CWA/ICWA Final :: Cost Audit and Management Audit : June 2007

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
1. (a) State whether the following statements are "True" or "False". No reason or explanation need be given:
(i)Goodwill included in Fixed Assets is to be excluded in computing Capital Employed.
(ii)Defaults in payments to financial institutions is a subject matter of comment by the Cost Auditor in his report.
(iii)Royalty paid by a cement company for raising limestone is to be excluded from the cost of raw material.
(iv)Acceptance of fees by a practising Cost Accountant for certifying certain statements for a lawyer contesting a customs case as a percentage of the duty relief amounts to professional misconduct.
(v)According to Cost Accounting Records Rules, inter-divisional transfer of intermediate products should be effected at market price.
(vi)Under the existing regulations, a Cost Accountant in practice, who is also a Chartered Accountant can also practice as a Chartered Accountant.
(vii)The Cost Auditor is a member of the Audit Committee of the company.
(viii)Managing Directors' remuneration paid as a percentage of profit is includible under Salaries & Wages in Cost of Production.
(ix)A large scale footwear unit in the Co-operative sector is not statutorily required to maintain Cost Accounting Records under section 209(1)(d) of the Companies Act.
(x)Valuation of inventory in para 19A of the Annexure to the Cost Audit Report should be as on the last date of the financial year under audit.
 10x1=10
(b) Which of the following is correct?
(i)A cost auditor at a time can function as an auditor of how many companies of which all the companies paid up capital is more than Rs. 30 lakhs?
(1)25 companies
(2)20 companies
(3)10 companies
(ii)A Cost Audit Firm has three partners. State how many companies cost audit can be conducted where the paid up capital of all the companies is less than Rs. 25 lakhs?
(1)30 companies
(2)60 companies
(3)15 companies
(iii)The Tea Company has twelve gardens located at different places and regarded as separate unit. How many maximum number of Firm can be appointed?
(1)Two Firms as Joint auditors
(2)Twelve Firms as Joint auditors
(3)One Firm for twelve gardens.
(iv)Excisable clearances means
(1)Only sale of goods from factory
(2)Total clearances from factory
(3)Despatches from bonded warehouse
(v)Appointment of Cost Auditor should be sent to be Department of Company Affairs within
(1)30 days of the commencement of every year
(2)50 days of the commencement of every year
(3)45 days of the commencement of every year.
 1x5=5
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( 2 )

F—19(CAM)
Revised syllabus
Marks
(c) State/Define the following (one/two sentence only):
(i)A Cost Accountant in practice has accepted as the concurrent auditor of a company for a particular year. Can the Cost Accountant accepts appointment as Cost Auditor of the same company for that year?
(ii)Under Para 6, Break up of Cost of Input materials imported during the year under audit—

Details should be furnished in respect of major input materials each consisting at least 2% or 3% of the total material cost. Write the correct percentage.

(iii)Define — Green Room Meetings.
(iv)Define — Sun Set Clause
(v)As per section 292A of the Companies (Amendment) Act, 2000, every Public Company having paid up capital of not less than ________ of rupees shall constitute a Committee of the Board known as "Audit Committee". _____ Fill up the gap.
 1x5=5
2. (a) State the 'Records' are considered as part of the Cost Accounting under Sec. 209(1)(d). 7
(b) What review should be made by a Cost Auditor of Cost Accounting Records? 8
3. Alpha Prarma Ltd. uses two ingredients P and Q for production of a formulation X in the ratio of 2:3.

P is produced entirely from indigenous sources, whereas 50% of Q is imported. This ratio of imports and indigenous source is maintained throughout the year. The input/output ratio of raw materials to finished goods is 1:0.9.

During the year 2005-06, the company produced 270 tonnes of finished product of X and the consumption of raw materials was as follows:

P — 1,21,500 kgs @ Rs. 360 per kg.

Q — 1,78,400 kgs at an average cost of Rs. 220 per kg.

During the year, the company imported 90,000 kgs of Q and the break up of landed cost was as follows:
CIF Value
Import Duty
Clearing & Forwarding Charges
Landed Cost		 Rs. 1,86,43,000
Rs.   18,63,600
Rs.   10,45,000
Rs. 2,15,51,600

How will you present the above informations in the manner prescribed in Paras 5A, 5B and 6 of the Annexures to the Cost Audit Report?

 6+6+3
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( 3 )

F—19(CAM)
Revised syllabus
Marks
4. (a) From the following figures extracted from the financial and cost accounting records, you are required to computer:
(i)Value added;
(ii)Ratio of Operating Profit to Net Sales and
(iii)Ratio of Operating Profit to Value added.

Rs. in lakhs
Net Sales excluding Excise Duty
Increase in Stock of finished goods
Expenses:		 21,000
250
Raw materials consumed
Packing materials consumed
Stores and Spares consumed
Power and Fund
Repairs and Maintenance
Insurance
Direct Salaries and Wages
Depreciation
Interest paid		 2,600
1,200
560
4,600
200
120
480
885
1,398
Factory Overheads:
Salaries and Wages
Others		 240
250
Selling and Distribution Overheads:
Salaries and Wages
Additional Sales Tax
Others		 120
475
1,700
Administration Overheads:
Salaries and Wages
Others		 120
80

10
(b) What details likely required to be provided in Reconciliation of Turnover under Para 27 of Cost Audit Report Rules, 2001? 5
SECTION II (50 Marks)
5. (a) State whether the following statements are "True" or "False" justify with reasons:
(i)Management Audit Report is to be submitted to the Cost Audit Branch.
(ii)The Ministerial Conference shall establish five functional committees for discharge of functions agreed to them under the Multilateral Trade Agreements.
(iii)The Secretariat of the WTO will be headed by a Secretary.
(iv)For stock hypothecation to the Bank, insurance coverage is required for Seventy-five percentage of stock as margin money;
(v)Productivity is broadly defined as the ratio of production and sales.
 2x5=10
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( 4 )

F—19(CAM)
Revised syllabus
Marks
(b) Fill in the blanks with appropriate word/words:
(i)Authority can be delegated but not the ________
(ii)Dumping is an ________ practice.
(iii)The Audit Committee shall meet at least ________ a year.
(iv) ________ is a movement protecting the interest of the consumers.
(v)The efforts, which are directed towards humanising the jobs and their contacts in order to overcome monotony and boredom in carrying out job is called ________.
 1x5=5
(c) Explain in brief the basic differences between any two out of the following:
(i)Inventory Audit and Audit under section 14AA of the Central Excise Act;
(ii)Voluntary Cost Audit and Interest Audit;
(iii)Sales and Marketing.
 2½x2=5
6. (a) What is meant by SWOT analysis? 3
(b) What is meant by 'Social Responsibility Management'? Briefly list the different types of pollution for which a manufacturing company is responsible. 12
7. (a) What is the purpose of the audit prescribed under Sec. 14AA of the Central Excise Act? 4
(b) What are the possible areas for misuse/malpractice? 4
(c) Prepare a checklist for carrying out an audit under Sec. 14AA of the Central Excise Act. 7
8. Write short notes on (any three):
(a)Energy Audit;
(b)Audit Committee;
(c)Industrial Sickness;
(d)Management Frauds.
 5x3=15
__________

 

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