Page 250 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes
22. Clause relating to No such reporting required Whether term loans were applied
usage of loan funds for the purpose for which the
loans were obtained.
No such reporting required Whether the funds raised on
short-term basis have been used
for long term investment and vice
versa; If yes, the nature and
amount is to be indicated.

23. Clause relating to No such reporting required Whether the company has made
preferential allotment any preferential allotment of
of shares shares to parties and companies
covered in the Register under sec
301 of the Act and if so whether
the price at which shares issued is
prejudicial to the int. of the
company.
24. Clause relating to No such reporting required Whether securities have been
creation of securities created in respect of debentures
for debenture holders issued?
25. Clause relating to No such reporting required Whether the management has
usage of equity funds disclosed on the end use of
money raised by public issues
and the same has been verified.
26. Clause relating to No such reporting required Whether any fraud on or by the
frauds company has been noticed or
reported during the year; If yes,
the nature and the amount
involved is to be indicated.

Self Assessment

State whether the following statements are true or false:
4. Default by the company in repayment of dues to a financial institution or bank is to be
mentioned under new clause.
5. With the introduction of CARO, the responsibility of the auditors as well as the companies
to which this report applies has not changed much.
6. Clause relating to unserviceable or damaged stores, raw materials or finished goods has
been removed from CARO.

12.3 Management Audit

Management audit refers to analysis and assessment of competencies and capabilities of a
company’s management in order to evaluate their effectiveness, especially with regard to the
strategic objectives and policies of the business. The objective of a management audit is not to
appraise individual executive performance, but to evaluate the management team in relation to
their competition. Management audits are often necessitated by major changes in a business.
Some of the events that call for a management audit are top management changes, mergers and
acquisitions, and succession planning.

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