IIBMS Audit Mgmt Answer sheet

1. What is an audit program? Discuss the advantages and disadvantages of conducting an audit according to a predetermined audit program. How can these disadvantages be overcome?
2. What is routine checking? What types of work are included in frequent checking? What are the objectives of regular checking? Describe the advantages and disadvantages of routine checking. Discuss the duties of an auditor in this regard.
3. Is it necessary to provide depreciation before profits are distributed as dividends? What are the Companies Act, 1956 provisions regarding the quantum of depreciation for the annual accounts?
4. An enterprise purchased an item of machinery on 1.4.2002 for Rs. 1,00,000. It depreciates this item at the rate of 10 % per annum on a straight-line basis. On 1.4.2005, the enterprise changed the depreciation method from straight-line to written-down value. The applicable rate under the new method is 15 %. How should the enterprise effect this change in the depreciation process?
5. State the provisions of the Companies Act 1956 regarding the declaration and payment of dividends.
6. State the provisions of the Companies Act of 1956 regarding the declaration and payment of Interim dividends. What would be the duty of an auditor in connection with such a dividend?
7. What are the different purposes of investigation? Distinguish between investigation and audit.
8. Mention the circumstances under which the central government can order an investigation of a company. What should be the procedure of the inquiry in such a case?
9. A fraud is suspected in a business house, and you are asked to investigate. Explain briefly how you would proceed in this matter.

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