Page 311 - CA Inter Audit PARAM

CA Ravi Taori
♦️ Every LLP is also required to submit Statement of Account and Solvency in Form 8 which shall be
filed within a period of thirty days from the end of six months the financial year to which the Statement
of Account and Solvency relates.

QNO LLP Books of Accounts Old Course – (N22E)
ADE.84 Bhaskar CNO - ADE.200
Ban LLP is formed during the year 2021-22. They are not sure about the type of books of accounts to be

maintained. What are the books of accounts that the LLP is required to maintain?
Answer Books of Accounts Ban LLP is required to maintain: An LLP shall be under obligation to maintain annual
accounts reflecting true and fair view of its state of affairs. LLPs are required to maintain books of
accounts which shall contain-

1. Particulars of all sums of money received and expended by the LLP and the matters in respect of
which the receipt and expenditure takes place,
2. A record of the assets and liabilities of the LLP,
3. Statements of costs of goods purchased, inventories, work-in-progress, finished goods and costs of
goods sold,
4. Any other particulars which the partners may decide.

QNO Assets on HP Old Course -- (P16M/M17R/M17M/M18R/N19R)
ADE.85 Bhaskar CNO - ADE.240
Machinery acquired under Hire-purchase system.
Answer ➢ Machinery Acquired Under Hire-Purchase System:
• Examine Approval
• Examine the Board’s Minute Book approving the purchase on hire-purchase terms.
• Examine hire-purchase agreement
• Examine the hire-purchase agreement carefully and note the description of the
machinery, cost of the machinery, hire purchase charges, and terms of payment and
rate of purchase.
• Value to record & Accounting Treatment
• Assets acquired under Hire Purchase System should be recorded at the full cash
value with corresponding liability of the same amount. In case cash value is not
readily available, it should be calculated presuming an appropriate rate of interest.

• Treatment of Interest
• The interest payable along with each installment, whether separately or included
therein should be debited to the interest account and not to the asset account.

• Presentation in Balance sheet
• Hire purchased assets are shown in the balance sheet with an appropriate narration
to indicate that the enterprise does not have full ownership thereof.

QNO Audit of Leasing Company Old Course -- (M21E/N23R)
ADE.86 Bhaskar CNO - ADE.240 New Course -- (S24E)
What is the procedure adopted by auditor in respect of leasing transactions entered by the leasing
company?
OR
As an auditor, how will you verify the hire purchase transaction in the case of an entity engaged in the
business of hire purchase?

OR
P Financial Services Ltd. (PFSL) is a leasing & hire purchase company. You, as an auditor of PFSL, are in the
process of examining finance lease agreements executed by them for equipment given on lease. Which
points shall be noted by you while examining a particular finance lease agreement entered into by PFSL in
respect of a leasing transaction?

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