CS Final :: Secretarial Management and System Audit : December 2003

Roll No…………………
Time allowed : 3 hours		Maximum marks : 100
Total number of questions : 7		Total number of printed pages : 3
PART—A
(Answer ANY TWO questions from this part.)

(a)

Comment on the following:

A complaint was received by the Institute of Company Secretaries of India from X, a company secretary in practice for the last ten years that Y who has started practising as a company secretary since the year 2000, has violated the provisions of the Company Secretaries Act, 1980 on the following grounds

(i) Y signed the annual return of a company for the year 2001-02 without communicating in writing with X who had signed the annual return of the said company for the preceding years.

(ii) Y charged Rs.5,000 only as fee for certification as against Rs.10,000 that was being charged by X, thus resorting to under cutting.

Y contended that he had not snatched away any assignment and also submitted that he had orally informed X before signing the annual return.

Y also stated that the lower amount of fee charged was to maintain uniformity in his fees for similar other assignments.

(6 marks)

(b)

Indicate in brief the professional services that a company secretary in practice can render in respect of the following :

(i)	Alternative dispute redressal system (ADRS).
(ii)	Registration of a trade mark.
(iii)	Determining residential status under the income-tax law.

(2 marks each)

(c)

Enumerate the areas of practice of a company secretary under the Central Excise Act, 1944.

(4 marks)

(d)

Certain persons are not entitled to have their names entered in the register of members of the Institute of Company Secretaries of India. Explain the disabilities as contemplated under section 8 of the Company Secretaries Act, 1980.

(4 marks)

2/2003/SMSA

P.T.O

( 2 )

333

(a)

“There is a very thin line of demarcation between ‘secretarial audit’ and ‘compliance certification’.” Discuss.

(6 marks)

(b)

Prepare the requisite annexures to the compliance certificate required under the Companies (Compliance Certificate) Rules, 2001 with appropriate assumptions.

(6 marks)

(c)

Draft any four clauses of compliance certificate with qualification.

(8 marks)

(a)

Fast and Co. Ltd. borrowed Rs.100 lakh from a scheduled bank and repaid a total of Rs.50 lakh on 10 occasions during the period from June, 2002 to December, 2002. Is it necessary to inform the Registrar of Companies about the repayment ? On 1st January, 2003, the bank reduced the limits to Rs.45 lakh. Is it necessary to file any form with the Registrar of Companies for the reduction of borrowing limits on 1st January, 2003 ? If so, what are the forms to be filed?

Prepare a check-list indicating various documents to be attached with the forms.

(6 marks)

(b)

The Board of directors of a public limited company appointed a managing director. What forms are required to be filed with the Registrar of Companies ? Prepare a check-list for the same.

(6 marks)

(c)

Prepare check-lists for proper filling and filing of the following: Form No.5; and Form No.21.

(4 marks each)

PART—B

(Answer Question No.7 which is compulsory and any two of the rest from this part.)

(a)

Managing director of a company of which you are the company secretary, feels that adequate information is provided to the shareholders through duly audited financial statements and he himself continuously reviews the performances of all the managers and as such the so called ‘management audit’ is redundant and waste of money. Advise him suitably highlighting the objectives of management audit, elements in management function covered and its distinctiveness vis-a-vis ‘financial audit’ conducted by the statutory auditor.

(12 marks)

(b)

Write short notes on the following:

(i) Techniques used in management audit to obtain evidence.

(2 marks)

(ii)	Important factors considered while reviewing the human side of the enterprise.
(iii)	Important factors considered while reviewing adaptation to change.

(3 marks each)

(a)

“An operational auditor has to review and analyse the control measures in operation in an organisation. His task is sophisticated and of technical nature and entails careful study.” Discuss what tools are usually adopted by the operational auditor to evaluate the controls.

(10 marks)

(b)

Managing director of a company is seriously concerned with the working of the purchase department. He asks you to examine the adequacy of the controls in existence and the actual observance of the internal control system. Highlight the points that will be covered in your review.

(6 marks)

(c)

What are the major points for review in respect of —

(i)	Sales Promotion; and
(ii)	Sanction of credit?

(2 marks each)

2/2003/SMSA

Contind...

( 3 )

333

(a)

While scrutinising the books and records of a company, the cost auditor noticed the following. Comment and suggest the course of action on the same :

(i)	Materials and stores worth Rs. 20,000 consumed in restoring a machine to working condition was charged to plant and machinery account. Materials worth Rs. 50,000 consumed in the installation of fire alarm system in workshop was charged to workshop maintenance account.
(ii)	There were no proper records for ‘overtime’ and ‘idle time’.
(iii)	There were no proper records for external and internal services consumed.
(iv)	Prices for related party transactions were substantially less than the normal price to others.
(v)	Profitability has been declining over the years and one division is incurring losses.

(3 marks each)

(b)

Explain the salient features of the Cost Audit (Report) Rules, 2001.

(5 marks)

(a)

Explain the foundations of ‘information systems auditing’.

(8 marks)

(b)

Discuss any three of the following :

(i)	Systems efficiency objectives.
(ii)	Computer control and security.
(iii)	Significance of ‘password’.
(iv)	Role of data base administrator.
(v)	Non-repudiation.

(4 marks each)

---------o---------

2/2003/SMSA