Page 304 - CA Inter Audit PARAM

CA Ravi Taori
• Confirm that at the end of show, a statement of tickets sold is prepared and cash
collected is agreed with it.
• Verify that a record is kept of the ‘free passes’ and that these are issued under proper
authority.
• Reconcile the amount of GST collected with the total number of tickets issued for each
class and vouch and verify the entertainment tax returns filed each month.
• Vouch the entries in the Cash Book in respect of cash collected on sale of tickets for
different shows on a reference to Daily Statements which have been test checked as
aforementioned with record of tickets issued for the different shows held.
• Advertisement Income
• Verify the charges collected for advertisement slides and shorts by reference to the
Register of Slides and Shorts Exhibited kept at the cinema as well with the agreements,
entered into with advertisers in this regard.
• Restaurant Income
The arrangement for collection of the share in the restaurant income should be enquired into
either a fixed sum or a fixed percentage of the taking may be receivable annually. In case the
restaurant is run by the Cinema, its accounts should be checked. The audit should cover sale
of various items of foodstuffs, purchase of foodstuffs, cold drink, etc. as in the case of club.

➢ Major Expense – Distributor Payment / Advertisement / Repairs / Depreciation
• Vouch payments on account of film hire with bills of distributors and in the process, the
agreements concerned should be referred to.
• Vouch the expenditure incurred on advertisement, repairs and maintenance. No part of such
expenditure should be capitalized.
• Confirm that depreciation on machinery and furniture has been charged at an appropriate
rate.

➢ Major Assets – Advance to Distributor
Examine unadjusted balance out of advance paid to the distributors against film hire contracts to see
that they are good and recoverable. If any film in respect of which an advance was paid has already run,
it should be enquired as to why the advance has not been adjusted. The management should be asked
to make a provision in respect of advances that are considered irrecoverable.
Author’s Note
This is a master answer you can write the relevant aspect of the master answer as per what the question
is asking.

QNO Audit of Cinema Halls (Payment to distributor) Old Course — (SM20/SM21)
ADE.38 Bhaskar CNO - ADE.080 New Course— (SM25)
You are auditing the Books of accounts of Karla Multiplex which runs 15 Film shows every day. One of the
major issues which are of concern to you as an auditor is the Agreement entered into the Multiplex owners
with the Film Distributors. State what points would you check as an auditor in this respect.
➢ Agreement with the Distributors:-
• Vouch payments on account of film hire with bills of distributors and in the process, the agreements
concerned should be referred to.
• Examine unadjusted balance out of advance paid to the distributors against film hire contracts to
see that they are good and recoverable. If any film in respect of which an advance was paid has
already run, it should be enquired as to why the advance has not been adjusted. The management
should be asked to make a provision in respect of advances that are considered irrecoverable.

QNO Audit of Club-Special Points- Old Course --
ADE.45 Bhaskar CNO - ADE.100 (P16M/N17R/N18M/N20E/SM20/SM21/M23M)
New Course—(SM25/J25M)
Mention any eight important points which an auditor will consider while conducting audit of a club?
OR

Draft an Audit Programme to audit the accounts of a Recreation Club with facilities for indoor games and in-
house eating.
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