Page 59 - CA Final PARAM Digital Book.

collections with the number of seats available for different shows on a day.
• Verify the internal control system and its effectiveness relating to the income from cafe
shops, pubs etc., located within the multiplex.
Expenses
➢ Expenses
Building
• Verify the payments effected in respect of the Maintainance
maintenance of the building and ensure the same is in `
order. Distributors
• In the case of payment to the distributors verify the
system of payment which may be either through out right Salaries
payment or percentage of collection or a combination of
both. Ensure at the time of settlement any payment of
advance made to the distributor is also adjusted against
Check Internal Control System &
the amount due. Verify the system of payment of salaries Its Effectiveness with respect to
and other benefits to the employees and ensure that payment of expenses
statutory requirements are complied with.

QNO Audit Programme for Wastage Old Course – (M22M)
159.000 UNIQUE
Darshan Ltd. is a manufacturing company, provided following details of wastages of raw materials in
percentage, for various months. You have been asked to enquire into causes of abnormal wastage of raw
materials. Draw out an audit plan.
Wastage percentage are
July 2021 1.3%
Aug 2021 1.6%
Sep 2021 1.5%
Oct 2021 3.9%

Answer Audit Plan to locate the Abnormal Wastage of Raw Material: To locate the reasons for the abnormal
wastage, the auditor of Darshan Ltd. should first assess the general requirements as under:

(i) Procure a list of raw materials, showing the names and detailed characteristics of each raw
material.
(ii) Obtain the standard consumption figures, and ascertain the basis according to which normal
wastage figures have been worked out. Examine the break-up of a normal wastage into that in
process, storage and handling stages. Also obtain control reports, if any, in respect of
manufacturing costs with reference to predetermined standards.
(iii) Examine the various records maintained for recording separately the various lots purchased and
identification of each lot with actual material consumption and for ascertaining actual wastage
figures therein.
(iv) Obtain reports of Preventive Maintenance Programme of machinery to ensure that the quality of
goods manufacture is not of sub-standard nature or leads to high scrappage work.
(v) Assess whether personnel employed are properly trained and working efficiently.
(vi) See whether quality control techniques have been consistent or have undergone any change.
(vii) Examine inventory plans and procedures in report of transportation storage efficiency,
deterioration, pilferage and whether the same are audited regularly.
(viii) Examine whether the basis adopted for calculating wastage for September is the same as was
adopted for the other three months.
(ix) Obtain a statement showing break up of wastage figures in storage, handling and process for the
four months under reference and compare the results of the analysis for each of the four months.

In addition, some specific reasons for abnormal wastage in process may be considered by the auditor
are as under:
(i) Examine laboratory reports and inspection reports to find out if raw materials purchased were of a
poor quality or were of sub-standard quality. This will be most useful if it is possible to identify the
wastage out of each lot that has been purchased.
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