Professional Documents
Culture Documents
It has been observed that the Internal auditors of BSNL are simply pointing out the errors and mistake
without rendering any assistance to the Units of BSNL for rectification of mistakes / which is totally against
the idea of engagement of the internal auditor, by BSNL Management. The Internal Auditors are
supposed to take pro-active steps for rectification of defects as well as assisting the unit / circles
authorities to bring about improvement in the quality of accounts. Moreover, the scope of work fixed by
BSNL Management are not followed by the Internal Auditor as well as comments are made by the Internal
Auditors which is against the Accounting Policy of BSNL. The main purpose of engagement of the CA
firms as internal auditor by BSNL Management is not only to identify the areas of weakness but also to
get the defects rectified on the spot by active participation of both the Internal auditors as well as BSNL
units so that BSNL accounts depicts true and fair picture.
The Scopes of work mentioned below are the guidelines for internal audit. The Internal Auditors appointed
by BSNL Management shall check all the points mentioned below in addition to other items covered by
generally accepted accounting procedure but subject to BSNL accounting policy, and also ensure that
necessary entries are passed in the accounts (General Ledger) as well as in the sub-ledger / register /
statement in order to set right defects / shortcomings detected during internal audit. Audit Report shall
reflect not only the comments on all the points mentioned below but also the details of action taken by the
internal auditor to set right the things. It is further mentioned that Internal Auditor must not function as
External Auditor i.e. Branch & Statutory Auditor. The performance of internal auditor will be judged by the
Management mainly based on pro-active action taken by the auditor to rectify any error, defects, omission
etc so that all the financial transactions are correctly reflected in the accounts within the scope of
accounting procedure as well as accounting policy.
Sl No Scope of Work Findings, observations / comments Pro-active steps action taken by
of Internal Auditor and details of the Internal Auditors to set right
discrepancies if any the discrepancy / shortfall i.e.
accounting entries passed / sub-
ledger & Register updated /
concerned official of BSNL trained.
1 FIXED ASSETS
1.1 Whether Fixed Asset Register It is maintained and updated till
(FAR) is maintained in 21- F.Y 2009-10, but not updated
column format prescribed by the
for current Financial year.
Corporate Office.
1.6 Whether value of all the assets Yes, all the assets have been
commissioned / put to use / booked to concerned accodes
started generating revenue for fixed assets and included in
during the financial year in
the trial balance.
question (the details of which
have been entered in the FAR)
has been booked to concerned
accodes for fixed assets by
passing necessary accounting
entries, and whether such
accounting entries has been
included in the Trial Balance.
1.7 Whether there is any fixed asset Yes, all the assets capitalised
which is purchased / constructed and accounted in Fixed assets
during the financial year in
Accounts of Trial Balance.
question or in any previous
financial years but not yet
capitalized / not put to use and
accounted in Fixed Asset
Accounts of trial balance and
reflected in FAR.
1.21 Whether there are any assets, No such case noticed during
which have been retired from the period of audit.
service forever, but not removed
from Fixed Asset Accounts (TB)
and FAR, and depreciation is
continued to be charged on such
assets
.
1.22 Whether in case of addition or The FAR is not updated for
deletion of assets proper records current Financial year, so we
are kept for the purpose of
are not able to comment.
preparation of Fixed Asset
Schedule (Proforma II
Statement).
1.23 Whether the value of all the The FAR is not updated for
assets reflected in the FAR is current Financial year, so we
reconciled with the value
are not able to comment.
reflected in the trial balance and
whether the difference found
during the financial year has
been settled in the same
financial year
.
1.24 Whether depreciation has been It will be charged at year end .
charged correctly in respect all
assets reflected in the FAR.
1.25 In case of assets i.e. put to use / It will be charged at year end .
commissioned during the
financial year in question
whether depreciation has been
charged from the date of
commission / put to use.
1.26 Whether depreciation has also Not applicable.
been charged in respect of
assets which have been
decommissioned / dismantled
temporarily for utilization of the
same in some other location or
for some other purpose
1.27 Whether in respect of assets Not applicable.
declared as obsolete /
unserviceable during the year,
depreciation has been charged
in the accounts correctly i.e. up
to last date of functioning of such
asset.
1.28 Whether depreciation has also There is no stand by assets.
been charged in respect of
stand-by assets.
1.30 Whether fixed asset have been Fixed assets have not been
physically verified as per order of physically verified.
Corporate Office.
1.32 Whether all the assets, which Physical verification has not
are physically available as per been carried out.
physical verification, are
reflected in the FAR.
1.37 Whether all the lands in The unit has no land either
possession of the units / circles freehold or leasehold.
have been analysed and
completely bifurcated as
freehold and leasehold.
1.38 Whether initial lease value of The unit has no land either
leasehold land is properly freehold or leasehold.
amortized over the lease period
on straight-line method.
1.41 In case of theft of assets / loss of There are no any such cases.
asset due to natural calamity,
fire etc whether proper
accounting entry has been
passed to relieve the Fixed
Asset Account (General Ledger)
& FAR and whether provision for
the net depreciated value of
assets lost has been made
2.32 Whether any project works has CWIP register is not up to date.
been abandoned during the hence, unable to comment.
financial year in question by the
competent authority.
2.33 Whether appropriate accounting CWIP register is not up to date.
entries have been passed and hence, unable to comment.
incorporated in the CWIP
account of General Ledger and
provision has been made for the
estimated loss in respect of
project work, which has been
abandoned under the sanction of
the competent authority.
3.2 Whether all the stores / material The same is recorded in Stock
received from Vendor / supplier register immediately on their
during the financial year in
receipt.
question or in any of the
previous financial years, have
been recorded in the Bin Card,
Priced Store Ledger (quantity
and other details) immediately
on their receipt and acceptance
by the consignee. (Stores /
material received must not be
directly charged to CWIP but to
be routed through Inventory
Account).
3.3 Whether full liability for stores Yes, Necessary entry is made.
received in good condition from
supplier/vendor as per terms and
conditions of purchase order
during the financial year in
question, has been created,
whether accounting entries for
such liability has been passed
and included in the Inventory
Account of General Ledger,
whether necessary entry for the
value of such stores has been
made in the Priced Store Ledger
immediately on acceptance of
the material by the consignee in
case the accounting unit of the
consignee is the paying authority
of the stores received. And
whether payment made to
vendor / supplier subsequently
against such stores has been
debited to accode where the
amount of liability / provision has
been credited at the time
creating the liability (on actual
basis) / provision (on estimation
basis).
3.11 Whether entries in Bin Card Bin Cards and Price Store
about receipt and issue of stores Ledger are not maintained.
have been reconciled with the
entries available in the Priced
stores ledger and difference if
any, has been settled promptly.
4.1 Whether cashbook and Yes, Cash book and Bank book
bankbook are properly are properly maintained and
maintained and updated on daily
updated on daily basis.
basis with all transactions taken
place during the day.
4.4 Whether bank has credited the Yes, the bank has credited the
cash remitted by the unit in cash remitted by the unit in
collection bank account of the
collection bank account of the
unit on the date of remittance, if
not what action the unit has unit on the same day.
taken to get the credit.
4.5 Whether the unit has reconciled The unit has not any Escrow
the amount transferred by the account.
Bank from the Escrow Account.
4.8 Whether all the cheques / DDs Yes, it has been treated as part
received on the closing day of of cash balance.
the financial year but could not
be remitted to bank on the same
day due to circumstance beyond
control, have been treated as
part of cash balance and
disclosure in this regard has
been given in the annual
accounts.
4.9 Whether all the cases of Yes, it has been analysed and
cheques deposited but not matter has been properly
credited by bank (as reflected in
pursued with the bank
the Bank reconciliation
statement), have been analysed authorities.
age-wise, and whether matter
has been properly pursued with
the bank authorities for early
credit to BSNL account.
4.12 Whether the banks have Yes, the banks have transferred
transferred the money from the the money from the Collection
Collection Account of Units to Account of Units to Circle IFA
Circle IFA and in turn from IFA to without any float.
Corporate Office without any
float. In case of delay in
transferring the money by bank
whether accounting unit and IFA
have recovered interest for the
delay as per terms and
conditions of agreement entered
with the banks.
4.13 Whether TT sent by the units to Yes.
IFA collection account have
been credited by bank to IFA’s
collection account correctly and
promptly and there is no
difference between the amount
accounted by the remitting unit
to concerned originating accode
for bank transfer & IFA to
concerned responding accode
for bank transfer.
4.15 Whether all the accounting units Yes, the unit has carried out
having bank account have bank reconciliation in respect of
carried out bank reconciliation in each and every bank accounts of
respect of each and every bank units and reconciliation has been
accounts of units and done in respect of all transactions
reconciliation has been done in
occurred .
respect of all transactions
occurred up to the close of the
financial year, whether bank
reconciliation statements have
properly been prepared showing
all the pending items and sent to
the banking cell at circle
headquarters.
4.16 Whether details of each and Yes, the details of each and
every item pending in the Bank every item pending in the BRS
reconciliation statement are
are available in the unit and the
available in the unit, whether
Unit has reviewed thoroughly all unit has reviewed thoroughly
such pending items pending in all such pending items .
the Bank Reconciliation
Statement of each bank account,
whether segregation of various
types of items have been done,
whether the unit has made age-
wise analysis of the pending
items in the range of > 6 months
but < 1 year, >1 year but < 2
years, > 2 years.
4.17 Whether the unit and SSA have Yes, the unit has taken
taken appropriate action to settle appropriate action to settle the
the wrong / excess / short / debit
wrong / excess / short /debit
and credit afforded by banks
which are reflected in Bank and credit afforded by Banks
reconciliation statement and how which are reflected in BRS and
many old wrong / excess / short annexure 1 is attached for
debit and credit items (both details.
quantity and value involved)
which were pending at the
beginning of the financial year in
question, have been settled by
the Unit / SSA during the current
financial year.
4.22 Whether sweeping facility has Yes, the unit has availed
been availed by the units in sweeping facility.
respect of operation bank
account and whether interest
afforded / to be afforded by bank
in such cases has been
accounted by the units on
accrual basis.
4.23 Whether interest afforded by the Yes, the interest afforded by the
bank on account of sweeping bank on account of sweeping
facility or delay in remitting the facility or delay in remitting the
money of collection bank money of collection bank
account to IFA and IFA to account to IFA is correct.
Corporate Office is correct. If not
correct whether appropriate
action has been for recovery of
the same from the bank.
4.24 Whether charges debited by Yes, the charges debited by
bank to operation / collection bank to operation / collection
bank account are as per bank account are as per
agreement with the bank, if not agreement with the bank.
whether all such cases has been
vigorously pursued by units and
settled by the bank authorities.
4.25 Whether higher officers have Yes, higher officers have verified
verified the cash and imprest the cash balance.
balance during the current
financial year.
4.26 Whether the units have Yes, higher officers have verified
maintained authorized cash and the cash balance.
bank balance and there is no
holding of abnormal cash and
bank balance in the operation
account.
4.27 Whether bank contra & cash Yes.
contra has been tallied and no
difference is left at the end of
each month and also at the
close of the financial year.
4.29 Carry out surprise check of cash Surprise check has been carried
at least twice once before 31st out as on 28/12/2010.
December and another before
31st March and ensure that
certificate of cash in hand and
cash on bank are correct.
4.30 Whether payment through cash Yes, it has been made as per
has been made as per rule and rule and acknowledgement of
acknowledgement of receipt of
receipt has been taken.
cash by the receiver has been
obtained by the cashier.
4.33 Whether booking made to inter Yes, The same has been tallied.
bank transfer accode i.e.
19801xx (originating), 19802xx
(responding),
49801xx(originating) and
49802xx (responding) i.e.
originating and responding for
transfer of fund from Circle IFA
to SSA / Accounting of Circle
and vice versa have been totally
reconciled and whether the
balance under originating
accode has been totally tallied
with balance under
corresponding responding
accode.
4.34 Whether amount booked to inter- Yes, The same has been tallied.
current bank transfer originating
accode 19701xx and 49701xx by
the Circle IFA for transfer of fund
of IFA’s collection bank account
to Corporate Office as well as
the amount booked to
responding accode 19702xx &
49702xx to acknowledge the
amount received from Corporate
Office has been tallied with the
booking made by Corporate
Office to accode 19702xx &
49702xx
4.35 Internal Auditor should review Yes, cash & cheque
the control procedure available management is adequate and
for cash, cheque management
proper at the unit.
and suggest better system and
make detailed mention about
this in their report.
4.36 In case of fake notes received, The unit has not received any
whether provision has been fake notes.
made for the amount of fake
notes and whether appropriate
action has been taken to recover
the amount from the officials /
external entity and in case of
non-recovery whether the loss
has been written off as per
sanction of the competent
authority.
5.5 Whether appropriate action has Such effort has not been taken.
been taken to collect the
outstanding bills particularly the
old outstanding from the debtors
and out of such efforts how
much recovery against the
outstanding bills has been made
during the financial year?
6.7 Whether loans and advances given Yes, it has not been booked as
by DOT to absorbed employees and current assets and recovery of
employees on deputation in BSNL such loan will be remitted to
has not been booked as current CCAs.
assets of BSNL. (Only the recovery
of such loan and advances will be
remitted to CCAs of DOT)
7 Various type of deposits made by
BSNL units with different
authorities / local bodies / others
and advances given to vendors /
contractors / Govt. companies &
organization etc.
8.2 Whether refund of EMD & SD Yes, the EMD/SD register has
has promptly been obtained on been maintained and refund is
fulfilment of all the terms and
noted properly in the same.
conditions related to it and same
has been noted in the EMD/SD
Register.
8.3 Whether the details of EMD & Yes, it has been reconciled.
SD as reflected in the EMD &
SD register / sub-ledger have
been totally reconciled with the
booked figure of EMD / SD
reflected in the General Ledger
and difference if any, between
two sets of figure has been
settled.
8.5 Whether BSNL units have got the No such case noticed during
bank guarantees released promptly the year.
on fulfillment of terms and
conditions.
9 Temporary advance & Imprest
9.6 The Internal Auditor in the Audit The head of the unit has
Report shall indicate what action implemented a system to not
has been taken by the Head of Unit sanction any further temporary
and IFA of the Circle to control the advance until the first one is
expenditure from Temporary
settled (i.e. bill & invoice
Advance and Imprest.
submitted and balance is
settled)
10 Amount recoverable from DOT,
DOP, MTNL
12.9 Whether the Unit has encashed No such case noticed during
the bank guarantee promptly as the year.
per terms and conditions related
to such bank guarantees.
13 Sundry creditors & provisions
13.1 Whether Sub-ledger / Register Yes,it is maintained by the unit.
for Creditors has been
maintained for all types of
creditors i.e. vendors, suppliers,
contractors, service providers,
other telecom operators etc and
whether the details all types of
liabilities and provisions payable
to such creditors have been
noted in the Sub-ledger /
Register of Creditors at the time
of creation of such liabilities /
provisions.
14.8 Whether liability towards rent for Not applicable for the unit.
space of DOP building occupied
by BSNL, house-keeping
charges for such DOP building
occupied by BSNL, postal
services provided by DOP to
BSNL etc has been created and
accounted to concerned
accodes of liability as and when
the liability accrues; whether
details of such liability has been
noted in the liability Register for
DOP; and whether payment
against such liability has been
made within due date and noted
in the liability register.
14.9 Whether the closing balance of Not applicable for the unit.
various liabilities payable to DOT
& DOP as reflected in the
General Ledger has been
reconciled with the details of
pending liabilities as reflected in
the liability register for DOT &
DOP and difference if any
between two sets of figure has
been settled.
14.10 Whether principal amount of loans Not applicable for the unit.
& advances (given by DOP / MTNL
to absorbed employees of BSNL or
unabsorbed employee presently on
deputation in BSNL), and interest
thereon have been recovered by
BSNL from such employees through
pay bill, and paid to the DOT /
MTNL.
15 Salary payable & bills payable
to employees
16.20 Whether charges for all working Not applicable for the unit.
circuits (leased & VPN circuits)
details of which are available
TARIT-PLUS system, has been
calculated correctly, bills for
such charges have been raised,
such charges have been
recognized either as revenue of
the current financial year or as
revenue in advance, and the
amount of claim has been
realized. Whether reconciliation
has been carried out between
the amounts of bills raised and
the amount recognized as
revenue. Whether reconciliation
of number of circuits
commissioned / working with the
number of circuits billed has
been done and there is no
difference. Whether charges for
circuits have been calculated
from the date of giving the
connection and accordingly
claims have been preferred.
16.21 Whether revenue from DSPT Not applicable for the unit.
service has been recognized,
accounted and realized.
16.22 Whether USO subsidy for DSPT Not applicable for the unit.
service (one time at the time of
installation of DSPT & annually
equated subsidy for five years)
has been recognized as
revenue, proper accounting has
been done, and subsidy has
been realized from CCAs.
16.23 Whether the claim for Not applicable for the unit.
reimbursement of expense i.e.
charges for diesel, electricity and
other items from USPs who are
sharing the USO Infrastructure
(tower) installed & maintained by
BSNL, as per terms and
conditions of agreement with
USO Administrator and USPs
have been correctly calculated,
bills for such reimbursement
have been preferred to USPs,
amount of bills has been
accounted, and the same has
been recovered from USPs as
per order of Corporate Office.
Whether in the last month of
each quarter the amount of
expenditure to be reimbursed by
USPs for the said quarter, has
been neutralized i.e. credited to
expenditure accode where the
expenditure incurred has been
debited during the quarter.
Whether a portion of such
expenditure has been
transferred through ATD to
CMTS vertical of BSNL for
sharing the same USO tower by
the latter.
16.24 Whether fixed charges towards Not applicable for the unit.
diesel generator set(s) and other
items to be recovered from other
USPs who are sharing the USO
infrastructure installed and
maintained by BSNL, has been
correctly calculated, bills for
such fixed charges have been
preferred to USPs, amount of
bills has been accounted as
income and charges have been
recovered from USPs. Whether
a portion of such fixed charges
has been transferred through
inter-segment ATD to CMTS
vertical of BSNL by recognizing
the same inter-segment income.
16.25 Whether the details of the claims Not applicable for the unit.
for reimbursement of expense
and fixed charges, which are
pending to be recovered from
USPs and as reflected in the
sub-ledger have been reconciled
with outstanding amount as per
general ledger and there is no
difference.
16.26 Whether CMTS vertical have Not applicable for the unit.
accounted the expense on
diesel, electricity and other items
by accepting ATD as well as
recognized the fixed charges as
inter-segment expense by
accepting the inter-segment
ATD.
16.27 Whether claims for USO subsidy Not applicable for the unit.
for USO Infrastructure (tower)
has been correctly calculated as
per agreement and order issued
by corporate office, claims for
such subsidy have been
preferred to CCAs of DOT,
amount of claim has been
recognized as income on accrual
basis and the same has been
realized from CCA.
16.28 Whether claims USO subsidy in Not applicable for the unit.
respect of Rural wire-line
connection n (i.e. rural house
hold connection, VPT,
replacement of MARR system
etc.) installed on or after
01.04.2002 and Rural
Broadband have been correctly
calculated, claims have been
preferred to CCA, amount of
claims has been recognized as
income on accrual basis and the
same has been realized from
CCA.
16.29 Whether outstanding claims for Not applicable for the unit.
USO subsidy in respect USO
Infrastructure, Rural Telephony,
Rural Broad band as per Sub-
ledger have been reconciled with
amount of such outstanding
claims reflected in the General
Ledger and there is no
difference.
16.30 Whether IUC recoverable from Not applicable for the unit.
other service providers has been
correctly calculated as per
IOBAS data, claims for IUC have
been preferred; amount of
claims has been recognized as
income and realized from other
telecom operators.
16.33 Whether revenue share for Not applicable for the unit.
inward traffic received from
SAARC countries during the
financial year in question has
been correctly calculated, claims
for revenue share have been
preferred to SAARC countries,
amount of claims has been
recognized as revenue on
accrual basis and such revenue
share has been recovered.
16.44 Whether charges for services Not applicable for the unit.
provided by BSNL to DOP and
for infrastructure of BSNL shared
by DOP has been calculated
correctly, such charges have
been recognized as income of
BSNL, claims for such charges
has been raised and realized
from DOP.
16.45 Whether charges for various Not applicable for the unit.
infrastructure (such as space in
administrative and operative
buildings, residential quarters,
inspection quarters, duct,
electrical installation etc) other
than those given at POI location
and towers, given to external
entities as per new policy of
BSNL, have been properly
calculated, bills for such charges
have been raised, claims have
been recognized as income of
BSNL and realization has been
made.
16.46 Whether charges for training Not applicable for the unit.
services provided by Training
Centres of BSNL to external
entities have been correctly
calculated, bills have been
raised, the amount of bill has
been recognized as revenue and
realization of amount of claim bill
has been done.
16.47 Whether all other sorts of Not applicable for the unit.
income which are categorized /
defined as “Other Income such
as license fee for residential
quarters, charges for inspection
quarters, water charges, sale of
waste papers, sale tender forms,
examination fee, interest on
short term bank deposits /
sweep in facility, interest
recovered from employees on
loans & advance, interest
recovered from employees as
penalty, profit on sale of assets,
RTI fee and related other
charges recovered if any,
charges for water and electricity
provided to contractor, charges
for usage of BSNL assets by
contractor etc have been
correctly recognized in the
accounts.
16.48 Whether revenue meant for a Yes.
financial year has been
accounted as income in the said
financial year and no excess
revenue has been accounted
and no revenue has been left to
be accounted.
16.51 Whether revenue billing package Not applicable for the unit.
used by the Circle has been got
audited.
16.54 Whether accrued revenue has Not applicable for the unit.
been calculated correctly at the
close of the financial year based
on actual meter reading and
accordingly the accrued revenue
has been recognized.
16.55 Whether Tatkal deposit (after Not applicable for the unit.
connection) has been
recognized as revenue per order
issued by Corporate Office.
17. Revenue from prepaid items
17.1 Whether Register for all types of Yes
pre-paid items such as SIM
Card, Recharge coupon,
CELLONE Vouchers, E-Pin,
VCC, ITC, Internet card etc has
been maintained at all levels of
BSNL Units.
18.5 Whether expense towards IUC Not applicable for the unit.
payable to MTNL related to the
financial year in question has
been recognized and accounted
in the accounts of the said
financial year through NTR and
corresponding liability has been
created.
18.7 Whether expense related to the Not applicable for the unit.
financial year in question in
respect of international roaming
charges payable to other
Operators has been calculated
correctly and recognized in the
accounts of said financial year
by debiting the expense accode
by Nodal circle and
corresponding liability has been
created and paid.
18.11 Whether expense towards lease Not applicable for the unit.
charges for various types of
assets taken on operating lease
by BSNL for the financial year in
question has been correctly
calculated and recognized by the
units in the said financial year
and liability has been created.
18.26 Whether all sorts of expenses Yes, all sorts of expenses have
have been incurred on the basis been incurred on the basis of
of approval accorded by approval accorded by
competent authority. competent authority.
18.27 Whether expenditure has been Yes, expenditure has been
incurred against the budget incurred against the budget
allotment and variation has been
allotment and variation has
covered by supplementary
been covered by
allotment.
supplementary allotment.
19.8 Check the reconciliation of E-pin All these has been reconciled
generated, prepaid voucher, and found to be correct.
SIM, CELLONE vouchers
printed etc.
21.6 Whether credit for Service Tax Yes, credit for Service Tax on
on input service, Excise duty / input service has been availed
CVD etc on capital goods, inputs by the unit as per CENVAT
has been availed wherever credits Rules.
applicable as per CENVAT
credits Rules. Whether CENVAT
credit has been availed only out
the credit lying as unutilised at
the end of immediate previous
month.
21.9 Whether ST-3A return has been The unit has filed such return.
filed within due date in cases
where permission for payment of
service tax on output service on
provisional basis has been
granted by Service Tax authority
to BSNL unit.
21.18 The Internal Auditors will also Yes, it has been done.
assist the units in maintenance
of all documents and registers
connected with CENVAT. They
should also impart necessary
training to the staff/officers
dealing with Service Tax /
CENVAT matters. Internal
Auditors must guide and assets
the units of BSNL so the units
can avail 100% credit on input
service.
22 Checking of trial balance
22.6 Whether in respect of any fixed It will be done at the year end.
asset reflected in a fixed asset
accode is having the booking for
accumulated depreciation and
depreciation under the accode
for accumulated depreciation
and depreciation, which are
relevant to such asset accode.
(Arundati Panda)
Sr. GM (CA)