Roll No…………………

Total No. of Questions—6] [Total No.of Printed Pages—3

Time Allowed—3 Hours Maximum Marks—100

GHY
Answers to questions are to be given only in English except in the case 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.

Question No.1 is compulsory and answer any four from rest.

1. As an auditor, how would you deal with the following :

(a) ABC Ltd, has spent Rs.45 lakhs for publicity and research expenses on 5
one of its new consumer product, which was marketed in the
accounting year 2009-10, but proved to be failure. How will you deal
the matter in the accounts of ABC Ltd., for the year ended 31st March,
2010.

(b) Sun Spinning Mills Ltd. is a sick company and has accumulated losses 5
of Rs.10 crores. The company has Rs.12 crores in the share premium
account. The management desires to adjust the accumulated losses
against the share premium balance.

(c) Included under Current Assets of XYZ Ltd. is inventory aggregating to 5

Rs.20 crores. A part of the said inventory manufactured for export had
to be sold earlier at a discounted price off-shore due to moisture content
present at the time of delivery. A part of similar inventory is included in
Rs.20 crores.

(d) A Public Company defaulted in the repayment of deposits together with 5

interest on the due date for more than a year and the Chief Accountant
contends that the auditor need not report on the default committed by
the company.

2. Comment on the following with reference to the Chartered Accountants Act,

1949 as amended by the Chartered Accountants (Amendment) Act, 2006 and
Schedules thereto:

(a) M/s P & Co are the cost auditors of Cineol Ltd. duly appointed u/s 233B 5
of the Companies Act, 1956. Mr. Anil, a Chartered Accountant, holding
a certificate of practice, is a part time employee of M/s P & Co, accepts
appointment as a statutory auditor u/s 224 of the Companies Act, 1956
of Cineol Ltd.

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(b) M/s PXD, a firm of Chartered Accountants has taken a loan for acquiring 5
computers, from a company whose managing directors’ son is an Articled
Trainee with P, a partner of M/s PXD.

(c) The superannuation – cum – pension fund for the employees of a company 5
was under a separate ‘trust’. Both the company and the trust were under
the same management. The auditor, who was auditing the accounts of the
company as well as the trust noted some irregularities in the operation of
trust and commented upon these Irregularities in the confidential report
given to the trustees, but did not mention about these irregularities in his
report on the Annual accounts of the Trust.

(d) Anirudh, a Chartered Accountant in practice is a partner in 3 firms. While 5

printing his personal letter heads and visiting cards, he gave the names of
all the firms in which he is a partner.

3. (a) Write a short notes on:

(i) Methods of obtaining sufficient and appropriate review evidence. 4

(ii) Steps involved in conducting Performance Audit. 4

(b) Computer systems have affected the auditors to collect and evaluate the 12
audit evidence. Explain in detail.

4. (a) As an Internal auditor of ABC Ltd, a Cement Manufacturing Company, 10

draft an audit program for verification of transport charges for dispatch
from the factory.

(b) Explain the term “Rolling Settlement” in the context of Audit of members 4
of Stock exchange.

(c) Explain the proprietary elements in the Companies (Auditors’) Report 6

Order, 2003.

5.(a) As a branch auditor of a nationalized bank, how would you verify:

(i) Drafts paid without advice. 4

(ii) Acceptances, Endorsements and other obligations. 4

(b) What are the areas in which Due Diligence can takes place ? 4

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(c) Write a short notes on “Solvency margin in case of an insurer carrying 8

general insurance business”.

6. Write a short notes on the following:

(a) Objectives of CFS Audit. 4

(b) Four situations leading to adverse/qualified statement in Certificate 4

of CG Compliance.

(c) Various types of Sampling selection methods. 4

(d) Audit of Abridged Financial Statements. 4

(e) Matters to be included in the ‘Auditors’ Report’ in the case of NBFCs 4

accepting or holding public deposits.

GHY

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