CWA/ICWA Inter :: Auditing: June 2003

INTERMEDIATE EXAMINATION
June 2003	*I-II(ADT)* *Revised Syllabus*
Auditing
Time Allowed : 3 Hours	Full Marks : 100
Answer Question No. 1 which is compulsory and any five from the rest.
Marks

(a)

Mention whether the following statements are True or False

(i)	The first auditor of a company is appointed by the Board of Directors.
(ii)	A new 'auditor' must inform the Registrar of his acceptance of the office of auditor but he need not do so if' he does not accept the office.
(iii)	A person can hold office of Director in more than 55 companies at a time.
(iv)	Cost auditor has right of access to the financial books of the company.
(v)	Private Limited Companies shall not be excluded in reckoning the number of companies which an auditor can audit.
(vi)	The auditor appointed to fill a casual vacancy shall hold office till the conclusion of the next General Meeting.

1x6=6

(b)

Match the following two columns :

Column I		Column II
(i) (ii) (iii) (iv) (v)	GAAS Efficiency Audit Revaluation Reserve A/c Auditing in Depth Disclaimer of Opinion	(a) (b) (c) (d) (e)	An auditor falls to obtain sufficient information to warrant an expression of opinion. Tracing of a transaction through its various stages from origin to conclusion. Studying competence in achieving goals. Quality of the audit performed by the auditing standards while conduction the audit. Profit on revaluation of land and building

1x5=5

(c)

As a statutory auditor of a company give your comments and observations on the following:-

(i)
The company purchased a standby generator in March 2003. The company has not charged any depreciation during the year ended 31.3.2003, on the ground that the main generator alone was running and the standby generator had not at all been put to use.

(ii)
During the course of stock taking, it was discovered that the stores manager had embezzled stock worth Rs. 1,20,000. This amount was adjusted by the company with stores consumed account.

(iii)
X Structurals Ltd. constructed a factory building for its own use with the help of its own workers. The services of the structural wing were priced at Rs. 4 lacs and charged to the new factory building account on the plea that the same was the price chargeable to an outsider. The actual cost of services of the structural wing is Rs. 3 lacs.

3×3=9

(a)

State the main points of distinction between :

(a)	Operational audit and Internal audit;
(b)	Test checking and Routine checking;
(c)	Depreciation and Fluctuation in value; and
(d)	Capital reserve and Reserve capital.

4x4=16

Please turn over

( 2 )

I-II(ADT)
Revised syllabus

Marks

(a)

How will you vouch/verify the following and what are the allied important aspects to be looked into?

(a) Transfer of goods from on branch to another with loading of' 15%.

(b) Legal expenses incurred for recovery of amount due to the company.

(c) Customs and excise duties:

(d) Retirement gratuity to employees.

4x4=16

(a)

Discuss the reasons as to why the audit working papers should be carefully preserved by the auditor.

(b)

Is it true that the overall objective and scope of an audit does change in a computerized environment?

(a)

As a principal incharge of a statutory audit of a limited company, how would you supervise and review audit notes. Working papers and queries of your audit assistants?

(b)

Discuss the importance of internal control questionnaire and flow charting as a tool in planning and programming the audit assignment.

(a)

How is 'Casual Vacancy' in the context of auditor's appointment defined under the Companies Act, 1956? A & Co. who were appointed statutory auditors of the company, consisted of two partners A and B. A dies: B has floated a new partnership firm - B & Co. in which he is a partner. The Board of Directors have appointed B & Co. as statutory auditors, subsequent to the demise of A is this valid?

(b)

XYZ Ltd. was regestered with the Registrar of Companies on 1st April, 2003. The Board of Directors appointed Mr. Rakesh as the first auditor on 4th May, 2003. A new Board of Directors who assumed charge on 30th May, 2003 removed him and appointed Mr. Mukherjee as the auditor of the company. Explain the irregularities, if any, in these acts.

(c)

An auditor may express his opinion on audit in a variety of ways. Explain the nature of auditor's opinion.

(a)

Briefly discuss about any eight areas in which there are noteworthy differences between India's GAPP and USA's GAPP.

Write short notes on -

(a)	Outstanding assets;
(b)	Audit risk;
(c)	Audit of Government expenditure;
(d)	Continuous audit.

4x4=16

__________