Page 181 - CA Inter Audit PARAM

CA Ravi Taori

QNO B/S (WIP, Valuation) Old Course – (N20E)
AIFS.46 Bhaskar CNO - AIFS-P2.060 New Course – (M24M)
Being statutory auditor of JAL Limited, a company engaged in manufacturing of chemicals, CA Gopika has
understood that company is expected to have material work-in-progress as on 31st March, 2024. State
few audit procedures to verify existence and valuation assertions for work-in-progress.
OR

ABC Limited has a closing balance of work in progress of inventories aggregating ₹ 850 lakhs in their
balance sheet as at March 31, 2020. As Statutory Auditor of ABC Limited, explain various audit procedures
which need to be performed to confirm Work-in-progress of inventories have been valued appropriately
and as per generally accepted accounting policies and practices.
Answer Audit procedures to verify existence and valuation assertions for work-in-progress are as under: -
• Attend inventory count in accordance with SA 501 and understand how work in progress is
arrived at.
• Evaluate work of management expert, if any, in this regard.
• Ascertain how the various stages of production/ value additions are measured and in case
estimates are made, understand the basis for such estimates.
• Ascertain what elements of cost are included. If overheads are included, ascertain the basis on
which they are included and compare such basis with the available costing and financial data/
information maintained by the entity.
• Ensure that material costs exclude any abnormal wastage factors.

QNO— Disclosure of Cash & Cash Equivalent New Course – (SM25)
AIFS.46.50 Bhaskar CNO - AIFS-P2.100
What are the disclosures requirements as per Part I of Schedule III to the Companies Act with respect to
the cash & cash equivalents held by a company?
Answer The following are the disclosure requirements as per Schedule III to the Companies Act, 2013, with respect
to the cash & cash equivalents held by the company:

➢ Cash and cash equivalents.
(i) Cash and cash equivalents shall be classified as:
(a) Balances with banks;
(b) Cheques, drafts on hand;
(c) Cash on hand;
(d) Others (specify nature)

(ii) Earmarked balances with banks (for example, for unpaid dividend) shall be separately
stated.

(iii) Balances with banks to the extent held as margin money or security against the borrowings,
guarantees, other commitments shall be disclosed separately.

(iv) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately
stated.

(v) Bank deposits with more than 12 months’ maturity shall be disclosed separately.

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