CWA ICWA Exam Papers Inter Group I Commercial and Industrial Laws and Auditing December 2010

CWA ICWA Exam Papers Inter Group I

Commercial and Industrial Laws and Auditing December 2010


This Paper has 54 answerable questions with 2 answered.

Syllabus 2008
Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks.
Answer Question No. 1 & Question No. 5 which are compulsory and attempt any two
from the rest in Section I and any two from rest in Section II
SECTION I (Marks 50)
(Commercial and Industrial Laws)
1. Comment on the following based on legal provisions (No marks for wrong reasons/justification) 2×7
(a) A dismissed employee who was reinstated without wages for the period of dismissal is entitled to bonus. (0)
(b) Mr.X accepted certain Goods of Mr.Y for delivery at Durgapur. When the driver of the truck which was carrying the Goods went for lunch, the Goods were stolen. There was noinsurance. Mr.Y has no remedy. (0)
(c) As per Factories Act, Canteen is mandatory in all the factories. (0)
(d) Payment of Gratuity Act, 1972 applies to all the factories. (0)
(e) A counter offer constitutes an acceptance of an offer. (0)
(f) Death or insanity of the proposer automatically revokes the proposal. (0)
(g) An enterprise entered into an agreement with an association in respect of production and supply which causes and appreciable adverse effect on competition within India. Hence this is voidable agreement and can be ratified with the approval of commission. (0)
2. (a) Mr. Roy consigns some fruits to his agent Mr.Paul at Mumbai with direction to send those fruits to Mr.Kar at Chembur. Mr.Paul sold fruits, which were spoiling at Mumbai below cost price without prior consent of Mr.Roy. Whether Mr.Paul’s action was valid? 2 (0)
(b) Mr.Bose is indebted to Mr.Das and Mr.Ghosh is the surity. When Mr.Bose & Mr.Ghosh refused to pay, Mr.Das sued the surity (Mr.Ghosh) who paid the amount & cost as per orders of the court. Can the surity recover the amount from Mr.Bose? 2 (0)
(c) Mr.X buys a ring from Mr.Y at a low price employing ‘undue influence’ and sells the ring to Mr.Z who purchased against consideration and without knowing of Mr.X’s undue influence’. Can Mr.Y recover the ring from Z.? 2 (0)
(d) Performance of a contract may be made only by the parties to the contract – Comment. 2 (0)
(e) Mr.Bose settled the price after selecting two chairs. He arranges to take delivery of chairs next day and agrees to pay next month. Said chairs were destroyed by fire before delivery. Seller demanded the price. Mr.Bose refused. State legal position. 2 (0)
(f) Mr.Suresh, a casual labour draws Rs.5,000/- per month. His Employer does not include his name for the purpose of provident fund. Whether the Employer is justified? 2 (0)
(g) Under what circumstances pension under E.P.F. can be applied for by an employee? 4 (0)
(h) What is bargain price (Consumer Protection Act). 2 (0)
3. (a) Write short notes on any four: 4×4
(i) Effects of ‘coercion’ on a contract. (0)
(ii) Exceptions to ‘implied condition as to quality or fitness’. (0)
(iii) ‘Over crowing’ (Factories Act). (0)
(iv) Employees Deposit Linked Insurance. (0)
(v) ‘Available surplus’ Allocable surplus’. (0)
(b) Mr.Saxena received cheque dated 02.05.2010 for Rs.10,000/- from Mr.Malhotra towards cost of furniture. On 13.11.10 Mr.Malhotra closed the Bank Account. What action Mr.Saxena can take to receive the amount against the cheque which is still with him. 2 (0)
4. (a) (i) How the surity is discharged from liability? 4 (0)
(ii) A.Das entered into contract to sing for B.Roy at a concert for Rs.10,000/- which was received in advance. A.Das being too ill could not sing. B.Roy demanded compensation for loss of profit which he would have made if A.Das had been able to sing. State B.Roy’s right. 2 (0)
(b) (i) Ramen sold 50Kg. of rice to Khagen who paid by cheque and Ramen gave the delivery order to Khagen. Khagen resold such rice to Bhaben who purchased on good faith and for consideration. Khagen’s cheque was dishonoured. Ramen refused to deliver rice to Bhaben on the plea of non–payment. Advise Bhaben. 2 (0)
(ii) Distinguish between ‘condition’ and ‘warranty’ (Sale of Goods Act). 4 (0)
(c) (i) What is the normal time for payment of Wages (factories Act.) 4 (0)
(ii) A complaint can be instituted with the prescribed Authority of any place in India. Do You agree? 2 (0)
SECTION II (Marks 50)
5. Comment on the following statements based on legal provisions (No marks for wrong reasons/justification) 2×7
(a) Cash flow statement with Annual Accounts is mandatory in case of all Public Companies. (0)
(b) Auditor, on receipt of appointment letter, is to inform to Central Government within 45 days. (0)
(c) The Auditor has nothing to do with inherent or control risk. (0)
(d) Auditor demanded notice for Annual general Meeting but the Director of the Company refused. (0)
(e) XYZ India Ltd. has a Branch Office in England. M/s. R.B. Dutta & Co. Chertered Accountants were appointed as Auditor of the Company whereas an Accountant qualified to act as Auditor in England was appointed as Branch Auditor to conduct Audit of that Branch. Indian Auditor opined this was not legally valid. (0)
(f) Statutory Auditor certifies the Statement of Accounts including Balance Sheet with reference to documentary evidence based on Vouchers only. (0)
(g) Is it correct to say that while auditing in computerised environment, over all objective and scope of Audit remains the same as for audit in non–computerised environment. (0)
6. (a) “Management Audit emphasizes on problem identification rather than problem solving” – Comment. 4 (0)
(b) How Auditor should conduct Audit in the case of Data Processing through computer service centres. 4 (0)
(c) What is expected under CARO regarding
(i) ‘transactions in which Directors are interested’.
(ii) ‘Guarantees for loan’ taken by others’.
2+2 (0)
(d) The Auditor has no liability under Companies Act, 1956 excepting rights – Do you agree? Otherwise State the liabilities, if any. 4 (0)
(e) How you will deal with in the Audit Report in respect of Fixed Assets being maintained at Mumbai Branch Office of a foreign company incorporated outside India. 2 (0)
7. (a) (i) A Company has not followed the Accounting Standards. Auditors suggested to finalize the Accounts after complying with relevant accounting standard. Suggest whether there is any way out to finalise the accounts without change at this stage. 2 (0)
(ii) IFRS applies to all entities & also to non–individual companies. The ICAI has decided to fully coverage with IFRS from Accounting period commencing from 1st January 2012. Do you agree? Give correct reasons. 2 (0)
(b) Explain the factors which act as guiding measures to the concept of materiality. 4 (0)
(c) As an Internal Auditor, how would you examine the “Receivables”? 5 (0)
(d) (i) What are the points an Auditor shall consider for I.T. Audit in respect of “Systems Development”. 2 (0)
(ii) What is ‘Audit Trails’ being one of the control under computer information system. 2 (0)
(iii) Do you agree that Management Audit can be conducted by an Audit Committee? 1 (0)
8. (a) Find out the difference between India GAAP & US GAAP in respect of ‘Assets & Liabilities’. 2 (1)
(b) Abnormal losses during construction period has been capitalised. As an auditor, what treatment you suggest. 2 (0)
(c) A person qualified to be appointed as auditor, who is already Auditor of 20 Public Limited Companies and 10 Private Companies received appointment as Auditor of XYZ Ltd. Advice whether he can accept this appointment. 2 (0)
(d) How an Auditor shall conduct and Report when he finds any embezzlement of cash which considerably affects the financial position of the Company. 2 (0)
(e) What is expected under CARO regarding “Maintenance of cost records”? 2 (0)
(f) Name at least 4 aspects which are being examined by the Auditor while making appraisal and review of Internal Audit/Check. 2 (0)
(g) What is Information System Audit? 4 (0)
(h) State at least 4 Limitations of Management Audit. 2 (1)

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