Page 346 - CA Final PARAM Digital Book.

question.

Old Course – (N23M)
QNO Investigate economic and financial position
644.050 TITANIUM CNO -- Unique

Namo Limited wants to acquire a unit of Sidha Limited. Namo Limited is uncertain about the future
viability of the unit under consideration. You are appointed to investigate economic and financial position
of the unit. What are the factors that you shall consider while studying the economic and financial
position of the business?
Answer For studying the economic and financial position of the business, the following should be considered:
(i) The adequacy or otherwise of fixed and working capital. Are these sufficient for the growth of the
business?
(ii) What will be the trend of the sales and profits in the future? Establishing the trend of sales,
product-wise and area-wise will ordinarily help in drawing a conclusion on whether the trend will
be maintained in the future.
(iii) Whether the profit which the business could be expected to maintain in the future would yield an
adequate return on the capital employed?
(iv) Whether the business is operating at its 100 percent capacity or improvements can be made to
reach at full productivity?

QNO Time Cards New Course – (SM23)
644.070 TITANIUM CNO -- Unique

A company has installed an Effluent treatment plant (ETP) in compliance with pollution control
regulations of the state government. The authority structure in the company is fairly decentralized and
top management of the company has given considerable leeway to different departments for meeting
their manpower requirements in accordance with emerging and changing needs from time to time. Of
late, the top management has grown suspicious over manpower expenditure in section maintaining and
beautifying area around ETP. There is a system in the company where timecards are punched by all
employees to mark attendance.

Suggest any one procedure you would perform as an investigator to bring out the facts.
Answer 1A. Attendance Record Analysis: The attendance record of employees pertaining to that section can be
analysed with regards to in and out time.
1B. Surprise Site Visits: Further, surprise visit to the site can be conducted to see the actual number of
workers at a point of time.
2A. Revealing Ghost Workers: It may reveal ghost workers. Discrepancies in attendance records vis-à-vis
actual number of workers present could reveal dummy workers.
2B. Productivity Indication: Such a visit would also give indication of actual work done in the area and give
an inkling of productivity of employees.

www.auditguru.in PARAM 17.19 | P a g e