COST AND MANAGEMENT AUDIT Tame Allowed: J hours Full Marks: 100 The figures in the margin on the right side indicate full marks Where considered necessary, suitable assumptions may be made and clearly indicated in the answer. Group-A : Cost Audit (50 Marks] Question Nos, Land S are compulsory and answer any two from Question Nos, 2,3 & 4 Section-A 1. Choose the most appropriate answer to the following questions with justification. | mark 26893 will w ai) (iii) (iy) be awarded for correct answer and | mark for justification; 2x5=10 Which of the following audit's primary objective is ensuring accuracy of cost data, accumulation and exact computation of the cost of a product? Justify your selection of the answer: (A) Cost Audit (B) Management Audit (C) Internal Audit ~ (D) Financial Audit Asper Generally Accepted Cost Accounting Principles (GACAP),Cost of Productions and distribution of Utilities is determined based on the normal or actual capacity whichever is . Briefly justify your Answer: (A) lower (B) higher (C) equal (D) Not applicable Cost Auditor to report fraud under section of the Companies Act, 2013 (A) 140.12) (B) 148 (2) (C) 144(10) (D) 143 (12) Justify your answer. Write when the Cost Auditor of the Company shall be appointed for FY 2023-24: (A) Before 31st March; 2023. (B) Within 60 days of the commencement of the FY viz 30.5.2023. (C) Within 180 days of the commencement of the FY. (D) After AGM of previous year viz. FY 2022-23. Give reason for your answer, Please Turn Overicity mal «iy 1 the 8 ii) (iv) ™ w P-INICMAD) Syllabus 2022 In the context of performance evaluation, this mechanism is perused in progressive organisations where employees, managers, subordinates and peers to provide feedback about performance of the employee from every angte. Explain the reayon briefly: * (A) Rating Seale (B) Feedback (C) Goal Setting Exercise (D) 360° Feedback Mechanism ‘A model categorizing known frauds grouped by categories and subcategories is known as: (Justify your selection) (A) Fraud Triangle (B) Fraud Square (C) Fraud Model (D) Fraud Tree COSO, the Committee of Sponsoring Organizations, is an advisory group that designs frameworks to help organizations with risk management issues. Which of the following is not a part of the COSO Internal Control Integrated Framework? Why? (A) Control environment (B) Risk assessment (C) Control activities (D) Information and Communication (B) Supervision Security in the design of information systems is used to (A) inspect the system and check that it is built as per the specifications. (B) protect data and programs from accidental or intentional loss, (C) ensure that the system process data as it was designed to and that the results are reliable, (D) ensure the privacy of data processed by it. Justify your answer.P-17(CMAD) Q) Syllabus 2022 (v) Name the Cost Audit Standard wherein the principle that the overall objectives of + cost auditor is to check the risk of material misstatement is contained: (A) Cost Auditing Standard 101 (B) Cost Auditing Standard 102 (C) Cost Auditing Standard 103 (D) Cost Auditing Standard 104 Justify your answer. Section-B Answer any two Questions: 16x2=32 2. (a) What are the social objectives of Cost Audit? 6 (b) The following figures are obtained from the Cost Accounting Records of VEE Ltd. a single product manufacturing company: Year ended 3ist March 2023 222 (Amount in ® lakh) Net Sales 8,120] 6,700 . Other Income 550 400 Export Incentives 70 50. Tncrease in Value of Stock of Finished Goods 40 20 Raw Materials Consumed 2840) 2.260] Direct Wages, Salaries, Bonus, Gratuity etc. 760 628] Power and Fuel 460 298 Stores and Spares 260 220 Other Manufacturing Overheads 745 655 “Administrative Overheads: ‘Audit Fees 5 6 Salaries and Commission to Directors. 82 90 ‘Other Overheads 490 #30 ‘Selling and Distribution Overheads: | Salaries and Wages ° 5 30 Packing and Forwarding 40 30 Oier Ovrheds 35[ ao Total Depreciation T1901 1901 Interest Charges: ‘On Working Capital Loans from Bank 100 85 ‘On Fixed Loans from IDBI — at 105 ‘On Debentures “Tax paid including provisions a t— 5 Dividend paid Divina Ta alatesa) P-17(CMAD) Syllabus 2022 You are required to calculate the following parameters as stipulated in PART-D, PARA-J of the Annexure to Cost Audit Report under the Companies (Cost Records and Audit) Rules, 2014 for the year ended March 31, 2023 and March 31, 2022 (i) Value Addition. (ii) Eaming available for Distribution. (iii) Distribution of Earning to the different claimants. 10 (a) Cost Accountants are bound by certain Professional ethics and requested to observe some fundamental principles. Please analyse the fundamental principles that will have to be followed by a Cost Accountant. 6 (b) Burnet Ltd., a manufacturing unit, provides the following extracts from its records for the year ended March 31, 2023: The Company's specifications capacity for a machine per hour: | 1,500 units No. of shifts (each shift of 8 hours) per day: 3 shifts Paid Holidays in a year (365 days): (i) Sunday 52 days (ii) Other holidays 12 days Annual maintenance is done within these holidays. Preventive weekly maintenance for the machine is carried on during Sundays. Normal idle capacity due to lunchtime, shift changes etc. per shift| | hour Production based on sales expectancy in last 5 years (units in| 75.70 lakhs): wa 65.38 71.97 76.08 Actual production for the year ( units in Lakhs) 81.50You are required to calculate: (i) installed Capacity; (ji) Practical Capacity (iti) Actual Capacity (); (iv) Normal Capacity; (¥) Idle Capacity (%): (vi) Abnormal Capacity keeping in view of the relevant Cost Accounting Standard (CAS-2) and advise Management. 0 4. (a) Formulate an audit checklist for Auditing Repairs and Maintenance Cost from the perspectives of Cost Audit 8 (b) What are the three stages of Audit? Analyse the three stages of Audit. 8 Section-C 5. Your friend, who has been appointed as the Cost Auditor of a Company, has sought your advice on: (a) How to analyse the duty of the Cost Auditor to highlight utilization of resources by the Company during the year under Audit? (b) Under what circumstances, a qualified Audit Report is to be issued? 44458 Group-B : Management Audit; Internal Audit, Forensic Audit and Anti-Money Laundering [50 Marks] Question Nos. 6 and 10 are compulsory and answer any two from Question Nos. 7, 8 & 9. Section-A 6. Choose the most appropriate answer to the following questions with justification. 1 mark will be awarded for correct answer and | mark for justification: 2x5=10* 4) This analysis is useful in understanding the effect of variable costs on the net income {performance indicator). Justify your selection: (A) Contribution Analysis (B) Performance Analysis (C) Technical Analysis (D) Ratio AnalysisRINOMAD) (oy Syiliedan 2022 Section-B Answer any wo Questions: Mir2=32 7. (a) Desenbe the processes followed for ESG (environmental, social and governance) Auntit 4 (b) In a business environment, disruption of operations can occur. Do you agree? Analyse the problems that disrupt the operations and how a business organisation an plan for Business Continuity? 8 8. (a) State the benefits of Corporate Social Responsibility. Examine how the Internal Auditor can contribute effectively in the CSR program of the company. 9 (b) “The audit engagement team should hold discussions to gain a better understanding of the organization and its environment, including internal control, and also to assess the potential for material misstatements of the financial statements. All these discussions should be appropriately documented for future reference” Critically examine the statement. 7 9. (a) Co-operative Auditor has to examine the overdue debts if any, and a valuation of the assets and liabilities of the society while conducting an internal audit. Examine. 8 (b) What are the records that are required to be maintained by the Reporting Entity under Prevention of Money Laundering Act, 2022? How long do these records have to be maintained? Comment. 8m PANOMADY NyMuhue 2027 Sectlon-C panini 10. You have been asked by the Management of a Company to formulae polly" ne the pea ‘Whistle Bi yin to be con ving activity’ that is currently prevalent inthe Company. What sidered by you while forming such a policy? ,