Commercial & Industrial Laws and Auditing

Syllabus
Paper 6: Commercial & Industrial Laws and Auditing
(One Paper: 3 hours:100 marks)
OBJECTIVES
To give an exposure some of important commercial laws essential for an understanding of the legal
implications of the modern business. Introduction to cover fundamental elements of the Legal System
and the system of judicial precedent. The study to include essentials of establishing and performing
simple contracts and the remedies available in the event of a breach and an introduction to company
law.
To gain expert knowledge of the Principles and Practice of auditing and assurance and their application
to different practical situations.
Learning Aims
The syllabus aim to test the student’s ability to:
● Understand and explain the conceptual framework of Financial Accounting.
● Prepare accounts for various entities under various situations.
● explain fundamental aspects of the organisation and operation of the Legal System;
● identify and explain the essential elements of a simple contract, what is regarded as adequate
performance of the simple contract, and the remedies available to the innocent party in the
event of a breach;
● explain the essential differences between sole trader-ships, partnerships and companies
limited by shares;
● explain the way in which companies are administered, financed and managed;
Skill set required
Level B: Requiring the skill levels of knowledge, comprehension, application, and analysis.
CONTENTS
SECTION I : COMMERCIAL & INDUSTRIAL LAW 50%
1. Laws of contacts 15%
2. Laws relating to Sale of Goods 10%
3. Industrial Laws 20%
4. Other Laws 5%
[III]
SECTION II : AUDITING 50%
5. Auditing Basics 10%
6. Companies Act Provisions relating to Audits 10%
7. Review and Audit of Internal Control Systems 15%
8. Information System Audit 10%
9. Introduction to Management Audit 5%
SECTION : I COMMERCIAL & INDUSTRIAL LAW
1. Laws of Contracts
● Essential elements of a valid simple contract.
● Legal status of the various types of statements which may be made by negotiating parties. Enforceable
offers and acceptances, and the application of the rules to standard form contracts and modern
forms of communication.
● Meaning and importance of consideration.
● Principles for establishing that the parties intend their agreement to have contractual force.
● How a contract is affected by a misrepresentation.
● Conditions and warranties
● Manner in which law controls use of exclusion clauses and unfair terms in consumer and nonconsumer
transactions
● Level of performance sufficient to discharge contractual obligations
● Valid reasons for non-performance by way of agreement, breach by the other party and frustration
2. Laws relating to Sale of Goods
● Formation of Contract of sale
● Conditions and warranties
● Transfer of ownership and delivery of goods
● Unpaid seller and his rights
3. Industrial Laws
● Factories Act
● Industrial Dispute Act
● Workman Compensation Act
● Payment of Wages Act, Minimum Wages Act
[IV]
● Provident Funds Act
● Payment of Bonus Act
● Payment of Gratuity Act
● Consumer Protection Act etc
4. Other Laws
● Limited Liability Partnership
● RTI Act
● Competition Commission Act
● Negotiable Instruments Act.
SECTION II : AUDITING
5. Auditing Basics
● Major influences of auditing; nature and scope of auditing; basic concepts of auditing; role of evidence
in auditing; auditing techniques and practices – generally accepted auditing standards; the
concept of materiality in auditing.
● Fixed assets, investments, inventories, debtors, loans and advances, cash and bank balances, debentures
and creditors, provisions for taxation, proposed dividend and gratuity – other items in the
balance sheet; verification of items in the profit and loss account; contingent liabilities; disclosure of
accounting policies, practice; expenditure during the period of construction; adjustments for previous
year – provisions of the Companies Act, 1956 regarding accounts. Restructure
● Statistical sampling in auditing. Use of ratios and percentages for comparison and analysis trends -
inter-firm and intra-firm comparison.
6. Companies Act Provisions relating to Audits
● Auditors’ appointment, remuneration, removal, rights of statutory auditors, duties of statutory
auditors, joint auditors, branch audits.
● Report versus certificate, contents of the reports, qualifications in the report.
● Relevant provisions of the Companies Act, 1956 and the Income-tax Act, 1961.
● Interface between statutory auditor and internal auditor.
● Corporate Governance
[V]
7. Review and Audit of Internal Control Systems
● Nature and scope of internal auditing, financial versus operational audit; concepts of efficiency
audit, propriety audit, voucher audit, compliance audit, pre and post audits.
● CARO
● Audit Report
● Internal auditing function
● Planning and process of internal audit
● Verification of evidence, detailed checking versus sampling plans, statistical sampling as used in
internal auditing; flow chart techniques.
● Internal control, nature and scope, internal auditor and internal controls.
● Field work, collecting evidences, interviews; memoranda.
● Audit notes and working papers.
● Audit reports - techniques of effective reporting; follow up of audit report.
● Summary reports of top management.
● Communications in internal auditing - improving auditor-auditee relationship.
● Scope of Audit Committee
● Internal audit and investigation of fraud
8. Information System Audit.
9. Introduction to Management Audit.
[