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Cost and Works Accountants Act, 1959

31. Stages, Papers and Syllabus for the Intermediate Examination under the revised syllabus

(1) The first Intermediate Examination under the revised syllabus after the commencement of Cost and Works Accountants (Amendment) Regulations, 1993 shall be held in December, 1994. Students registered on or after lst July, 1994, shall, and students registered prior to lst July, 1994, who may so opt, shall be examined under the revised syllabus and all other students registered prior to lst July, 1994 who are candidates for the Intermediate Examination to be held from December, 1996, shall also be examined under the revised syllabus. The Groups, papers and syllabus for the Intermediate Examination under old syllabus shall be the same as mentioned in this regulation before the date of commencement of the Cost and Works Accountants (Amendment) Regulations, 1993. The last Intermediate Examination under the old syllabus shall be held in June, 1996.

(2) The stages, papers and syllabus for the Intermediate Examination under the Revised syllabus shall be as follows:


Stage I : Paper I : Financial Accounting

(One paper: 3 hours : 100 marks)

Aim : To examine candidate's ability for application of accounting principles in different situations.

Level of knowledge: Adequate.

1. Basic concepts of book-keeping and accountancy. Definition of accounting and its usefulness, book-keeping and accounting, its principles and practices, classification of accounts.

2. (a)System of book-keeping : Double Entry System, books of prime entry, subsidiary books, recording of cash and bank transactions, preparation of ledger accounts, preparation of trial balance, interpretation and usefulness;

(b) Book Reconciliation Statements-Need for reconciliation: Procedure for reconciliation between cash book and bank pass book and problems relating to the preparation of bank reconciliation statements.

3. Bill of Exchange-Definition, promissory note and bill of exchange, bills receivable, bills payable, drawing, accepting, renewal and retirement of bills, accommodation bills.

4. Concept of Capital-Revenue and deferred revenue expenditure, opening entries, closing entries, adjustment entries and rectification entries. Trading, Manufacturing and Profit and Loss Account and Balance Sheet. Bad Debts and reserve for bad debts-its accounting treatment. Depreciation-its significance and accounting treatment.

5. Concept of single entry of accounting vis-avis double entry system of accounting, their inter-relationship and conversion from single entry system to double entry system. Preparation of receipts and payments accounts and income and expenditure account. Significance of reserve and provisions. Preparation of profit and loss account and balance sheet.

6. Joint Venture and consignment Accounts : Partnership Accounts, admission, retirement and death of partner, dissolution of partnership, piecemeal distribution of assets.

7. joint Stock Company Accounts-Issue, forfeiture and redemption of shares and debentures, profits prior to incorporation and company Profit and Loss Account and Balance Sheet as per provisions of the Companies Act, 1956 (1 of 1956).

Stage I: Paper 2 : Cost Accounting

(One paper: 3 hours: 100 marks)

Aim : To provide in-depth knowledge of the various components of cost and their ascertainment and treatment.

Level of knowledge: Thorough understanding

1. Introduction : Evolution of Cost Accounting and Management Accounting, Cost concepts and cost object, Cost classification, Cost organization and its relationship with other departments.

2. Elements of cost and cost determination

(i) Material cost-purchase procedure, store keeping and stock control, pricing, issue of material and accounting thereof, identification to slow , non-moving and fast moving item. ABC analysis, policies relating to insurance spares, level of inventories and economic order quality. Analysis, investigation and corrective steps for treatment of stock discrepancies- control through other means.

(ii) Labor cost- remuneration methods, monetary and non-monetary incentives schemes, payroll procedures, labor analysis and idle time, measurement of labor efficiency and productivity, analysis of non-productive time and their cost, labor turnover and remedial measures, treatment of idle time and overtime.

(iii) Direct expenses-nature, collection and classification of Direct Expenses and its treatment.

(iv) Overhead: nature, collection and classification.

(a) Production, overheads-distribution, appropriation, absorption by-products, use of pre-determine recovery rates, treatment of under and over-absorption, report for control of overhead cost.

(b) Administration, selling and distribution overheads-analysis, accounting and control, treatment of miscellaneous items in cost accounting.

3. Cost Accounting records : Cost ledgers, reconciliation of cost and financial accounts and integrated accounts, basis of computerization of accounts.

4. Methods of Costing:

(i) Specific order costing-job, batch and contract, Determination of cost accounting in job, batch and contract, valuation of work progress in job costing, features of contract cost, certification of work done, profit on incomplete contracts, cost plus contracts.

(ii) Operation costing-process and services. Process costing-treatment of normal and abnormal losses and gains, valuation of Work-in-Progress using First-in-First-out and average methods (equivalent production); interprocess transfer and pricing, concept, accounting for joint products, by-products, waste, scrap, spoilage and detectives.

5. Service or operating costing: Unit costing and multiple costing, application, identification of cost unit and cost determination and control.

6. Techniques of costing

(a) Marginal costing: Basic concepts, marginal costing and absorption costing, Cost-Volume- Profit analysis, breakeven analysis, Limitations of Break Even (BE) analysis, differential cost analysis and relevant cost analysis applications for management decision making (simple types).

(b) Budgetary control : Basic concepts, functional budgets, master budget, flexible budgets.

(c) Standard Costing: Concept and uses, setting of standard cost accounting methods, computation of simple variances relating to material, labor and overheads, relationship standard costing and budgetary controls.

Stage I: Paper 3 : Corporate Laws and Secretarial Practice

(One Paper: 3 hours: 100 marks)

Aim: Undertaking of the basic concepts and legal principles governing the business.

Level of knowledge: Thorough understanding.

Section I: Corporate Laws (50 marks)

The Companies Act, 1956 (1 of 1956)

Definition: Fundamental matters and general frame-work of documents, meetings and proceedings, management of a company operations, mis-management and arrangements, concept of capital, classification of shares and debentures, borrowing of a company, accounts and audit of a company, classification and appointment of an auditor, the powers of Central Government, direct special audit, cost accounting records and cost audit, auditor's report and explanation, preparation and presentation of accounts of government companies and statutory corporations.

The Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969)-The Monopolies and Restrictive Trade Practices Commission, unfair and restrictive trade practices.

The Industrial (Development and Regulations) Act, 1951 (65 of 1951)-Development Councils, licensing for new industrial undertakings, taking over management or control by the Central Government.

The Essential Commodities Act, 1955 (10 of 1955): Powers of Central Government to control, effect seizure and confiscation.

The Foreign Exchange Regulation Act, 1973 (46 of 1973)-General Concepts.

The Sick-Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and provisions relating to Board for Industrial and Financial Reconstruction-General concepts.

The Apprentices Act, 1961 (52 of 1961), the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), the Workmen's Compensation Act, 1923 (8 of 1923), the Payment of Gratuity Act, 1972 (39 of 1972), the Employees' State Insurance Act, 1948 (34 of 1948)-The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (10 of 1952), the Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974), the Air (Prevention and Control of Pollution) Act, 1981 (14 of 1981), the Consumer Protection Act, 1986 (68 of 1986)-General concepts.

Section II: Secretarial Practice (50 marks)

Definition of Secretary, his position and importance in the organization, Directors-their qualifications and disqualifications, powers, duties and liabilities.

Meeting : Kinds of company meetings, meeting of shareholders, statutory and annual general meetings, requisitions and other general meetings.

Preparation of notices, agenda, quorum, proxy, voting, motion, amendments, resolution, adjournment and postponement, explanatory statements and minutes, matters relating to ordinary resolution, special resolution special notice, preservation and maintenance of registers and books, submission of returns to the Registrars of Companies to all for information and inspection procedures ascertaining profits and dividends and declaration of the same to various types of shareholders including mode of payment to residents and non-residents.

Stage I: Paper 4: Direct Taxation

(One Paper: 3 hours: 100 marks)

Aim: To provide in-depth knowledge of tax laws and their impact on management decision and more particularly to emphasize the role of the tax factors in the use of management of accounting techniques.

Level of knowledge: Expert

(i) Direct Tax Laws-A Comprehensive study of Income Tax Act, 1961 (43 of 1961), the Gift Tax Act, 1958 (18 of 1958), the Wealth Tax Act, 1957 (27 of 1957), case laws governing capital and revenue expenditure, deemed income residence concept.

Special problems centering on the concept of assessee, registered firm, Hindu undivided family, Association of persons and trust-minors, Non-resident Indians and avoidance of double taxation.

Problems covering heads of income; Salaries, perquisites, gratuity and retirement benefits, income from house property, capital gains, income from other sources, income from business and profession, problems arising from aggregation of income and carry forward of losses.

(ii) Tax Audit.

(iii) Tax Administration: Appeals, revisions, review rectification and application to Central Board of Direct Taxes.

(iv) Acquisition proceedings: Principles of valuation-movable and immovable property.

(v) Direct Tax planning: Tax implication in planning ,the legal status of business unit, firm, private limited company and public limited company.

Tax implication in (a) receiving foreign collaboration (b) giving collaboration abroad, subsidiaries, outright sale of know-how, equity participation.

Tax aspects of mergers and amalgamations.

New industrial establishment and tax planning.

Tax consideration arising with regard to specific management decisions such as (i) make or buy; (ii) own or lease; (iii) retain or replace; (iv) repair or scrap or return; (v) export versus local sale; (vi) shut down or continue; (vii) expand or contract; and (vii) new capital investment.

Tax incentives and export promotions.

Capital gains and tax planning

Tax aspects of investments

Tax implications in developing capitalization structure (a) short term loans; (b) deposits from public; (c) term loans; (d) bonus issues; and (e) dividend policy.

State II : Paper 5: Cost Management and Accounting

(One Paper: 3 hours: 100 marks)

Aim : Understanding on costing and management accounting techniques that could be utilized for decision making and control.

Level of knowledge: Thorough understanding.

1. Introduction: Management process and accounting. Management accounting as an extension of cost accounting to serve managerial needs. Managerial Planning and control, scope and role of management accounting, installation and operation of cost.

2. Financial analysis and control :Uses of ratios for analysis of financial results- limitations of conventional accounting statement for analysis of the operating results of public enterprises in India, Utility of value-added statement and contribution approach-funds flow and cash flow analysis.

3. Capital structure: Types and sources of capital including internal source-cost of capital-selecting a desired combination of different components leverage of gearing consideration.

4. Management of liquidity and working capital : Liquidity and profitability relationship, concepts of working capital, need for working capital, management forecasting of working capital. The concepts and use of operating cycle management of inventory, debtors, cash and creditors.

5. Capital budgeting decisions :Objectives and problems, replacement decision, new investments, criteria used, pay back method, Discounted Cash Flow methods, effect of taxation, role of cost of capital-capital rationing-decision under conditions of risks and uncertainty.

6. Cost analysis for decision making- Determining cost behavior learning curve theory-relevant costs for decisions-irrelevance of past cost. Decision on pricing, optimum product mix, make or buy, lease or buy, shut down etc. Introduction to decision models and uncertainty.

7. Management control tools: Budgeting and standard costing-advanced cost and sales variances-profits variances-analysis, investigation and disposition of variances-management by exceptions-responsibility accounting-Performance budgeting and zero-base budgeting-behavioral aspect in budgeting and standard costing.

8. Uniform costing: Inter-firm comparison.

9. Cost reductions-concepts and techniques including value analysis..

10. Performance appraisal of public enterprise.

Stage II : Paper 6: Auditing

(One paper: 3 hours: 100 marks)

Aim: To provide and in-depth study of the techniques and methods of planning, audit assignments with special emphasis on Internal Auditing.

Level of knowledge: Expert

Section I: Principles of Auditing (50 marks)

1. Evolution of auditing-Major influences of Auditing-Nature and scope of Auditing-Basic concepts of Auditing-Role of Evidence in Auditing.

2. Auditing Techniques and Practices- Generally accepted auditing standards the concept of Materiality in Auditing.

3. Verification of Assets and Liabilities, Fixed Assets, Investments, Inventories. Debtors, Loans and Advances, Cash and Bank Balance, 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 (1 of 1956) regarding accounts.

4. Nature of Internal Control Evaluation and Audit of Internal Control-Internal Control questionnaires-Flow Charts-Systems Audit, Internal Control.

5. Auditing-in depth-statistical sampling in Auditing.

6. Use of ratios and percentages for comparisons and analysis of trends-inter- firm and inter-firm comparison.

7. Appointment of statutory Auditors-remuneration, removal, Rights of Statutory Auditors, Duties, of statutory Auditors, joint Auditors, Branch Audits.

8. Audit Report-Report versus Certificate, contents of Reports-Qualifications in the Report.

9. Divisible Profits-relevant provisions of the Companies Act, 1956 (1 of 1956) and the Income Tax Act, 1961 (43 of 1961).

10. Interface between Statutory Auditor and Internal Auditor.

Section II: Internal Auditing (50 marks)

1. Nature and scope of Internal Auditing-Financial versus Operational Audit -Concepts of Efficiency Audit, Propriety Audit, Voucher Audit, Compliance Audit, Pre and Post Audit.

2. Impact of the Manufacturing and other Companies (Auditors' Report) Order, 1988 on the Internal Auditing functions.

3. Organization of the Internal Auditing function-Selection and Training of Staff-assignment of audit projects-Organizational status of the Internal Auditing functions-Scope for Audit Committees.

4. Planning the Internal Audit Project : Familiarization-Preparing check list, Internal Control Questionnaires, Audit Programmes.

5. Verification of Evidence-Detailed checking versus sampling plans, statistical sampling as used in Internal Auditing.

6. Flow Chart Techniques.

7. Internal Control-Nature and Scope, Internal Auditor and Internal Controls.

8. Field Work: Collecting Evidences-interviews-Memoranda.

9. Audit Notes and Working papers.

10. Audit Reports-Techniques of Effective Reporting. Follow up of Audit Report.

11. Summary Reports to Top Managements.

12. Communications in Internal Auditing-improving auditor-auditee relationship.

13. Auditing the operations of an enterprise-such as accounting and finance, inventory control, procurement, production, marketing, maintenance, personnel, branches and depots, Research and Development.

14. Internal Auditor and the Investigation of frauds.

15. Auditing the Internal Auditing Function.

Stage II: Paper 7: Indirect Taxation

(One Paper :3 hours: 100 marks)

Aim : To provide in-depth knowledge of indirect tax laws and their impact on management decision and more particularly to emphasis the role of the tax factors in the use of management accounting techniques.

Level of knowledge: Expert

Indirect Tax Laws and Relevant Procedures.

1. (i) The Central Excise including Modified Value Added Tax:

(ii) The Central Sales Tax Act, 1956 (74 of 1956):

(iii) The Customs Act, 1962 (52 of 1962), and

(iv) Excise Audit.

2. The Central Excises and Salt Act, 1944 (1 of 1944). The Central Excise (Valuation) Rules, 1975. The Central Excise Rules, 1944 and Customs and Central Excise Duty Drawback Rules, 1971. Familiarity with the Schedule of the Central Excise Tariff Act, 1985 (5 of 1986), licensing procedures, Statutory forms of Returns and Registers (Central Excise Series) and case law relating to determination of Manufacturing expenses.

3. Procedure for the levy and collection of Central Excise Duties for different Industrial sections viz. (i) Physical control; (ii) Records based control; (iii) Production based control; and (iv) Compounded levy scheme.

4. Adjudication and appellate procedures, offences and penalties, provisions relating to import and export of goods, certification with reference to valuation, consumption, stock and MODVAT. Procedure relating to transportation and warehousing.

5. Tax Planning in the area of Indirect Taxes.

Stage II: Paper 8: Quantitative Methods

(One Paper :3 hours: 100 marks)

Aim : To provide adequate knowledge for application of economic and quantitative methods in business situations.

Level of knowledge: Adequate .

Section I: Mathematical Techniques (40 marks)

(i) Algebra of vectors and matrices and determinants: Addition, subtraction, multiplication and inversion of vectors and matrices, solution of systems of linear equation with the help of matrix algebra.

(ii) Calculus: Variables, constances and functions-graphs of functions-limits of algebraic function simple differentiation of algebraic function-meaning of derivatives-evaluation of first and second order derivatives-partial differentiation-solution of problems involving maxima and minima of algebraic functions.

(iii) Integration (by substitution and by parts): Determining indefinite integrals for simple functions-application of integration to evaluate areas and volume of solids and revolution.

(iv) Optimization of functions under constraints, Linear programming and simplex method of solution.

Section II : Statistical Techniques (40 marks)

(i) Probabilities: Meaning and definition of probability mutually exclusive and collectively exhausting events, repeated trials, combinatorial analysis. Addition and multiplication rules, Bayes theorem and its application.

(ii) Population and Samples : Sampling methods, uses of random numbers, simulated sampling, concept of sampling distribution and standard errors, confidence intervals for means and percentages, testing hypothesis and uses of z, t, x 2 tests.

(iii) Decision making under risks and uncertainty, Decision Tree Analysis.

(iv) Simple regression and correlation.

Section III: Economic Techniques (20 marks)

(i) Demand Analysis: The basis of demand, market demand function, industry demand versus firms demand. The demand curve. Relation between demand function and demand curve. Change and shift in demand. Demand relation and managerial decisions. Theory of consumer behavior. Substitution and income effects. Price, income and cross elasticities of demand, other demand elasticities. Time impact on elasticity. Price elasticity for derived products. Revenue concepts. Demand estimation.

(ii) Forecasting : Forecasting methodologies. Time series analysis, Trend projection, Barometric or leading indicator method. Index number analysis-composite and diffusion indices. Econometric models, curve fitting and least square methods. Correlation and regression analysis, multiple and partial correlation-input-output analysis, forecasting with input-output tables, criteria for forecasting demand for existing and new products.

(iii) Empirical production function analysis, empirical cost analysis, short and long run cost estimation, factor demand, joint product and multiproduct firm, uncertainty in production functions, profit planning under risk and uncertainty.

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