This Paper has 34 answerable questions with 0 answered.
| 1–11(ADT) Revised Syllabus | |
| Time Allowed : 3 Hours | Full Marks : 100 |
| The figures in the margin on the right side indicate full marks. |
| Answer Question No. 1 which is compulsory and any five from the rest. |
| Marks |
| 1. | (a) | Discuss with reasons, whether the following statements are true or false: (Answer without reasons will not be given any credit) | |||||
| (i) | The auditor of a company who attend the general meeting spoke first about the accounts of the company. Later he wanted to express his views about a matter relating to proposed expansion plans; the board of directors have the power to prevent him from expressing such views. | 2 | (0) | ||||
| (ii) | A company can refuse to provide access to its books of accounts to the company’s auditor out side the normal working hours of the company, as it will inconvenience the accounts staff. | 2 | (0) | ||||
| (iii) | Companies can charge depreciation at rates lower than the rates prescribed in schedule XIV of Companies Act, 1956. | 1 | (0) | ||||
| (iv) | Unpaid dividends can be kept by the company without any time limit. | 2 | (0) | ||||
| (v) | Reclassification of long–term investment as short term investments is made at cost as on the date of such classification. | 1 | (0) | ||||
| (vi) | Audit is concerned with ethics of business. | 1 | (0) | ||||
| (vii) | Cost auditor has right of access to the financial books of the company. | 1 | (0) | ||||
| (b) | Briefly comment on the following | ||||||
| (i) | Mr. B, chartered accountant, is appointed as statutory auditor of G Ltd., in which three Government companies jointly hold 35% of the subscribed share capital. The appointment of Mr. B has been through an ordinary resolution passed in the duly convened in an annual general meeting. | 3 | (0) | ||||
| (ii) | Since the appointment of Mr. V as a statutory auditor in an annual general meeting is held to be void ab–initio, the company holds another general meeting and appoint Mr. C through a special resolution. | 2 | (0) | ||||
| (iii) | Disclosure of a guarantee furnished as a security or cover: | ||||||
| (a) | For an existing liability which is already recorded in books. | 3 | (0) | ||||
| (b) | For a contingent liability. | 2 | (0) | ||||
| 2. | (a) | As an auditor of a limited company state your views on the following facts noticed by you in the course of audit: | 2x4 | ||||
| (i) | Fixed assets acquired in exchange for the shares of the company are recorded at normal values. | (0) | |||||
| (ii) | Proposed dividend is not adjusted in the Financial Statements. | (0) | |||||
| (iii) | Government Grant Received as compensation for losses sustained in backward areas is credited to revenue reserve. | (0) | |||||
| (iv) | No depreciation is charged on an equipment kept idle throughout the year. | (0) | |||||
| (b) | How does the cost auditor ensure the adequacy or otherwise of the budgetary control system existing in a company for purpose of cost audit? | 8 | (0) | ||||
| 3. | (a) | What are the conditions or events peculiar to an EDP environment that increase the risk of fraud and error? | 4 | (0) | |||
| (b) | What factors lead the auditor to suspect the possibility of fraud and error in manually maintained accounts? | 6 | (0) | ||||
| (c) | Briefly state how compliance procedures are helpful to an auditor. | 6 | (0) | ||||
| 4. | (a) | Explain the concept of joint audit and state the responsibilities of joint auditors. | 6 | (0) | |||
| (b) | Briefly list the points of distinction between the companies auditor’s Report order, 2003 (CARO)and section 227 of the companies Act is the order intended to limit the duties and responsibilities of the auditors. Are all private companies exempt from the applicability of the said order? | 6 | (0) | ||||
| (c) | What are the items under “Reserves and Surplus”appearing on the liabilities side of the Balance Sheet of a company which are not available for declaration of dividends?(any four items) | 4 | (0) | ||||
| 5. | Write short notes on: | 4x4 | |||||
| (a) | (i) | EDP application controls: | (0) | ||||
| (ii) | Summary internal Audit Report. | (0) | |||||
| (b) | How will you vouch/verify the following and what are the important allied aspect to be considered? | ||||||
| (i) | Royalty payments to a foreign collaborator, to whom royalty is payable as a percentage of sales | (0) | |||||
| (ii) | Disposal of plant. | (0) | |||||
| 6. | (a) | About what are Generally accepted accounting principles (GAAP) are concerned with? Disclose about the need for GAAP in India. | 6 | (0) | |||
| (b) | ‘Financial Audit suffers from a number of limitations.’--Discuss. | 10 | (0) | ||||
| 7. | (a) | Do you think that related party disclosure is required in the following cases? | |||||
| (i) | Two companies have a common director who is able to affect the policies of one of them. | 1 | (0) | ||||
| (ii) | Transactions between an Enterprise and the specified relatives of its key management personnel | 2 | (0) | ||||
| (iii) | Transactions between an Enterprise and trade Union which some times restricts the freedom of the Enterprise. | 1 | (0) | ||||
| (b) | How would you audit ‘Inventory Control and Management’ as an Internal Auditor? | 12 | (0) | ||||
| 8. | (a) | Cost Audit can be considered as part of Management Audit. Discuss the scope of Cost Audit and explain how are these inter related and different from each other. | 12 | (0) | |||
| (b) | Distinguish between Audit Report and Audit Certificate. | 4 | (0) | ||||
