Review III

I.The following jumbled sentences make up a short text about cost accounting. Do unjumble
them and decide which order they should go in. After that, do try to translate them into
Romanian
.
a.But to this have to be added all the factory’s overheads – rent or property taxes, electricity
for lighting and heating, the maintenance department, the stores, the canteen, and so on.
b.Finally, where a company does not want to calculate the price of specific orders or
processes, it can use full costing or absorption costing, which allocates all fixed and variable
costs to the company’s products.
c.For example, if you produce 500 wooden door-knobs, each one requiring 100 grams of
wood and taking the machine operator two minutes to make, you can easily calculate the
direct cost.
d.It is fairly easy to calculate the prime cost or direct cost of a manufactured article.
e.One of these is job-order cost accounting, which involves establishing a price for an
individual item or a particular batch ( a quantity of goods assembled or manufactured together
).
f.There are lots of other expenses of running a business that cannot be charged to any one
product, process or department, and companies have to price their products in such a way as
to cover their administration and selling expenses, the research and development
department, and so on.
g.This is the sum of the direct costs of the raw materials or components that make up the
product and the labour required to produce it, which, of course, vary directly with production.
h.This is impossible where production involves a continuous process as with steel, flour or
cement. In this case, companies often use process cost accounting, which determines costs
over a given period of tlme.
i.Various methods can be used to allocate all these expenses to the selling price of different
products.

Answer:

The correct order is: f i e d g a c h b

Translation:

f. Exista o multime de alte cheltuieli intr-o afacere care nu pot fi asociate unui singur produs,
proces sau departament si companiile trebuie sa puna un pret produselor astfel incat sa
acopere cheltuielile de administrare si vanzare, cheltuielile departamentului de cercetare si
dezvoltare si asa mai departe.

i. Pot fi folosite metode variate pentru alocarea acestor cheltuieli pretului de vanzare al
diferitelor produse.
e. Una dintre aceste este contabilizarea costurilor pe comanda, care implica stabilirea unui
pret pentru un articol specific sau pentru un lot (o cantitate de bunuri asamblate sau facticate
impreuna).
d. Este destul de usor sa se calculeze costul primar sau direct al unui articol fabricat.

g. Acesta este suma costurilor directe al materiilor prime sau componentelor care alcatuiesc
produsul si a muncii necesar producerii acestuia, care, desigur, variaza in raport cu productia.

a. Dar la acesta trebuie adaugate toate cheltuielile generale ale fabricii – chiria sau impozitele
pe proprietate, cheltuielile cu energia electrica pentru iluminat si incalzire, cheltuielile de
administrare, cheltuielile cu magazinele cantina si asa mai departe.

c. De exemplu, daca produceti 500 manere de lemn pentru usa, fiecare necesitand 100 g
lemn si o munca de 2 minute pentru operatorul masinii, puteti calcula cu usurinta costul direct.
h. Acest lucru este imposibil in cazul in care productia implica un proces continuu ca in cazul
otelului, fainii sau cimentului. In acest caz, companiile folosesc adesea contabilizarea
costurilor de proces care determina costurile procesului pe o anumita perioada de timp.

b. In cele din urma, in cazul in care o companie nu doreste sa calculeze pretul unor comenzi
sau procese specifice, ea poate folosi costul total sau de absorbtie care aloca toate costurile
fixe si variable, produselor companiei.

II.Complete the following sentences:

1.Manufacturers have to find a way of...........all fixed and.......costs to their various products.
2.They have to cover the factory’s ........and things like administration and selling. 3.The direct
cost of............and labour is easy to calculate.

1.Manufacturers have to find a way of allocation all fixed and variable costs to their
various products
2.They have to cover the factory’s expenses and things like administration and selling.
3.The direct cost of the product and labour is easy to calculate.

Review IV

I.Indicate whether the following statements in ” Metaphors Used in Auditing ” are true (T)
or false (F) :
 1.The client confirms an auditor’s first responsability of confidentiality to his client.
2.The report suggests auditors must also consider other publics.
3.Auditors should always go direct to the regulatory authorities in cases of fraud.
4.There are no cases where an auditor is legally obliged to disclose information to the
authorities.
5.Most ’professional people’ are aware of what auditors do.
6.An auditor’s role is very often confused with that of an accountant.

1-T
2-T
3-F
4-F
5-T
6-T

II. MATCH these three roles ( the expressions are metaphors) with their best definition:
Roles: 1.Watchdog; 2.Bloodhound; 3.Whistle-blower.

Definitions: a.Responsibility for overseeing a company’s finances; b.Responsibility for

informing the authorities of malpractice; c.Responsibility for tracking down the instigators of
malpractice.

Roles:
1. Watchdog; a. Responsibility for overseeing a company’s finances;
2. Bloodhound; c. Responsibility for tracking down the instigators of malpractice
3. Whistle-blower b. Responsibility for informing the authorities of malpractice;

III. MATCH the words in the first list with their best synonym in the second one:
1.to alert; 2.to stumble upon; 3. to spot; 4. To give a nod and a wink; 5.pro-active; 6.to
spell out; 7. to see fit; 8.impunity; 9.to flout; 10.solace; 11.to impinge upon; 12.a gulf.

a.to affect; b.consolation;c.to consider right; d.to state clearly; e.tocome across; f.to warn;
g.to notice; h.to inform indirectly; i.initiating; j.to openly ignore; k.an abyss; l.freedom from
punishment.
 1. to alert; f. to warn;
2. to stumble upon; e. to come across;
3. to spot; g. to notice;
4. to give a nod and a wink; h. to consider right;
5. pro-active; i. initiating;
6. to spell out; d. to state clearly;
7. to see fit; c.. to inform indirectly;
8. impunity; l. freedom from punishment;
9. to flout; j. to openly ignore;
10. solace; b. consolation;
11. to impinge upon; a. to affect;
12. a gulf. k. an abyss.

IV.ANSWER the following questions focused on ” Reporting on Financial Statements:

1.Which are the two types of banks existing in the U.K.?
2.Which are the Acts the banks in the U.K. must refer to in order to prepare their financial
statements?
3.Who are the persons employed by the banks to perform work in accordance with the
Acts specified and what are their obligations?
4.Which are the requirements of the Companies Act?
5.Can you mention the audit tests used by the auditors to form an opinion on the
financial statements?
 6.Which are the U.K. auditing standards?
7.Are there any differences between work performed by the auditors and that performed
by the reporting accountants?
8.Can you specify the control types examined by the auditors and the reporting
accountants?

IV.ANSWER the following questions focused on ” Reporting on Financial Statements:

1.Which are the two types of banks existing in the U.K.?

Answer: Incorporated banks and foreign banks with UK branches

2.Which are the Acts the banks in the U.K. must refer to in order to prepare their financial
statements?

Answer: UK banks must prepare financial statements in accordance with the Companies
Act 1985 and Banking Act 1987.

3.Who are the persons employed by the banks to perform work in accordance with the
Acts specified and what are their obligations?

Answer: The persons employed by the banks to perform work in accordance with the
Acts specified are the Reporting accountants (who will normally, but need not necessarily, be
the auditors)/Auditors.
The reporting accountants will report to the directors or the management of the bank in
accordance with the specific instructions of the Bank of England on aspects of the bank’s
records and systems and on the Bank of England returns used for prudential purposes.
Auditors in the UK have a fundamental duty to comply with UK auditing standards, which
are included in the auditor’s operational standard issued by the Auditing Practices
Committee of the Consultative Committee of Accountancy Bodies (CCAB)

4.Which are the requirements of the Companies Act?

Answer: When performing an audit under the Companies Act, the auditors need to carry
out sufficient work to be able to report that:
 the financial statements have been audited in accordance with auditing standards;
 in their opinion the financial statements give a true and fair view of the bank’s state of
affairs, its profit or loss and its cash flows; and
 the financial statements have been properly prepared in accordance with the
Companies Act

5.Can you mention the audit tests used by the auditors to form an opinion on the
financial statements?

Answer: the auditors will need to accumulate evidence about the transactions and
balances included in the financial statements. An overall review of the financial statements
will be necessary to determine whether in their opinion:
 a) they have been prepared on the basis of acceptable accounting policies that have
been consistently applied and are appropriate to the bank’s business;
b) the results of operations, state of affairs and other information disclosed in the
financial statements are compatible both with each other and with the auditors’
knowledge of the bank;
c) there is adequate disclosure of all appropriate matters and the information contained
in the financial statements is suitably classified and presented; and
d) the financial statements comply with all statutory requirements and other regulations
that are relevant to the bank.

6.Which are the U.K. auditing standards?

Answer: Auditors in the UK have a fundamental duty to comply with UK auditing

standards, which are included in the auditor’s operational standard issued by the Auditing
Practices Committee of the Consultative Committee of Accountancy Bodies (CCAB) and
are summarised under the following headings:
a) planning, control and recording;
b) accounting systems;
c) audit evidence;
d) internal controls; and
e) review of financial statements.

7.Are there any differences between work performed by the auditors and that performed
by the reporting accountants?

Answer: The scope of the work performed by reporting accountants generally differs in
nature and extent from that performed by the auditors.
The auditors must consider not only whether it will be possible for the bank to prepare
reliable financial statements at a particular point in time, but also whether the accounting
records are maintained in such a way as to enable the directors and management to
control the business effectively from day to day.
The reporting accountants must consider whether the accounting and other records and
the management information, that is produced from those records are sufficient to enable
management to monitor and control the risk relating to the various activities of the bank
and to make timely and informed decisions

8.Can you specify the control types examined by the auditors and the reporting
accountants?

Answer:
The auditors may examine the internal control systems as part of the audit, but are
obliged to do so only to the extent that they need to place reliance on those systems.

The types of controls that are examined by reporting accountants and auditors may also
differ. The auditors may be content to rely on detective controls, which provide
assurance that any misappropriation or loss is properly reflected in the financial
statements. The reporting accountants may be more concerned with preventative
controls, which reduce the likelihood of loss. The reporting accountants’ examination of
internal controls is therefore likely to be wider in scope and extent than that of the
statutory auditors.