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Unit 2: Auditing Practices

9. Interest free loans or advances in the nature of loans have been given to the employees Notes
only, who are repaying the principal amounts as stipulated.
10. In our opinion, there is an adequate internal control procedure commensurate with
the size of the company and the nature of its business for purchase of stores, raw
materials including components, plant and machinery, equipment and similar assets,
and for the sale of goods.
11. In our opinion, purchase of goods and materials and sale of goods, materials and
services, made in pursuance of contract or arrangements entered in the register
maintained under Section 301 of the Companies Act, 1956 and aggregating during
the year to ` 50,000 or more in value in respect of each party, have been made at
prices which are reasonable having regard to the prevailing market prices for such
goods, materials or services or the prices at which the transactions for similar goods
or services have been made with other parties.
12. The company has a system of determining unserviceable or damaged stores, raw
materials and finished goods on the basis of technical evaluation and on the aforesaid
basis, in our opinion, adequate provision for the loss has been made in the accounts.

13. In the cases of public deposits received by the company, the directives issued by the
Reserve Bank of India and the provision of Section 58A of the Companies Act, 1956
and the rules framed thereunder, where applicable, have been complied with.

14. In our opinion, reasonable records have been maintained by the company for the
sale and disposal of production scrap. The company has no by-product.
15. In our opinion, the company’s present internal audit system is commensurate with
its size and nature of business.
16. The Central Government has not prescribed the maintenance of cost records by the
company under Section 209(1)(d) of the Companies Act, 1956 for any of its products.
17. The company has generally been regular during the year in depositing provident
fund dues with the appropriate authorities. As informed to us, the company is at
present not covered under the Employees’ State Insurance Act, 1948.
18. At the last day of the year there were no amounts outstanding in respect of all
undisputed income tax, wealth tax sales tax, customs duty, and duty which were due
for more than six months from the date e they became payable.
19. During the course of our examination of the books of account carried out in accordance
with the generally accepted auditing practices, we have not come across any personal
expenses which have been charged to Profit and Loss Account, nor have we been
informed of such case by the management.
20. The company is not a sick industrial company within the meaning of Clause (o) of
Section 3(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
21. In respect of services rendered :
(a) In our opinion, the company has a reasonable system of recording receipts,
issues and consumption of materials and stores and allocating materials and
stores consumed to the relative jobs commensurate with the size and nature
of its business.
(b) In our opinion, the company has a reasonable system of allocating man hours
utilized to the relative jobs, commensurate with its size and nature of its
business.
Contd...

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