CWA/ICWA Final :: Cost Audit and Management Audit : December 2004

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

What do the following abbreviations stand for?

(i)

MAOCARO

(ii)

DSA

(iii)

TRIMS

(iv)

TBT

(v)

HISE & E AUDIT

1x5=5

(b)

Define the following (one/two sentence only)

(i)

Green Room Meetings.

(ii)

Sun Set Clause

(iii)

Trade Facilitation

(iv)

Social Audit

(v)

Authentication

1x5=5

(c)

Fill in the blanks”

(i)	______ ______ is the highest decision-making body at the WTO. Which meets at least once in every two years.
(ii)	The authority for approving the appointment of Cost Auditor is ______ ______ ______ ______.
(iii)	The Cost Auditor has to submit his report to the Central Government with in ______ days from the close of the financial year of the company.
(iv)	As per section 292A of the Companies (Amendment) Act, 2000, evry Public Company having paid up capital of not less than ______ of rupees shall constitute a Committee of the Board known as “Audit Committee”
(v)	______ ______ is needed to create a corporate culture of transparency.

1x5=5

(d)

State merely whether the following statements are “True” or “False”. You need not give any reason/explanation for your answer:

(i)	‘Working Paper File’ refers to papers, relating to matters, which do not normally change every year.
(ii)	The Cost Auditor has same powers, as Financial Auditor has, under section 227(1) of the Companies Act.
(iii)	As per CARR, 2001. the Annexure to Cost Audit Report is to be compiled by the Cost Auditor.
(iv)	“Small Scale Units” are exempted from the purview of the Cost Accounting Record Rules.
(v)	Engineering Export Promotion Council is located in Mumbai.

1x5=5

(a)

Based on the following information, in respect of a concern manufacturing cement, you are required to offer your comments, as a Cost Auditor on
(i) The performance of the concern,
(ii) Your suggestions for improvement:

Given Rated Capacity 80 MT/Hr.
		2003	2002
(1) (2) (3) (4) (5) (6) (7) (8)	Break down (Hrs) Planned maintenance (Hrs) Power restrictions (Hrs) Shortfall (there are no orders) (Hrs) Want of Wagons (Hrs) Total stoppage(Hrs) Total running (Hrs) Total available hours Production during the year (MT) Hourly Rate of Production (MT) Capacity Utilization (%)	2164 246 1230 787 492 4949 3865 8784 2,47,360 64 61.84	1009 420 1472 673 631 4205 4555 8760 3,27,960 72 81.9984
	Annual Installed Capacity	4,.00,000 MT

(b)

What is the relevance of Cost Audit in India?

Please turn over

( 2 )

F—19(CAM)
Revised syllabus

Marks

Your company has received an order from the Government of India directing your company to have the Cost Accounting Records audited. List the actions to be taken by the company step by step from appointment of Cost Auditor till the Cost Audit Report specifying the time schedule.

From the following figures extracted from the Cost Accounting Records of a company, calculate the Value Addition and its Ration as a percentage of sales, and also show how the value added is distributed to the different claimant thereto:

	(Rs. In lakh)
Gross sale (included ED Rs.1,240 lakhs) Raw materials, consumable Stores and Spares Increase in value of stock of WIP and Finishing goods Salaries, Wages, Bonus, Gratuity and welfare expenses Power and Fuel Other Overhead expenses excluding depreciation depreciation Interest Dividend Income from Investments Provision for Taxes Dividend Proposed	16,500 6,250 42 2,840 2,220 215 840 720 75 240 280

Section—II (50 marks)

(a)

Indicate whether the following statements are ‘True/False’. You need not give any justification in defense of your answer:

(i)	The concept of Management Audit was developed by T.G. Rose as a logical system of evaluating the quality of management.
(ii)	Management Audit extends beyond Operation Audit.
(iii)	Cost Accountants only can be appointed for ‘Management Audit’.
(iv)	The Central Excise Act has not specifically granted any power of Cost Auditor for Excise Audit.
(v)	The filing of the Cost Audit Report, along with the income tax Return, where in a Cost Audit is ordered, is not mandatory as per section 139(9) (e) of the Income Tax Act.

1x5=5

(b)

Explain the following terms on just one/two sentences only:

(i)	Environment Audit,
(ii)	Sick Industrial Company,
(iii)	Brand Equity,
(iv)	Corporate Service Audit,
(v)	Job Enrichment.

1x5

(c)

Fill up the blanks with appropriate words:

(i)	The two techniques available for Social Cost Benefit Analysis are _______ and _______.
(ii)	_______ pollution affects pedestrians and motorists due to the presence of dust, fumes and smoke in the atmosphere.
(iii)	Professionally managed organizations use _______ _______ _______ for deciding and determining increments, promotions and other rewards for their employees.
(iv)	Authority can be delegated but not the _______
(v)	‘Management Audit’ can be a _______ _______ for managerial control and reduction of cost.

1x5

(a)

Enumerate the circumstances which have brought about the development of “Management Audit”.

(b)

Enumerate the statutory and specific field of audit, verification and certification open to ‘Cost Accountants in Practice’ other than the Cost Audit.

What is the scope of work for Cost Accountant in practice as a loss assessor? Give an illustrative list of the types of claims and the role of the Cost Accountant in assessing the quantum of loss.

(a)

The newly appointed Chief Executive of a company (after a month of assuming the charge) has asked you, as a Management Auditor, to give him a factual report, as to why his staffs are by and large demoralized.

(b)

As a Management Auditor of a large organization you have been asked to carry out the review of ‘Marketing Policies’- as a part of corporate development. Prepare a questionnaire for carrying out such a review.

__________