Internal Audit Checklist of Import Purchases

Check whether any Detention charges / Demurrage charges have been paid to the clearing and
forwarding agents - ascertain the reasons for the payments of demurrage / detention charges.

Ascertain whether demurrage / detention/terminal handling charges/free time allowed for the
containers by the suppliers as per the terms of the purchase order to be borne by the suppliers have
been recovered from the suppliers.

Check whether TDS has been made from the bills of the clearing agents.

Ensure that the Advance licences are fully utilized.

Ensure that the imports purchases have been made within the LC Validity period.

Check whether any LC extension / revalidation charges have been paid.

Check whether customs duty has been paid for imports of material inspite of Advance licences being
available.

Check whether excess time is taken for the clearance of material from the customs over and above
the grace period / free time allowed.

Check the agreement / contract with the clearing agent and ensure that the terms and conditions of
the contract are complied with.
o Obtain the status of Advance licence utilisation.

Ensure that proper offers were made by the suppliers and quotations called from a sufficient number
of foreign sources / comparative statements prepared before releasing the PO for imports from a
foreign source. Check the Purchase Orders on the basis of Purchase register - Item wise.

Observe the rate variation over a period of time in the rates paid to the foreign suppliers for the
same product and enquire into the reasons thereof. Scrutinise the offers / quotations of foreign
suppliers.

Carry out a comparison of rates paid to the foreign suppliers with the rates prevailing in the domestic
market and comment upon the cases where the domestic rates are lower as compared to the imports.

Inquire whether efforts have been made to develop cheaper domestic sources and comment upon the
same.

Check whether any amount has been paid towards Advance licence validity extension / revalidation
charges. Such expenses are of an avoidable nature.

Check whether any customs duty / penal interest / penalty has been paid towards imports made but
export obligation not fullfilled under an Advance licence.