Tiêu đề 7.Paper 19.pdf ✅

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Suggested Answer_Syllabus 2016_Jun2017_Paper 19 Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1 FINAL EXAMINATION GROUP - IV (SYLLABUS 2016) SUGGESTED ANSWERS TO QUESTIONS JUNE - 2017 Paper-19 : COST AND MANAGEMENT AUDIT Time Allowed : 3 Hours Full Marks : 100 The figures in the margin on the right side indicate full marks. Answer Question No. 1 which is compulsory and carries 20 marks and any five questions from Question Nos. 2 to 8. Section – A (20 Marks) 1. Choose the correct answer with short justification/working. (1 mark for correct choice, 1 mark for justification/workings. 2x10=20 (i) Part C of the Annexure to the Cost Audit Report in CRA 3 deals with ________. (a) Manufacturing Sector (b) Service Sector (c) Regulated Sector (d) Unregulated Sector (ii) Cost Accounting Standard 8 is a Cost Accounting Standard on ___________ . (a) Employee Cost (b) Utilities Cost (c) Pollution Control Cost (d) Selling and Distribution Cost (iii) Under the Generally Accepted Cost Accounting Principles, the cost of cane supplied from own farm to the sugar mill is treated as ___________. (a) Direct Materials Cost (b) Indirect Materials Cost (c) Production Overhead (d) Administrative Overhead (iv) Constitution of Audit Committee by the Board of Directors is mandatory for _________. (a) all companies (b) all listed companies only (c) all listed companies and those prescribed under the Companies (Meetings of Board and its Powers) Rules only (d) all public companies having turnover of `100 crore or more only (v) Cost Auditing Standard 102 deals with ______________. (a) planning an Audit of Cost Statements (b) Cost Audit Documentation (c) knowledge of process and business (d) overall objectives of the Independent Cost Auditor (vi) As per the Central Excise Valuation Rules 2000, the assessable value of goods used for captive consumption is __________. (a) at actual cost of production of such goods (b) at marginal cost of production of such goods (c) at 110% of cost of production of such goods (d) at market price of such goods (vii)A cotton textile mill had cumulative waste percentage of 8% in Blow Room, 6% in Carding, 4% in Drawing, 4% in Simplex and 9% in Ring Frame. For an input of 1000 kg.
Suggested Answer_Syllabus 2016_Jun2017_Paper 19 Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 2 of cotton in Blow Room, the output at Ring Frame is _________. (a) 730.27 kg. (b) 725.27 kg. (c) 742.27 kg. (d) 749.97 kg. (viii)Operational Audit can lead to better management with the focus on ________. (a) transaction-based analysis for fraud prevention (b) compliance of rules (c) risk identification, process improvement (d) budget monitoring (ix) A shoe manufacturing company has a plant capacity of producing 700 shoes per shift. During the year of 300 working days, 3 shifts of 8 hours with half-hour recess per shift, it produces 35.91 lakh shoes. The Normal Capacity Utilization percentage is ____. (a) 82% (b) 76% (c) 74% (d) 78% (x) Propriety Audit in the context of Government Audit seeks to ensure that _______. (a) public money are not spent for the benefit of a particular person (b) public officer should exercise same vigilance as in respect of expenditure of his/her own money (c) no authority should pass an order which will be directly or indirectly to its own advantage (d) All the above Answer: 1. (i) (B) Service Sector Reason: Part C of the Annexure to the Cost Audit Report in Form CRA 3 pursuant to the Rule 6(4) of the Companies (Cost Records and Audit) Rules, 2014, gives quantitative information and abridged cost statement for services in the Service Sector. (ii) (B) Utilities Cost Reason: CAS 8 deals with the Cost Accounting Standard on cost of utilities. (iii) (A) Direct Material Cost Reason: As per the GACAP, Direct Materials Cost includes cost of procurement and freight inwards of the materials. (iv) (C) All listed companies and those prescribed under the Companies (Meetings of Board and its Powers) Rules only Reason: The Rule covers all listed companies, public companies having capital of `10 crore and more, annual turnover of `100 crore and more, outstanding deposits, loans and borrowings of `50 crore or more. (v) (B) Cost Audit Documentation Reason: The Cost Auditing Standard 102 is to provide guidance to the members in the preparation of audit documentation in the context of the audit of cost statements, records and other related documents. (vi) (C) At 110% of cost of production of such goods Reason: Liability of Excise Duty arises as soon as the goods covered under the Excise Duty are manufactured but the Excise Duty is collected at the time of removal or clearance from the place of manufacture even for captive consumption. (vii) (B) 725.27 kgs. Reason: Output at Ring Frame = 1000 × (100-92)% × (100-94)% × (100-96)% × (100-96)% × (100-91)% = 725.27 kgs. (viii) (C) risk identification, process improvement Reason: The objective is to assist the organization in performing the functions more effectively and economically with focus on the efficiency and the
Suggested Answer_Syllabus 2016_Jun2017_Paper 19 Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 3 effectiveness of the operations, giving an early warning system for the detection of the potentially-destructive problems. (ix) (B) 76% Reason: Available capacity = 300 × (8-0.5) × 3 × 700 = 47.25 lakh units Actual Capacity Utilization % = 35.91/47.25 = 76% (x) (D) All the above Reason: The objective of Propriety Audit is that public money is not spent for the benefit of a particular person. Public officer should exercise same vigilance as in respect of expenditure of his/her own money and no authority should pass an order which will be directly or indirectly to its own advantage. Section - B (80 marks) 2. (a) What is meant by 'Normal Price' with reference to 'Related Party Transaction' in CRA 1? State the basis adopted to determine 'Normal Price'. 8 (b) Mr. P. Swamy, the Cost Auditor of PQR Ltd. for the FY 2016-17, was offered an assignment of Investment Consultant of RST Ltd., a subsidiary of PQR Ltd., for the same year. (i) Whether the acceptance of the assignment amounts to violation of law and professional misconduct? (ii) What are the penal provisions, if any? (Mention the relevant provisions.) 4+4=8 Answer: 2. (a) As per Para 24 (b) of the CRA 1, ―Normal Price‖ means price charged for comparable and similar products in the ordinary course of trade and commerce where the price charged is the sole consideration of sale and such sale is not made to a related party. Normal Price can be construed to be a price at which two unrelated and non-desperate parties would agree to a transaction and where such transaction is not clouded due to the proximity of the parties to the transaction and is free from influence through the parties may have shared interest. In the context of the basis adopted to determine Normal Price, the methods stated below are relevant. (i) Comparable Uncontrolled Price method (ii) Resale Price method (iii) Cost-plus method (iv) Profit Split method (v) Transactional Net Margin method (vi) Any other method, to be specified (b) (i) Any person who is engaged in consulting and providing specialized services to a company and its subsidiary companies is not eligible to act as Cost Auditor [Section 141 of the Companies Act, 2013, read with Companies (Audit and Auditors) Rules, 2014]. The Cost Auditor cannot accept the assignment as long as he/she remains appointed as the Cost Auditor of the company. A member of the institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if— (1) he is held guilty by any civil or criminal court for an offence which is punishable with imprisonment for a term not exceeding six months; (2) in the opinion of the Council he brings disrepute to the profession or the institute as a result of his action whether or not related to his professional work.[Part IV, The First Schedule] A member of the Institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if he is held guilty by any civil or criminal court for an offence