Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
FINAL EXAMINATION
Syllabus 2016
Paper 19: COST AND MANAGEMENT AUDIT (CMAD)
Time Allowed: 3 Hours Full Marks: 100
There are Sections A, B, C and D to be answered subject to instructions given against each.
Section A 20 X 1
You are required to answer all the questions. Each question carries 1 mark. = 20
Instructions: Each question is followed by 4 Answer choices and only one is correct. You are required to Marks
select the choice which according to you represents the correct answer.
1.
a. Cost Accounting Standard 8 is a Cost Accounting Standard on ________________ .
(i) Employee Cost
(ii) Utilities Cost
(iii) Pollution Control Cost
(iv) Selling and Distribution Cost
b. Constitution of Audit Committee by the Board of Directors is mandatory for ______________ .
(i) All companies
(ii) All listed companies only
(iii) All listed companies and those prescribed under the Companies (Meetings of Board
and its Powers) Rules only
(iv) All public companies having turnover of Rs. 100 crore or more only
c. The useful life of an intangible asset, like amount paid on technical knowhow, shall not exceed
_________ from the date it is available for use.
(i) 5 years
(ii) 8 years
(iii) 10 years
(iv) 12 years
d. According to the Companies (Cost Records and Audit) Rules, 2014, which one of the following is
not a regulated industry?
(i) Fertilizers
(ii) Cement
(iii) Sugar
(iv) Petroleum products
e. Comptroller & Auditor General (C&AG) has right to direct the manner in which the company’s
accounts shall be audited by the auditor and to give such auditor instructions in regard to any
matter relating to the performance of his functions as per section ______________.
(i) 138 of the Companies Act, 2013
(ii) 143 of the Companies Act, 2013
(iii) 173 of the Companies Act, 2013
(iv) 134 of the Companies Act, 2013
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
f. Which one of the following KPIs is used to measure productivity & efficiency of a machinery?
(i) Percentage of Idle time to total available time
(ii) Machine downtime ratio
(iii) Production per man hour
(iv) Contribution per unit of material used
g. Kaizen Costing and Lean Manufacturing (Management Accounting Tool) are used as ________ .
(i) Cost Reduction Tool
(ii) Cost Computation Tool
(iii) Performance Measure Tool
(iv) Control Tool
h. Quantity of output from any process, which will be needed to get one unit of final output is
called as _________________ .
(i) Utilities
(ii) Return on Net Worth
(iii) Capital Employed
(iv) Waste Multiplier
i. Target costing is used for the purpose of ___________________ .
(i) Cost Computation
(ii) Cost Reduction
(iii) Pricing and decision making
(iv) Cost Control
j. Cost of self-generation utilities for own consumption shall comprises of _______________.
(i) Administrative overheads
(ii) Distribution cost
(iii) Factory overheads
(iv) None of the above
k. Which section of the Companies Act, 2013 deals with Internal Audit?
(i) Section 138
(ii) Section 148
(iii) Section 139
(iv) Section 192
l. Royalty paid on sales Rs. 30,000; Royalty paid on units produced Rs. 20,000, Hire Charges of
equipment used for production Rs. 2,000, Design charges Rs. 15,000, Software development
charges related to production Rs. 22,000. The Direct Expenses amount is:
(i) Rs. 88,000
(ii) Rs. 89,000
(iii) Rs. 98,000
(iv) Rs. 99,000
m. Operational Audit can lead to better management with the focus on _________________ .
(i) Transaction-based analysis for Fraud Prevention
(ii) Compliance of Rules
(iii) Risk Identification, Process Improvement
(iv) Budget Monitoring
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
n. The main objective of Management Audit is to_________________ .
(i) suggest improvement in methods of operations
(ii) framing basic policies for the organization
(iii) setting up an organizational framework
(iv) None of these
o. The process of determining the elements which correspond to the lines and the columns in a
financial statement and the elements which must be created by extension is called as ________ .
(i) Mapping
(ii) Name
(iii) Concept
(iv) Scaling
p. Every unlisted public company having turnover ______________ during the preceding financial
year shall require to appoint Internal Auditor u/s 138 of companies Act 2013.
(i) Rs. 50 crore or more
(ii) Rs. 100 crore or more
(iii) Rs. 150 crore or more
(iv) Rs. 200 crore or more
q. Which one of the following is the first step to conduct a Hospital Audit?
(i) Check the letter of appointment
(ii) Study Trust Deed
(iii) Examine Records
(iv) Physical Verification
r. According to the Companies (Cost Records and Audit) Rules, 2014 Profit Reconciliation of the
company as a whole is dealt in ____________ of the Annexure to Cost Audit Report.
(i) Part D
(ii) Part C
(iii) Part B
(iv) Part A
s. Which of the following is an important point in Corporate Planning?
(i) Time and Work Study
(ii) Imposing Control System
(iii) Forecasting and goal setting
(iv) SWOT Analysis
t. Which is not an Activity Ratio and/or Liquidity Ratio?
(i) Current Ratio
(ii) Expense Ratio
(iii) Debtors Turnover Ratio
(iv) Stock Turnover Ratio
Section B 10 X 2
You are required to answer all the questions. Each question carries 2 marks. = 20
Instructions: Each question is followed by a space where you are required to type your answer. Marks
2.
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
a. What is the objective of Cost Auditing Standard 101?
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b.. In which CRA Form, is the Cost Audit Report of a company filed with the Central Government?
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c. Under which Article states about the audit of accounts of Municipalities?
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d. Net Sales Rs. 15,260 lakhs, Increase in stock Rs. 42 lakhs, Cost of raw materials Rs. 6,250 lakhs,
Power Rs. 2,220 lakhs and other overheads Rs. 215 lakhs. How much is the Value Addition?
Type your answer here
e. What should be the first step in audit of Educational Institutions?
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f. In which class of audit, data or information depicting social performance of a business is audited
in contrast to its normal economic performance as audited in financial audit?
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g. In which account abnormal Loss due to flood or earthquake is being charged?
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h. The Balance Sheet of X Ltd as on 31st March 2022 showed the following information:
Capital - Rs.1500 lacs, Reserves - Rs.696 lacs, Loans - Rs.600 lacs, Sundry Creditors Rs.774
lacs, Total assets -Rs.3570 lacs. For the year 2021-22, PBT - Rs.900 lacs, Provision for tax is Rs.
360 lacs and proposed dividend is Rs.300 lacs. Return on Net worth is:
Type your answer here
i. Who is the developer of Management Audit?
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j. To whom the Management Audit Report is submitted?
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Section C 4 X 12
You are required to answer any 4 out of 6 questions in this section = 48
Instructions: Each question is followed by a space where you are required to type your answer. Marks
3. a. In a factory, running single shift, two products A and B, are manufactured.
Particulars A B
Man hours/unit 3 7
Production/month (units) 1,500 1,000
Month means 26 working days and 8 hours a day. The company employs 60 workers and the
budgeted man-hours are 1,32,000 for the year.
(i) What is the Capacity Ratio? 3
Type your answer here
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
(ii) What is the Activity Ratio? 3
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(iii) What is the Efficiency ratio? 2
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b. A member of the Institute, whether in practice or not, is liable for disciplinary action if he/she is 4
found guilty of professional and other misconduct. Explain the term ‘other misconduct.”
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4. a. The Financial Accounts of Auto Parts Manufacturing Company Ltd. showed a profit for the year 6
2021-22 as Rs. 35,46,700. During the course of Cost Audit, the following transactions were
noticed:
(i) an old machine with net value of Rs. 6,54,000 was sold off for Rs. 9,30,000
(ii) dividend income was received amounting to Rs. 84,500 from investments
(iii) a sum of Rs. 58,000 was spent towards CSR commitment
(iv) the company was engaged in trading activity where purchase of goods was Rs. 13,50,000 and
sales was Rs. 13,42,300, after incurring Rs. 40,800 as expenditure
(v) some renovation work was carried out at a cost of Rs. 7,75,000 and its useful life was only for
five years, and
(vi) the closing inventory of raw material was undervalued Rs. 29,600 and that of finished goods
was overvalued Rs. 65,400 in the financial records
Compute the Profit or Loss as per Cost Accounts.
Type your answer here
b. State the ethical requirements of a Cost Auditor for ensuring the conduct of the audit of Cost 6
Statements as per the Cost Auditing Standard 103.
.
5. a. RP Ltd. appoints you as Management Auditor to check internal system in the area of data 6
processing. List out the areas covered by such study.
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b. Which points should consider by a Management Auditor for performing CSR Audit? 6
Type your answer here
6 a. Describe the role of Comptroller & Auditor General (C&AG) in the Audit of a Government 3
company.
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b. A unit actually operated 291 days in a year and was stopped for abnormal circumstances –
(i) 6 days due to power disruption for cyclone and flood, and
(ii) 4 days due to heavy breakdown of core machinery.
The rest of the days were weekly off or holidays. Half wages as lay-off compensation were paid
for the stoppage period. During the year, total expenses incurred were
(a) Salaries and wages (including lay-off compensation of Rs. 65 lakhs) Rs. 3,360 lakhs, and
(b) Other fixed costs Rs. 1,050 lakhs.
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
(i) Compute the no. of working days during the year. 2
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(ii) What is the amount attributable to abnormal loss as per Cost Accounting Standard on Material 4
Cost (CAS- 6)?
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c. Suggest some checklists the Cost Auditor should draw for Profitability Analysis in a 3
manufacturing organization.
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7. a. What are the salient features of Financial Administration of Local Bodies? 6
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b. Discuss the responsibility of Management with regard to Internal Control. 6
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8. You are required write Short Notes on any 4 out of 5 4X3
= 12
Marks
a. Utilities of Cost Accounting Standards 3
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b. Disadvantages of audit programme 3
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c. Objectives of Internal Control 3
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d. Uses of Management Audit 3
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e. Process to file the reports in XBRL Format 3
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Section D 1 X 12
You are required to answer all the questions in this section = 12
Instructions: Each question is followed by a space where you are required to type your answer. Marks
9. Z Ltd. has the following Balance Sheets as on 31 March 2022 and 31 March 2021:
Particulars Rs. in lakhs
31 March 2022 31 March 2021
Sources of Funds:
Shareholder’s Fund 4,954 3,144
Loan Funds 7,740 6,766
TOTAL 12,694 9,910
Applications of Funds:
Fixed Assets 7,132 6,000
Cash & Bank 1,178 1,140
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
Mock Test Paper for June 2022 Online Examination – Final/P19-CMAD/S1
Debtors 3,190 2,536
Stock 5,934 5,014
Other Current Assets 3,334 3,008
Less: Current Liabilities (8,074) (7,788)
TOTAL 12,694 9,910
The Income Statement of the Z Ltd for the year that ended is as follows:
Rs. in lakhs
31 March 2022 31 March 2021
Sales 44,530 27,964
Less: CGS 41,920 25,288
Gross Profit 2,610 2,676
Less: Selling, General & Administrative Expenses 2,070 1,304
Earnings before Interest and Tax (EBIT) 540 1,372
Less: Interest Expense 226 210
Profit before tax 314 1,162
Less: Tax 46 384
Profit after Tax 268 778
a. Compute Return on Investment for the year 2021-22. 3
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b. What is the Operating Ratio for the year 2021-22? 3
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c. Compute Return on Equity for the year 2021-22. 3
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d. Give a brief comment on the financial position of Z Ltd. 3
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END
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
