CS Final :: Secretarial Management and System Audit : June 2004

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)

State briefly the fundamental principles which should govern the conduct (professional ethical standards) of a company secretary in practice.

(4 marks)

(b)

Comment on the following, if a company secretary in practice has —

(i)	contested and got elected as an MLC from the graduates constituency.
(ii)	accepted the office of notary public.
(iii)	taken up an appointment as arbitrator under the orders of a labour tribunal.
(iv)	along with another eligible company secretary started professional business under the name of a partnership firm which does not constitute/bear the name(s) of either of the partners.

(2 marks each)

(c)

Examine whether the requests for transfer of shares can be entertained in the following cases :

(i)	signature in a different language on the transfer deed vis-a-vis specimen signature recorded with the company.
(ii)	The transferee has lodged more than one share certificate accompanied with a jumbo transfer deed and if one or more of such certificates not found in order.

(2 marks each)

(d)

Briefly state the infrastructure needed by a company secretary for setting up a professional practice.

(4 marks)

1/2004/SMSA

P.T.O

( 2 )

333

(a)

Prepare a check-list for issuing compliance certificate under the Companies (Compliance Certificate) Rules, 2001 in respect of the following :

(i)	Alteration of the 'situation clause' in the memorandum,
(ii)	Alteration in the articles of association.

(3 marks each)

(b)

List out the prominent services which can be rendered by a company secretary in practice in the areas of corporate restructuring and project planning.

(8 marks)

(c)

Enumerate the points to be checked by a company secretary in practice in respect of issue of bonus shares by a listed company.

(6 marks)

(a)

While appraising the 'creation of security' and 'debenture redemption reserve' for the debentures issued by a company, the requirements under the provisions of the Companies Act. 1956 and the requirements applicable to debenture issues under SEBI guidelines have to be kept in view. Discuss the relevant provisions and requirements.

(8 marks)

(b)

State briefly the important disclosure requirements in the prospectus as specified under section 1 of Chapter VI of SEBI (Disclosure & Investor Protection) Guidelines. 2000 in the following cases :

(i)	Basis for issue price
(ii)	Outstanding litigations on defaults.

(4 marks each)

(c)

Prepare a check-list for pre-certification of the Form No.4A (Declaration of solvency) to be filed with the Registrar of Companies under the Companies Act. 1956.

(4 marks)

PART—B

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

(a)

"Management audit should be applied to all factors of production and all elements of costs." Discuss briefly the points that should be kept in mind by an auditor while carrying out an appraisal of management methods and performance.

(12 marks)

(b)

Write short notes on the following :

(i) Canons of financial propriety

(4 marks)

(ii)	Fixed asset turnover ratio
(iii)	Current ratio.

(2 marks each)

(a)

"Internal control refers to the design and utilisation of all the means whereby management is enabled most effectively to safeguard the company's assets, administrate the current operations and plan for the future." In the light of this statement, state the main components and objectives of an internal control structure in an organisation.

(8 marks)

(b)

As a cost auditor, what steps would you suggest to the management that would improve the performance of the labour and that the labour cost is allocated to different jobs in an equitable manner.

(6 marks)

(c)

''Operational audit is an extension of financial audit." Comment.

(6 marks)

1/2004/SMSA

Contind...

( 3 )

333

(a)

While auditing the books and records of Prudent Ltd. for the year ended 31st March, 2004, the statutory auditors have found the following. State how he should deal with these findings in his report (Attempt any five) :

(i)	Figures relating to turnover have been inflated on the basis of orders received, whereas the goods have been produced after 31SI March, 2004.
(ii)	The company had entered into an arm length transaction with one of its associate companies aggregating to Rs.5 crore.
(iii)	There have been material discrepancies on physical verification of stocks as compared to the book records.
(iv)	Prudent Ltd. advanced loans to its managing director and the whole-time director without adequate security.
(v)	Personal expenses have been debited to the revenue account.
(vi)	The factory building has been gutted by fire on 7th April, 2004. The book value of the building was Rs.50 lakh and it was insured for Rs.35 lakh.
(vii)	The company has delayed in depositing employees' provident fund dues.

(3 marks each)

(b)

Explain the following in the context of the Cost Audit (Report) Rules, 2001 :

(i)	Normal price; and
(ii)	Non-moving stocks

(5 marks)

(a)

Discuss briefly the basic check points for carrying out information systems audit in respect of any two the following :

(i)	Systems development methodology,
(ii)	Operational controls.
(iii)	Internal control in a computerised set-up.

(4 marks each)

(b)

Write notes on any three of the following :

(i)	Major components in software development
(ii)	Debugging a programme
(iii)	Devices/software systems used in network's security
(iv)	Encryption, secure tunnels and tracking
(v)	Construction of a good password.

(4 marks each)

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

1/2004/SMSA