Name of Company _______________

Other Expenses
Period of review: _______________

Risk Minimum control Standards Extent & period Work paper file Vouching sheet
Sub-process Activity Risk Consequences Audit Approach/controls tested Observations & exceptions
Category (Best Practices) of check reference embedded here
Sign-off from legal department Medium Clauses which may be Sign-off by legal team for all agreements 1. Review the sign-off from the legal
not obtained before entering unfavourable to the Company entered into by the Company. department for the agreements reviewed.
Legal review into agreements. may be missed out by the user
department signing the
agreement.
Approval matrix not adhered to Medium Unauthorised transaction. Loss 1. Strict implementation of the SoA by user 1. Verify whether the agreements have
for agreements entered to Company departments. been signed by Company officials in line
SoA adherence 2. Compliance verification to be assigned with the SoA.
to a particular department of the Company

Agreements Multiple quotations, Medium The company may not obtain 1. Well defined procurement process in 1. Review / verify the multiple quotations
with vendors comparative analysis not the best possible rates. place. and comparative analysis for the sample
Procurement conducted. 2. Segregation of duties between user agreement selected.
process department and procurement department.

Expired agreement or no Medium Non-enforceability in the court Well defined process in place for 1. Verify the agreements for its validity and
agreement in place. of law. agreements management. existence.
2. Ensure that all contracts with vendors
Validity of are valid (not expired) and all contracts
agreement which are nearing expiry are identified so
as to renew the contract or delist the
vendor from the vendor master list.

Approval matrix not adhered to Medium Unauthorised payments. Loss 1. Well defined SoA and strict 1. Verify the invoices selected for audit for
for payments processed. to Company. implementation of the same by the user adherence to SoA.
department.
SoA adherence 2. Finance should not make payment if the
invoices are not approved as per SoA.
Approval of
vendor invoices Payment made without Medium Payment to vendors without 1. First level verification of invoices / 1. Review the invoices selected on a
supportings/ PO. formal agreement on rates or supportings by user department. sample basis for supportings/ PO etc.
Verification of verification of service rendered. 2. Second level verification by Finance
supportings/ PO department.
3. Payments to be released only after
proper 3-way or 2-way match

Incorrect account head Low Mis-statement in the financials Review / approval of accounting entry by 1. Verify the account head debited at the
Proper account
debited. of the company. senior team member after the posting is time of accounting of each vendor invoice.
head
done by a junior team member
Incorrect Cost Centre selected Low Incorrect cost centers / 1. Review / approval of accounting entry by 1. Verify the cost centre selected at the
at the time of invoice booking. operations would be debited senior team member after the posting is time of accounting of each vendor invoice.
Cost centre with the cost. done by a junior team member.
Accounting of selection 2. Second level review by respective
vendor invoices vertical finance team.
Service tax amount not Low Service tax credit cannot be Review / approval of accounting entry by 1. Verify the capturing of service tax
captured while accounting for availed. Excess payment of senior team member after the posting is amounts at the time of accounting of each
Service tax an invoice. output service tax. done by a junior team member in a vendor invoice.
accounting separate set of service tax control
accounts.
Multiple vendor codes for the Medium Loss to company. 1. Vendor codes to be creation to be 1. Verified the existence of multiple vendor
Payment to Payment to same vendor leading to centralised. codes for the same vendor.
vendors vendors payment more than once for 2. Periodic verification process to be
the same invoice. implemented.
Rechargeable expenses are Medium Loss to company. 1. First level verification at the time of 1. Reviewed on sample basis, the amounts
Booking of not captured in the respective invoice booking. lying in non-rechargeable accounts for its
rechargeable recharge account heads. 2. Second level verification by respective correctness.
expenses vertical finance team.
Recharges Reconciliation Reconciliation and corrective Low Loss to company. Monthly reconciliation statements to be 1. Review the monthly reconciliation
between action is not performed prepared statements for sample months for
income and between the income and correctness, ageing.
recharge recharge expense accounts
accounts
Cash collection from sale of Medium Loss to company. Periodic submission of cash collected to 1. For the sample selected review the
coupons not deposited with finance and sign-off obtained. acknowledgments for receipts of money by
Sale of food finance finance.
Cafeteria
coupons Excess claim by canteen Medium Loss to company. Comparison of details of coupons sold and 1. Verified the reconciliations for the
vendor claimed by the vendor for a period. issuance of food coupons and claims
submitted by the canteen vendor.
Mobile expenses claimed by Medium Incorrect payment to Review mechanism by head in the user 1. Review the mobile policy document.
Claim of mobile employee not in line with employees / Non adherence to department for adherence to Company 2. For the sample selected, verify the
Mobile Policy expenses by Company policy stated company policy policy approvals from user department and check
employees for adherence to the Company policy

Purchase of a Unauthorised purchase of a Medium Increased cost to company / Policy to be defined for authorisation of 1. Verify the authorisation for purchase of a
software license Overrun in department budget software purchases new software for the sample selected
Software
Licenses
 Software Incorrect accounting of Low Incorrect depreciation charge / Accounting policy to be clearly defined in 1. For the sample selected, review the
Licenses software licenses Misstatements in financials case of software purchases. correctness of accounting - one time
Accounting licenses being capitalized versus annual
licenses being expensed
No defined objective process Medium Selection of improper vendor 1.Review the process of identification of the
for vendor identification. resulting in higher costs and sources of potential vendors
poor serviceability 2.Check whether quotations invited through
media/ Tenders issued in news print / other
media.
3.Whether the Vendor Registration form
(VRF) has been filled by all vendors
4. Is the completeness & accuracy of VRF
verified
5. Ensure whether the financial soundness
Vendor is verified
identification 6. Documentation of correspondence with
Vendor
selection & the Vendors' Clientele
appointment 7. Documentation of Vendor with respect to
compliance of statutory regulation by the
Vendor
8.Ensure all the licenses are obtained
9. Whether the various vendors are
manufacturers, dealers or traders

Purchases from unapproved Medium Unauthorised purchases. Review the approved vendor list and
Vendor vendors Substandard quality and compare it with purchase register to ensure
selection delivery level of services from that purchases are made only from
unapproved vendors. approved vendors.
No performance evaluation Medium 1. Consistent supply of inferior Ensure that periodic evaluation of vendors
conducted for vendor quality of materials/ services are conducted. Review
serviceability. affecting the production. the parameters considered for evaluation
2. Uncompetitive rates as such as quality inspection, delivery time,
Vendor compared to the service levels/ provision of invoice etc
Vendor
evaluation quality offered by vendors. Ensure that vendors are accordingly
evaluation
process rated. Vendors with least rating should be
taken for action such as issuing a notice or
working with them to enhance the quality

Quotation not obtained/ High Optimum purchase price is not 1. Ensure that standard format is used for
comparative quotation analysis achieved calling of quotation from approved vendors
not carried out.
2. Ensure that the
quotations are obtained for all the items
Obtaining 3. Review the process of review of
quotations and quotations and finalizing the prices
doing 4. Review the process of short listing the
Quotations final vendor. Ensure whether the selection
comparative
quotation is based on the matrix containing price,
analysis. transportation cost, capability, quality, etc.
5. Analyze the Possibility of splitting orders
to different vendors to make it cost effective
and better services.

Credit limits not well Medium 1. Blockage of working capital. 1. Review the process of finalizing mode of
negotiated with suppliers/ cash 2. Adverse payment efficiency. payment.
Payment terms Payment terms discount not agreed for prompt 2. Ensure the credit limits provided is as
negotiation negotiation payment. Credit limits not per the business norms and agreement
adhered. terms.
Inconsistencies and delays in Medium Delays in further supplies by Verify payments to vendors are made on a
vendor payments. vendors and financial timely basis and as per agreement terms
penalties. (Discounts, prepayment discount, mode of
payments, etc.)
Duplicate payments High Loss of revenue Ensure the three way check between PO,
Payments and GRN and Supplier Invoice is being done
Payables before making any payments to vendors.
debtors
Management Ensure that each and every service
management
consumption is acknowledged by the user
as per SOA.

Payment without adjusting the High Excess payment to vendors Ensure all returns, advances and debit
advances/ credit notes, etc. resulting in working caoital memos are adjusted before making
blockage. payments (system controls)
Long outstanding debit/credit Medium Incorrect reflection of financial Ensure vendor reconciliation is done on a
Vendor Vendor
balances in accounts statements timely basis. Investigate into reasons and
reconciliation Reconciliation
suggest remedial actions
Transactions with discontinued Medium Leads to disputes and loss of Ensure a vendor discontinuation form has
vendors goodwill been filled and authorized by the Category
Merchandising Manager and intimated to
all concerned (DC, RPC, etc.).

Review the
Vendor process of
discontinuation Vendor
discontinuation
 Pending balances in vendor High Financial loss on account of Review full and final settlement process.
Review the accounts non recoverable balances. Accounts department to confirm that no
Vendor process of balances of the vendor is pending in the
discontinuation Vendor system. Also, ensure legal department has
discontinuation issued a vendor termination letter.
Re-appointment of Medium Poor service quality/ Risk of Ensure the vendor management
discontinued vendor reputational damage if the department maintains adequate record/
vendor was blacklisted on documentation for closure of vendor code.
grounds of poor discipline/ Ensure Vendor Master has been updated
ethics. to this effect. Check vendor blacklisting in
database.

Medium Inability to identify a range of There should be a list of all categories of Verify whether a vendor database is
vendors for variuos travel travel expenses and the vendor providing maintained for various travel related
Vendor related expenses. these services. expenses. For eg. Car hire, service
database apartements, travel agents, meeting &
banquet hall vendors, conference call
Non maintenance of vendor
facility service provider, etc.
database
Medium Higher expense outgo. Continuous negotiation with suppiers on Ascertain the process of negotiation with
the basis of their relative strength and hotels, travel agents airlines and other
weakness evaluation. service providers. Check whether a clear
Negotiations process has been established and
Negotiations not carried out
with vendors followed. Review if any documentation is
maintained to leverage the learnings of one
negotiation into another.

High Higher overhead cost Comarative evalautaion should be carried Check and review the procedures
out by Admin department on a periodic established and followed to optimise the
Comparative anlaysis for basis to identify the areas of potential cost operating & other overhead cost like travel,
Data analytics
doifferent cost elements and savings. communication, housekeeping, printing &
for comparative
their alternative options not stationery, transport, pantry, canteen , etc.
cost studies
carried out.

High Excess accomodation cost for Comarative evalautaion should be carried 1. Check the procedures established and
Cost managers/ employees. out by Admin department on a periodic followed to bring down the operating &
optimisaiton basis to estimate the guest house other overhead cost.
occupany and the potential cost savings 2. Check whether Guest house supply is
from it. matched with the demand.
3. In order to save cost, whether new
guest house are hired if there is continuous
Guest house Inefficient use of guest house shortfall of availablity.
management facility. 4. If the existing guest house are excess, is
the proposal put to liquidate the same
based upon less demand.
5. Discuss with Admin manager and collect
the evidence of exercise conducted by
company to optimise the travel cost.

High Higher travel costs Cost benefit analysis should be carried out
to use video conferencing facility. In case
the usage is not high, options to get tie up
with other service providers (Eg. Reliance
Video Video conferencing facility not web world) should be evaluated to conduct
conferencing deployed. VC instead of travelling to different
locations.
1. Check whether VC facility is installed at
the Company.
2. Check whether it has been effectively
utilised to reduce the travel cost.
3. Enquire whether any comparative
analysis has been done by company to
ensure that the benfits out of VC are
optimally utilised.

Non-compliance with labour
laws for payment of wages.
High The Company being the Monitoring mechanism to review the wages 1. Obtain Minimum Wage notification for
principal employer will be held being distributed by the contractor to its relevant period and check for actual wage
liable under labour regulations staff. payment.
for any defaults by the 2. Also, they should conform to law
contractor. pertaining to overtime work - double wage
rate payment.

Non-compliance with labour
laws pertaining to working
hours and days.
Statutory
compliance
Contractor Statutory license/ records/
labour registers not maintained and
statutory dues not deducted
and paid.
Statutory dues not deducted or Medium
not deposited to authorities or
not deposited in time.
High The Company being the Monitoring / review mechanism to ensure 1. Obtain the attendance register / in-time
principal employer will be held that working hours of contract labourers are & out-time register and check for
liable under labour regulations within the prescribed limits as per law. compliance to daily / weekly hours criteria
for any defaults by the as mentioned by law.
contractor. 2. Check for compliance to continuous
(days) working of the employees.
Medium The Company being the Obtain certified copies of licenses from the 1. Obtain & review the license copies of
principal employer will be held contractors. both contractor and the Company.
liable under labour regulations Also ensure that the Company's licenses
for any defaults by the are up to date.
contractor.
The Company being the Monitoring / review mechanism to ensure 1. Obtain statutory (e.g. PF / ESI / PT etc.)
principal employer will be held that statutory deductions are done on a challans and tie it up with wage register.
liable under labour regulations monthly basis and deposited with 2. Verify the dates of deposit with
for any defaults by the authorities on a timely basis. authorities.
contractor.
 Payment to vendor without Medium Excess payment to the Sign-off on the invoice by user department 1. Compare the attendance records and
Contractor supportings/ proper verification contractor due to non-review of after checking with the details. the invoice / supportings to ensure
payments of attendance records. attendance records/ completeness / accuracy.
supportings vis-à-vis invoices.