Auditing And Business Law-p1-(nov-08), Icab

Auditing and Business Law Time allowed-3 hours Maximum Marks-100 [N.B.- The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account of the quality of language and of the way in which the answers are presented. Separate answer scripts should be used for each section. Different parts, if any of the same question must be answered in one place in order of sequence.]

Section-I Marks-50 Marks 10

1. Write short notes on the following : (a) (b) (c) (d) (e)

Audit program Audit engagement letter Prospectus Operating leases Fraud & Error

2. (a) What are the responsibilities of an auditor, if there has been a limitation of scope of the audit? 3 (b) Draft an audit report for a private limited company, containing at least two findings on limitation of scope of the audit. 5 3. The fair presentation of financial statements is the responsibility of the management. Describe the assertion of management with regard to fair presentation of financial statements. 7 4. (a) What are the provisions regarding appointment of the auditors under the Companies Act, 1994? 4 (b) A firm has been invited to accept appointment as auditor of a company following resignation of the previous auditor. Give at least three reasons why the firm might decline the invitation. 6 5. State verification procedure of the items appearing in the financial statements of the Company, as noted below: 15 Borrowing from banks by financial institutions Capital work in progress Accounts receivable Trade creditors Investment in Subsidiary Company Section-II Marks-50 1. (a) (b) (c) (d) (e)

“Parties to contract must be competent to contract”, Explain. When is consent said to be free? What are the remedies for breach of contract? Distinguish between a contract and an agreement. ‘No consideration no contract’-Interpret.

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2. (a) (b) (c) (d)

What are the essentials of partnership? Happening of certain contingencies may lead to dissolution of partnership – What are those? Distinguish between a Company and a Corporation. What is certificate of incorporation?

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3. (a) (b) (c) (d)

Name different types of companies that may be registered under the Companies Act 1994. Illustrate jus in rem and jus in personam. Explain the basic difference between a Memorandum of Association and an Articles of Association. Point out 3 differences between two major type of companies.

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4. (a) Explain briefly the implied conditions and warranties of a contract of sell of goods. (b) A enters into a contract with B to sell him 1000 bales of cotton and afterwards discovers that B was acting as agent of C. Advise A as to the person against whom he should bring a suit for the price of the cotton. (c) What are the differences between executed and executory contracts? (d) What is the difference between a general crossing and a special crossing of cheque? (e) Who may or may not be adjudged bankrupt?

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