| Roll No………………… | |
| Total No. of Questions— 8] | [Total No. of Printed Pages—3 |
| Time Allowed : 3 Hours | Maximum Marks : 100 |
| AG | |
| Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued. | |
| Answer Questions 1 and 2 and any four from the rest. | |
| Marks | |
| 1. | As an auditor comment on the following situations/statements: | ||
| (a) | The method of depreciation on Plant and Machinery is to be changed from SLM basis to WDV basis from the current year. | 4 | |
| (b) | The Finance Manager of Belt Ltd. is of the opinion that before declaration of dividends it would not be necessary to set off the carried forward amount of debit balance in the Profit and Loss Account against current revenue profit but the same could be set-off against existing revaluation reserve. Do you agree? | 5 | |
| (c) | Ganga-Kaveri Project Ltd. was incorporated on 1.7.2002. During the year ended 31.3.2003 there was no manufacturing or trading activity except raising of share capital, purchase of land, acquisition of plant and machinery and construction of factory sheds. Therefore the Chief Accountant of the company contends that for the relevant year there was no need to prepare a statement of profit or loss or any other statement except a Balance Sheet as at 31.3.2003. | 5 | |
| AG | P.T.O. |
( 2 )
| AG | Marks |
| (d) | The company has sent semi-finished goods to third parties for further processing which is lying with them at the end of the year. | 4 | |
| 2. | Give your comments on the following: | ||
| (a) | PQR & Co. a firm of Chartered Accountants has three partners, P, Q, and R; P is also in whole time employment elsewhere. The firm is already holding audit of 40 companies including audit of one foreign company. The firm is offered the audit of Z Ltd. and its 20 branches. | 5 | |
| (b) | It is not essential to verify the sale proceeds of scrap which did not have a significant value if the company had a good accounting and costing systems. | 4 | |
| (c) | Nene and Sane Associates, Chartered Accountants in practice have been appointed as statutory Auditor of Do Good Ltd. for the accounting year 2003-04. Mr. Nene holds 200 equity shares of DDA Ltd. a subsidiary company of Do Good Ltd. | 5 | |
| (d) | White star Ltd. was incorporated on 1.8.2003 and Mr. T who is related to the Chairman of the company appointed as auditor by the Board of Directors in their meeting on 4.9.2003. | 4 | |
| 3. | (a) | In performing an audit of financial statements, the auditor should have or obtain knowledge of the business. Explain in the light of SAP-20 | 8 |
| (b) | What is an Audit Trail? Briefly state the special audit techniques using the computer as an audit tool. | 8 | |
| 4. | (a) | Explain the important requirements which should be kept in mind to establish or evaluate a system of internal control for application process at Service Bureau. | 10 |
| (b) | Mention any Twelve title of statements of Standard Auditing Practices (SAPs) and the date from which it comes into force. | 6 | |
| AG | P.T.O. |
( 3 )
| AG | Marks |
| 5. | Draft an illustrative Audit Report u/s 227 of the Companies act, 1956, with a few qualifications. Annexure u/s 227(4A) is not required. | 16 | |
| 6. | How will you vouch and/or verify the following? | (a) | Contingent Liabilities | 4 | (b) | Excise Duty | 4 | (c) | Recovery of Bad-debts written off | 4 | (d) | Endowment Policies | 4 |
| 7. | (a) | Mention the important items to be examined by the auditor in the receipt of Income of Non-Governmental Organisations (NGO's) | 10 |
| (b) | "Installation of Computer Operating System have created both benefits and problems for auditors". Explain the Statement | 6 | |
| 8. | Write short notes on the following: | ||
| (a) | Intangible Assets | 4 | |
| (b) | Audit Risk | 4 | |
| (c) | Substantive procedures | 4 | |
| (d) | Floating charge | 4 | |
| AG |