The Institute of Company Secretaries of India 2008 ICSI Final Secreterial Management and System Audit - Question Paper

– Annual turnover Rs.400 lakh The company has not accepted any public deposits.
(3 marks)
(c) Comment on the observations made by the Internal Auditor in the subsequent cases :
(i) Facts:
For a training programme conducted for 30 employees :
– Working lunch was given at a cost of Rs.80 per trainee.
– Scribbling/note pads provided to the trainees containing around 50 sheets of 1/2 full scape size were purchased at a cost of Rs.20 every.
– Ball-point pens provided to the trainees were purchased at a cost of Rs.15 every.
Observations:
– Meals of the identical quality, if not superior, were available at the local hotels at Rs.40 per meal. The hotels were also willing to cater at the venue of the training programme for an additional amount of Rs.5 per
meal.
– Scribbling pads and ball-point pens of comparable quality were available in the open market at a price of Rs.10 every in the retail market. There was a possibility of volume discounts for bulk purchases.
(3 marks)
(ii) Facts:
– Bulk order for supplying printed forms, booklets, manuals, etc., involving an expenditure of over Rs.10 lakh was placed on a single party who was the least among 3 parties who submitted open quotations in response to a notice calling for quotations for the stated requirement which was placed on the notice board of the purchase department.
Observations:
– It is understood that the suppliers, whose quotations were received, were informed about the requirement by a staff member over telephone.
(4 marks)
(d) Usually there is a difference in the amount of profit as per the cost accounting records and the profit as per the financial accounts. explain the reasons for the difference and draw a proforma reconciliation statement as per the annexure to the Cost (Audit Report) Rules, 2001.
(6 marks)

5. (a) An Auditor has to be cautious before accepting the relative info made available under inter-firm comparison. Before initiating measures to fall in line or better itself, the company cannot blindly accept the info but study in depth how the calculations were made and assumptions on which they are made.
explain the limitations of inter-firm comparison.
(7 marks)
(b) If a company’s accounts show the sufficient profit to pay dividend which the Board of directors have duly declared but the cash balance is insufficient to pay the dividend, what would be your attitude as an Auditor ? Suggest a method to overcome the shortage of liquid resources to pay the dividend.

Earning:   Approval pending.