professional accountants.

Integrity, Objectivity, Professional Competence and Due Care, Confidentiality, and Professional Behaviour.

What are the five categories of threats to auditor independence under the Code of Ethics?

Self-interest, Self-review, Advocacy, Familiarity, and Intimidation threats.

Under SA 320, what is 'performance materiality'?

An amount set lower than overall materiality to reduce, to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

For a resident individual in India, how is global income treated under the Income-tax Act?

A Resident and Ordinarily Resident is taxed on global (worldwide) income; a Non-Resident is taxed only on income received or accruing/arising in India.

Under section 6, what are the basic conditions to be a 'resident' individual in India?

In India for 182 days or more in the previous year, OR 60 days or more in the PY and 365 days or more in the four preceding PYs.

What is the purpose of Transfer Pricing provisions (sections 92 to 92F)?

To ensure international (and specified domestic) transactions between associated enterprises are at arm's length price, preventing profit shifting and tax base erosion.

Name the methods prescribed for computing Arm's Length Price under Indian transfer pricing.

CUP (Comparable Uncontrolled Price), Resale Price Method, Cost Plus Method, Profit Split Method, Transactional Net Margin Method (TNMM), and any other prescribed method.

What is a Permanent Establishment (PE) and why does it matter in international taxation?

A fixed place of business through which an enterprise's business is wholly/partly carried on; it determines whether a source country can tax a non-resident's business profits under a tax treaty.

What relief does section 90 provide for double taxation?

Relief where India has a DTAA with the other country, applying either the exemption or credit method as per the treaty (taxpayer may apply the more beneficial of treaty or Act).

Under GST, what is the difference between a 'composite supply' and a 'mixed supply'?

Composite supply: naturally bundled supplies with one principal supply — taxed at the principal supply's rate. Mixed supply: two or more independent supplies for a single price — taxed at the highest applicable rate.

What is the GST treatment of an inter-State supply versus an intra-State supply?

Inter-State supply attracts IGST; intra-State supply attracts CGST + SGST/UTGST.

State the order of utilisation of Input Tax Credit under GST.

IGST credit first set off against IGST, then CGST and SGST in any order; CGST credit against CGST then IGST; SGST credit against SGST then IGST. CGST and SGST cannot be cross-utilised.

What is the 'time of supply' of goods under GST (forward charge)?

The earlier of the date of issue of invoice (or the last date it should be issued) and the date of receipt of payment.

Under GST, when is Reverse Charge Mechanism (RCM) applicable?

When the recipient (instead of the supplier) is liable to pay GST — for notified goods/services, supplies from unregistered to registered persons (notified cases), and import of services.

What is the threshold for compulsory GST registration for goods suppliers (normal category states)?

Aggregate turnover exceeding Rs. 40 lakh for exclusive goods suppliers (Rs. 20 lakh for services / special category states), subject to notified exceptions.

Under the Companies Act 2013, what is the minimum and maximum number of directors for a public company?

Minimum 3 directors and maximum 15 directors (more than 15 allowed by passing a special resolution).

What majority is required to pass a special resolution under the Companies Act 2013?

Votes cast in favour must be at least three times the votes cast against (i.e., not less than 75%), with notice of intention to propose it as a special resolution duly given.

Under the Companies Act 2013, which companies must constitute a CSR Committee and spend on CSR?

Companies with net worth ≥ Rs. 500 crore, OR turnover ≥ Rs. 1,000 crore, OR net profit ≥ Rs. 5 crore in the immediately preceding financial year; spend 2% of average net profits of preceding 3 years.

What is the doctrine of 'ultra vires' in company law?

Acts done by a company beyond the powers conferred by its Memorandum of Association are void and cannot be ratified even by all shareholders.

Under FEMA, distinguish a Capital Account Transaction from a Current Account Transaction.

Capital account transactions alter assets/liabilities (incl. contingent) outside/inside India of residents/non-residents. Current account transactions are all others (e.g., trade, travel, interest) and are generally permitted unless restricted.

In Strategic Cost Management, distinguish Target Costing from Standard Costing.

Target costing works backward from a market-driven price minus desired profit to set an allowable cost during design (market-led). Standard costing sets predetermined costs and compares with actuals via variances during production.

What are the four perspectives of the Balanced Scorecard?

Financial, Customer, Internal Business Processes, and Learning & Growth.

How is the Material Cost Variance decomposed?

Material Cost Variance = Material Price Variance + Material Usage Variance, where Price Variance = (Std price − Actual price) × Actual qty and Usage Variance = (Std qty − Actual qty) × Std price.

What is the Throughput Accounting Ratio in the Theory of Constraints?

TA Ratio = Throughput per unit of bottleneck resource ÷ Operating (factory) cost per unit of bottleneck resource; a ratio above 1 indicates the product is profitable.