CWA ICWA Final Stage IV : Cost Audit and Management Audit - December 2007

CWA ICWA Final - Stage IV • Cost Audit and Management Audit • December 2007

This Paper has 43 answerable questions with 0 answered.

F—19(CAM) Revised Syllabus
Time Allowed : 3 Hours	Full Marks : 100

The figures in the margin on the right side indicate full marks.
Answer Question Nos. 1 and 5, which are compulsory and two each from the remaining questions of Sections I & II.
Section — I(50 marks)
Marks

The figures in the margin on the right side indicate full marks.

Answer Question Nos. 1 and 5, which are compulsory and
two each from the remaining questions of Sections I & II.

Section — I(50 marks)

Marks

(a)

State whether the following statements are "True" or "False" justify with reasons: No credit will be given, if justification for your answer is not given:

1x10=10

(i)

At present Cost Audit Report should be filed manually.

(0)

(ii)

As per the provision under sub–sec. (10) of section 233–B of the Companies Act, the Central Government can direct a company to circulate the full/part of the Cost Audit Report to the shareholders.

(0)

(iii)

"Export Performance" of a company is beyond the scope and coverage of Cost Audit.

(0)

(iv)

Hard copy of Cost Audit Report submitted to the company without signature of Cost Auditor before Board Meeting.

(0)

(v)

Cost Auditor qualified in his report for not submission of Excise Reconciliation where the company deposited only ‘Cess’ to Excise Department.

(0)

(vi)

New Cost Auditor is authorized to submit a supplementary report, if he considers it as necessary.

(0)

(vii)

There are no statutory qualification requirements, in case of persons appointed to act as "Internal Auditors"

(0)

(viii)

Cost Records are not maintained even maintenance has been prescribed and order not issued.

(0)

(ix)

A Practicing Cost Accountant needs to file "Service Tax Returns" annually.

(0)

(x)

Fees paid for the present Cost Audit by the company is less than the previous Cost Auditor.

(0)

(b)

Which of the following is correct?

1x5=5

(i)

Clarification Cost Audit Report to be given to the Cost Audit Branch by the Cost Auditor within

(1)

45 days

(2)

180 days

(3)

30 days

(0)

(ii)

Prescribed form of Cost Audit Report not followed by the Cost Auditor, fine will be

(1)

Rs. 500

(2)

Rs. 5000

(3)

Rs. 1000

(0)

(iii)

For calculation of Capital Employed, average is considered for

(1)

Current and Previous year

(2)

Current and Previous two years

(3)

Five years.

(0)

(iv)

For preparation of Cost Sheet, previous year/years figures are not required:

(1)

Only last year

(2)

Only last two years

(3)

Only last three years.

(0)

(v)

Under Para 27, Cost Auditor gives Reconciliation only of

(1)

Two years

(2)

Current year

(3)

Three years

(0)

(c)

Fill up the blanks:

1x5=5

(i)

The Cost Accounting records u/s 209(1)(d) are to be made available to the Cost Auditor within _______ days from the close of the financial year.

(0)

(ii)

Non–moving Stocks of stores and spares are those Stocks which have not moved for more than _______ months.

(0)

(iii)

The Annexure to the Cost Audit Report and Proforma should be signed by the _______ and _______ of the company.

(0)

(iv)

Detailed provisions relating to Cost Audits are contained in Section _______ of the Companies Act.

(0)

(v)

The ceiling on the number of Cost Audits to be undertaken by a Cost Auditor is laid down in Section _______ of the Companies Act.

(0)

Inspite of increasing turnover, continuously for three years, a company has started incurring cash losses, and has become sick. It is possible to identify and pinpoint the factors which have led to this situation from the Cost Audit Report? Explain quoting the relevant paragraphs in the Annexure to the Report.

(0)

(a)

What information is required to be furnished by the Cost Auditor in the "Annexure to the Cost Audit Report", and "Observation and Suggestion" in regard to exports, if any, of the product under audit?

(0)

(b)

How are Abnormal/Non–recurring Costs to be treated in Cost as per Para 17 of the Annexure to the Cost Audit Report Rules, 2001? Give illustration of such Costs.

(0)

(a)

How Cost Auditor allocate and apportion cost of caustic soda in a chemical industry where various products are produced?

(0)

(b)

What are "Waste Multipliers" in textile costing? The following are the process wise wastages on the inputs in the year 2006–07:

Process	% of Wastages on Input
Blow Room Carding Drawing Roving (Simplex) Ring Frame (Spinning) Reeling and Winding	9.18 7.17 1.10 0.30 7.21 1.50

From the above, calculate the processwise waste multiplier factor.

(0)

Section — II (50 marks)

Section — II (50 marks)

(a)

What do the following abbreviations stands for?

(i)

MAP;

(ii)

GAAP;

(iii)

CERA;

(iv)

CEGAT;

(v)

TRIPS.

(0)

(b)

State whether the following statements are ‘True’ or ‘False’ with justification for your answer. No credit will be given for merely answering True/False — without any justification/reasoning:

2x5=10

(i)

In the operation of Responsibility Accounting System, the concept of an ‘activity centre’ is very important.

(0)

(ii)

Zero base budget (ZBB) system was modelled by Peter A. Woodcock.

(0)

(iii)

Principles of Management Audit remain valid irrespective of the nature of an enterprise.

(0)

(iv)

Being a stakeholder in the Equity Share Capital of an undertaking, agencies like LIC, UTI and other financial institutions may conduct Management Audit – to avoid possible losses arising from inefficient management.

(0)

(v)

The efforts which are directed towards humanizing and harmonizing the jobs and their content are collectively known as “Jon Enlargement”.

(0)

(c)

Fill in the blanks:

1x5=5

(i)

Corporate objectives represent the ______ that the organisation has laid down for itself.

(0)

(ii)

Activity based costing is the extended application of ______ to activity centres.

(0)

(iii)

Energy audit means the monitoring of energy efficiency of different ______ and ______ in a plant.

(0)

(iv)

India had to remove ______ ______ on imports as per WTO stipulations.

(0)

(v)

Margin of Dumping means the difference between ______ and ______.

(0)

The cost of production of goods cleared for captive consumption should be certified only by a practicing Cost Accountant. Briefly explain the statutory requirements for this certification under the Central Excise Rules.

(0)

(a)

Give an “Audit Programme” as a Cost Auditor after being appointed for Cenvat Credit Audit.

(0)

(b)

Give an “Audit Programme” as an Internal Auditor of Wage Audit.

(0)

Write short notes on (any three):

5x3=15

(a)

Environment Audit;

(0)

(b)

Points to be considered for takeover bid;

(0)

(c)

Disclosure and transperancy of Corporate Governance;

(0)

(d)

Functions of the WTO.

(0)

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