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Audit of college

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Singh. Thane for extending their support. Murdeshwar and Librarian Faculty of.G. Joshi College of Arts and N. Sr. Bedekar College of Commerce. (Mrs. Prof. She has taken pain to go through the project and make necessary when correction as and needed.Y.no Names Roll nos. K. We would also thank our Institution and our faculty members without whom this project would have been a distant reality. Our deepest thanks to Asst.G. coordinator Mr.G.B Accounting and Finance ‘A’ Division Date of Submission -10/03/2014 2 . Iyer Seethalakshmi B the Guide of the project for guiding and correcting various documents with attention and care. Joshi College of Arts and N.G. We express our thanks to the Principal Dr.Acknowledgement We owe a great many thanks to a great many people who helped and supported us during the writing of this project. Thane T. 1 Keval Patel 26 2 Komal Waghmode 27 3 Anuprita Sakharkar 28 4 Fiona Fernando 29 5 Supriya Pandhire 30 K. Bedekar College of Commerce. M. We also extend our heartfelt thanks to our family and well-wishers. D.) Shakuntala A.

hotels. Auditor should check income and expenditure account and balance sheet of such institutes in order to verify and report the true and fairness of results presented by income statements and financial position presented by the balance sheet. the educational institutions can be divided into four types. Government-affiliated institutions. the methods and procedures for vouching and auditing is same even though an auditor of educational institution should perform following tasks: Many educational institution are run under Societies Registration Act. Government-aided and -affiliated institutions. Audit of Educational Institutions Audit of books of educational institutions like school. hospitals. the types of problems the auditor usually face in conducting audit of these types of institutions are also same. which include i.Special Audit Audit of different kinds of institutions viz.. etc. universities etc. or for which there are special accounting or auditing requirements. Government institutions. educational institutions. or other such institutions which are engaged in the educational field is known as audit of educational institutions. Specialised undertaking call for special knowledge from auditor. Every audit vis-à-vis every undertaking has its unique features. ii. Generally. 1980 or are run by the public trusts registered under the Public Trusts Act of the state. iv. iii. The auditors of school or college are. As a result. However. The main activities of these types of institutions are more or less similar to each other. differ in nature. Private institutions. college. charitable trusts. generally appointed by the management of the trust or society. and scope. approach. on the basis of financial support and affiliation from the government. 3 .

How are the RECEIPTS vouched? 4. the activities and mode of maintenance of books of accounts and records may also differ and the auditor will take into consideration these deviations at the time of his audit. Preliminary work. On 1st of March 2014. noting resolutions affecting accounts and 4 . refer to the Act of Legislature and the Regulations framed thereunder. Who provided us the information on audit of colleges (educational institutions) on asking the following questions – 1.How does the PHYSICAL VERIFICATION OF ASSETS takes place? 6.On the basis of the nature of the institutions. we met Mr Abhijit Deshpande F.In the case of a university. How are the LIABILITIES checked? For which he explained to us the following information 1.C. What is the AUDIT PROCEDURE of colleges? 2.The auditor should try to obtain knowledge about the institution he shouldStudy of the Constitution In order to ascertain the legal status of the institution the auditor should go through the Trust Deed or Regulations to find out provisions affecting accounts and should ensure that the books of accounts are kept with the provision as contained in the Deed or Regulation. How are the PAYMENTS verified? 5.A. Is there any PRELIMINARY WORK? 3. Inspection of the Minutes Book The auditor should inspect the minutes of the meetings of the Managing Committee or Governing Body.

2. Judge its adequacy and efficiency.the decisions taken regarding operation of bank account etc. Study and evaluate the accounting system in order to determine the extent of audit to be performed. and verify that there operates a system of internal check which ensures that demands against the students are properly raised. specially the decisions as regards the operation of bank account and sanctioning of expenditure. authorise the financial transactions. disburse the money involved.ensure that these have been duly complied with. Collection of monthly fees Check names entered in the Students’ Fee Register for each month or term. Operation of bank accounts He must obtain a list of books of accounts maintained and persons who maintain them. ReceiptsTuition Fees Received The auditor should check the fees received by comparing counterfoils of receipts granted with entries in the cash book and should trace the collection in the Fees Register to confirm that the revenue from this source has been duly accounted for.Any fees received in advance should be properly adjusted. Advance and arrears of fee Total up the various columns of the Fees Register for each month or term to ascertain that fees paid in advance have been carried forward and the arrears that are irrecoverable have been written off under the sanction of an appropriate authority. showing names of students on rolls and test amount of fees charged. Review of the Internal Control System He should ensure that there operates a system of internal check which is effective. He must study the latest audit report and note the nature of observations and qualifications contained therein. with the respective class registers. 5 .

Hostel dues Confirm that hostel dues were recovered before students’ accounts were closed and their deposits of caution money refunded. Report any old heavy arrears on account of fees. etc. Verify any Government or local authority grant with the relevant papers of grant.. ascertain the reasons and compliance thereof. as well as interest and dividends from investment. Recovery of fines Confirm that fines for late payment or absence. having regard to the prescribed Rules. Caution money 6 . If any expense has been disallowed for purposes of grant.Admission Fees Received He should check admission fees with admission slips signed by the head of the institution and confirm that the amount has been credited to a Capital Fund. should be properly verified from the vouchers. etc. have either been collected or remitted under proper authority. Government Grants He should verify the grant from the government or any local authority with the memo of grant.. Examine whether interest due on investments has been received with reference to investments register and bank pass book.. investment etc. Vouch income from endowments and legacies. Interest income The income from property. Rental and any other income Verify rental income from landed property with the rent rolls. to the Managing Committee. dormitory rents. etc. unless the Managing Committee has taken a decision to the contrary. also inspect the securities in respect of investments held. Free studentship and concessions See that free studentship and concessions have been granted by a person authorised to do so.

if any. Salary See that increase in the salaries of the staff have been sanctioned and minuted by the Committee.Confirm that caution money and other deposits paid by students on admission have been shown as liability in the balance sheet and not transferred to revenue. Auditor should pay special attention to the increment earned by the staff sanctioned by the competent authority. Vouching of Expenses He should check all expenses with reference to the entries in the cash book with the help of bills. unless they are not refundable. etc. with the list published with the annual report. Donations Vouch donations. 3. While 7 . If salary is paid in cash.Auditor should vouch the amount of payment of salaries to staff with reference to the salary/wages register. the counterfoils of the cheque should be examined. receipts etc.) has been claimed and recovered since the institutions are generally exempted from the payment of income-tax.The donations and other subscriptions from the various authorities have been accounted for and acknowledged. Payments – Distinction between Capital and Revenue Expenditure The auditor should see that proper distinction has been made between capital expenditure and revenue expenditure in the accounts. If some donations were meant for any specific purpose. He should verify the bank pass book and check the bank statement. he should vouch through cash book and see the accuracy and authenticity of the transaction or if paid by cheque. Refund of taxes Confirm that the refund of taxes deducted from the income from investment (interest on securities. see that the money was utilised for the purpose.

Vouch all capital expenditure in the usual way and verify the same with the sanction for the Committee as contained in the minute book.making payment of staff salaries. The auditor should assure himself about their existence through physical verification at a particular interval of time. Maintenance of Different Funds 8 . Depreciation of Fixed Assets The auditor should examine whether proper depreciation has been charged on the fixed assets of the institute including furniture and buildings. Purchase of Fixed Assets Purchase of fixed assets should be verified with the help of relevant documents. Provident fund Verify that the Provident Fund money of the staff has been deducted properly from the salaries of staff and invested in appropriate securities.The payment of scholarship should be verified with the receipt from students and Scholarship Register. Vouch in the usual manner all establishment expenses and enquire into any unduly heavy expenditure under any head. Prizes and scholarship See that the investments representing endowment funds for prizes are kept separate and any income in excess of the prizes has been accumulated and invested along with the corpus. income tax should be deducted at source and shall be duly deposited with the Income Tax Department. Tax Liability on Income The auditor should confirm that the refund of taxes deducted from income from investment has been claimed and recovered since the institutions are generally exempted from income tax liability.

He should verify the addition to the fixed assets purchased and entries in the fixed assets register. stationery. etc. equipments. Games Fund. stationary. 4. he should ensure that separate statements of accounts have been prepared as regards. clothing. He should physically verify the investments the additions and deductions during the year with reference to sanction of proper authority and examine compliance with legal requirements. furniture (tables. foodstuffs.The auditor should verify the annual statements of account and while doing so. Poor Students Fund. furniture. These should be checked by reference to Stock Register and values applied to various items should be test checked. clothing and other equipment is efficient and all bills are duly authorised and passed before payment.The stock of equipment. Verify the inventories of furniture. provision and all equipment. Stock taking Ascertain that the system ordering inspection on receipt and issue of provisions. Ensure that depreciation charged is adequate and has been properly disclosed. and should see whether proper stock register or records have been maintained in this respect. Verification of cash in hand and bank balances He should verify the cash balances by physically counting the same and vouch the bank balances with available documentary evidence on date of balance sheet. benches). etc. furniture should be carefully verified. should be written off. Loans and advances 9 .All unserviceable assets. Library Fund etc. Accumulated Investments He should note the investments representing endowment funds for prizes are kept separate and any income in excess of the cost of prizes has been accumulated and invested with the original fund. sports goods. buildings. Assets – Fixed assets The auditor should physically verify the stock of laboratory equipments. stationary. library books.

Security deposits Verify security deposits received from the students during the year with reference to the collection register and counterfoils of receipts issued for payments. correspondence which has led to increase in corpus during the year due to contribution by trustees. The auditor should examine relevant documents. Liabilities The auditor should see that the liabilities appear at their true and fair values in the balance sheet. students. Liabilities Corpus or capital Corpus or capital should be verified with references to the last years audited statements. 10 . 5.. True and Fair View The auditor should examine the financial statements and see whether they give a true and fair view of the surplus or deficit and of the state of affairs of the institution. Examine the possibility of doubtful recovery and verify total amount outstanding in the books with copies of balances confirmation certificates issued to the concerned person. and others. etc. donations in cash and kind. Any refund of such security deposits should be verified with reference to the acknowledgements from them. All the assets and liabilities should be properly exhibited in the balance sheet. members.Verify authority for making loans and advances to employees.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position & financial performance of the College in accordance with the Accounting Standards referred. whether due to fraud or error. In making those risk assessments. 1961. ABC College. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. whether due to fraud or error. and a summary of significant accounting policies and other explanatory information. including the assessment of the risks of material misstatement of the financial statements. Address The Trust. & the Statement of Income and Expenditure and for the year then ended. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit 11 . The prescribed particulars are annexed herewith : Place: Date: Signed Membership No. implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement.AUDIT REPORT Audit report under section 10(23C) of the Income-tax Act. The procedures selected depend on the auditor’s judgment. Report on the Financial Statements We have audited the accompanying financial statements of ABC college which comprise the Balance Sheet as at 31 March 2013. in the case of any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or subclause (via) of section 10(23C). Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. This responsibility includes the design. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

2. 6. or trust. proper books of account have been kept by the head office and branches of the above-named fund. (b) In *my/our opinion. give a true and fair view (1) In the case of the Balance Sheet. Sub-clause of section 10(23C) under which the fond or trust or institution or any university or other educational institution or any hospital or other medical institution is seeking exemption. PART B . as well as evaluating the overall presentation of the financial statements. if any. Assessment Year 5.APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS OR EDUCATIONAL OR PHILANTHROPIC PURPOSES 7.(vi) or (via) of section10(23C)] 12 . (iii) Subject to comments below (a) *I/We have obtained all the information and explanations which to the best of *my/our knowledge and belief were necessary for the purpose of the audit.procedures that are appropriate in the circumstances. or institution or any university or other educational institution or any hospital or other medical institution so far as appears from *my/our examination of the books of account. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management. (c) In *my/our opinion and to the best of *my/our information and according to the information given to me/us. the said accounts read with notes thereon. Address 3. ANNEXURE Report on Other Legal and Regulatory Requirements Statement of particulars PART A-GENERAL 1. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. (ii) *I/We certify that the Balance Sheet and the Income and Expenditure Account or Profit and Loss Account are in agreement with the books of account maintained by the head office at and branches. Permanent Account Number 4. Opinion (i)* I/We have examined the Balance Sheet as at and the Income and Expenditure or Profit and Loss Account for the year ended on that date attached herewith of (name of fund or trust or institution or any university or other educational institution or any hospital or other medical institution). Name of the found or trust or institution or any university or other educational institution or any hospital or other medical institution. Nature of charitable/religious/educational/philanthropic activity [as referred to in sub-clauses (iv). or institution or any university or other educational institution or any hospital or other medical institution as at and (2) In the case of Income and Expenditure Account or Profit and Loss Account. of the state of affairs of the above-named fund. or trust.(v). surplus or deficit or profit or loss for the year ended on that date. Number and date of notification/approval of the fond or trust or institution or any university or other educational institution or any hospital or other medical institution.

8. Objective The audit of educational institutions is essential to see whether it is functioning well. any part of the income of any earlier year exceeding 15% of the income. To ensure that the objectives of the organization are fulfilled. then give details of income so applied or ceased to be so accumulated 13. (a) Whether. together with amount of income not so utilized. It is a service organization & hence has to fulfil certain needs under the law. 12. wholly and exclusively. Conclusion From this report we learnt the importance and the procedure of audit conducted in an educational institution. 11. to the extent it does not exceed 15% of income of that year. that was accumulated in accordance with clause (a) of the third proviso to section 10(23C) in that year. (a) Whether. that was accumulated in accordance with clause (a) of the third proviso to section 10(23C) in that year. any part of the income of any earlier year exceeding 15% of the income. during the previous year. during the previous year. during the previous year. Amount of income of the previous year applied during the year wholly and exclusively to the objects for which it is established 10. We gained a direct practical knowledge from an auditor. to the objects for which it is established. was applied for purposes other than to the objects for which it is established or has ceased to be accumulated for application thereto? (b) If the answer to (a) above is 'yes'. exceeding 15% of income of the year. not exceeding 15% of income accumulated in any earlier year. accumulated in accordance with clause (a) of the third proviso to section 10(23C). Amount of income. then give details of income so applied or ceased to be so accumulated 14. was applied for purposes other than to the objects for which it is established or has ceased to be accumulated for application thereto? (b) If the answer to (a) above is 'yes'. 13 . Total income of the previous year of the fond or trust or institution or any university or other educational institution or any hospital or other medical institution 9. (a) Whether. any part of the income. Amount of income of the previous year accumulated for application. was not utilized for purposes for which it was accumulated during the period for which it was to be accumulated? (b) If the answer to (a) above is 'yes'. We also got a life time experience in going through the actual process of audit. then give details thereof.

Thanking you. 14 .

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