Audit Checklists

Audit Checklists

Below checklist covers the following:

1) Insurance
2) Scrap Material
3) Purchases
4) Bank Reconciliation
5) Import Purchases
6) Accounts Department
7) Fixed Asset Register
8) Physical Verification of Cash
9) Investment
10) Administration
11) Dispatch of Goods & Receipt of Materials
12) Excise
13) Export Sale of Goods
14) Outsourcing /Job Work
15) Personnel & Time Office
16) Production & Planning Process
17) Publicity & Advertisement
18) Repair & Maintenance
19) Secretarial Department
20) Stores & Spares

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 Audit Checklists

Insurance Checklist

Check whether the Insurance policies taken by the company cover the following assets
at all the locations (factories, offices, branches etc.)
- Plant & Machinery, Furniture / Fixtures, Electrical installation, Office equipment etc.
- Buildings / Warehouses etc.
- Inventories / Stocks in transit
- Cash
- Vehicles
- Any other.

Ensure that the value of Assets insured is adequate.

Ensure that all the risks are covered in the policy.
Check whether the loss of profits policy has been taken by the company.
Ensure that the additions / deletions to the fixed assets during a particular accounting
year are fully taken care of in the policy.
Check whether the insurance premium amount has been properly negotiated. Ensure
that competitive rates of 2-3 insurance companies were taken into consideration
while finalizing the premium payable. For this purpose all necessary precautions
should be taken to reduce the level of premium.
Obtain a list of all the insurance claims pending for settlement as on a particular date
and comment upon the old pending cases.
Obtain a list / statement of all the Insurance policies and ensure that all the assets of
the company are fully insured.
Ensure that the value of assets / fixed assets declared by the company is proper and
that the assets are not under covered.
Ensure that maximum discounts / rebates were availed by the company at the time of
finalizing the insurance policies / premium.
Check whether insurance policies in respect of group Gratuity / Medical /
Superannuation / accident etc. are obtained at the best rates. Comparative
statements / comparative data should be checked.
Ensure that the Insurance policies are renewed in time i.e. before the expiry of the
period of validity.
Check the list of fixed assets / assets filed with the insurance company to ensure that
all the fixed assets / assets are covered by the insurance policies.

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 Audit Checklists

Ensure that all the policies are obtained for the uniform period matching with the
accounting year of the company.
Check whether the terms and conditions given in the insurance policy are complied
with by the company.

Checklist for Scrap Material

Ensure that a separate space / scrap yard is earmarked for keeping the scrap material.
The scrap yard should have an enclosure and a gate with a lock and key.
Ensure that a proper record is kept of receipts, issues, opening and the closing
balances quantity of each item of scrap in the scrap yard
Check that proper slips are kept at the point of generation of scrap and at the
receiving end i.e. the scrap yard. At the generation point(s) the output / production /
scrap generation slip should be made in 2 copies giving details of the item of scrap and
the Qty. of scrap.
The weighment / measurement / counting can take place either at the point(s) of
generation or at the scrap yard. However, the scrap generation slip should contain the
details of the quantity. The slips should have a serial control and should be authorised
by a responsible person. The scrap yard should receive the material on the basis of slip
and enter the receipt in the scrap register. Weighment should be carried out at the
scrap yard if not already made at the production floor. The weighment should be
carried out in the presence of a person each from the scrap yard and the production.
Thus the scrap yard entries for receipt of scrap should be made on the basis of
generation slips only. The issues entries should be made on the basis of sales invoices
raised on customers / issue slips for consumption within the plant.
It should be ensured that the entries in respect of receipts and issues in the Scrap
Stock Register are made on the basis of generation slips / Sales invoices / issues slips.
The generation slips / Sales invoices / issue slips should be authorised by a responsible
person.
Scrap Generation points should be identified and a booklet of generation slips with a
serial control given at each generation point. The scrap yard person should sign on one
copy of the slip as an acknowledgement of having received the scrap qty. as given in
the slip and return the slip back to the generation point. The second copy of the slip is
to be retained at the scrap yard.

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For sale of scrap ensure that a comparative chart of offers / quotations is prepared
and the Sales order is made in the name of the best quoted party. All the offers /
quotations should be properly evaluated.
Scrap sale should be affected on spot payment terms - cash / DDs at the time of
delivery. Ensure that full amount is collected from the customer before the material is
allowed to be lifted.
Ensure that Sales Tax / excise duty is properly charged in the Sales Invoice.
Ensure that no debit balances appear in the Sundry Debtors ledger in respect of scrap
customers.
Ensure proper counting / weighment / measurement of scrap at the Scrap generation
point(s) / Scrap yard.
The Scrap Stock Register should be kept updated at all times.
A gate pass should be issued at the time of despatch of material from the Scrap Yard
and the gate pass should then be checked at the exit gate by the security.
A periodical physical verification of scrap stock in scrap yard should be made and the
physical Qty. tallied with the book quantity. The discrepancies, if any should be
reported.
The total scrap generation as per the Scrap Stock Register should be tallied with the
quantity of scrap generation of various types as shown by the costing data. Comment
if any difference / discrepancy is observed.

Checklist for Purchases

Check whether an Approved Vendor list of suppliers / authorized dealers has been
prepared and is updated on a regular basis. The Approved Vendor list should carry all
the items of purchases - Raw Material / Engineering / Consumables / Packing material
etc. The approved vendor list can be Vendor - item / Item -Vendor wise.
Check whether a Purchase Manual has been prepared and approved. The Purchase
Manual should include policies / procedures / and all the matters relating to purchase
methodology.
Find out the Rate Variations over a period of time in respect of every item of
purchases. The purchase register whether prepared Manually / Computerized would
indicate the item Code / Name of the item and purchases made of the item over a
period of time at varying / same rates with reference to the Purchase Order Number.

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Reasons for purchases made at varying rates should be obtained. Rate Variations
without a proper justification should be reported.
A scrutiny of Purchase Orders should be carried out to ensure that comparative
statement of quotations are prepared and the order is placed on the lowest bidder
after considering factors like quality / delivery / payment terms / profile &
competence of the vendor.
Check whether the comparative statements of quotations are duly approved by an
appropriate authority and dated.
The comparative statements should be prepared on a landed cost criteria. All the costs
such as the basic price / taxes / duties/ insurance / P&F / freight & cartage / interest
etc. should be indicated in the comparison and the final cost of comparison should be
the landed cost of the item.
Ensure that a proper justification (Technical / Commercial) is given in writing on the
comparative statement wherever the purchases are made from a source not being the
lowest bidder.
Ensure that a sufficient number (3 or 4) of quotations / offers are called from the
suppliers at the time of making a comparative statement.
In case of single offer / quotation cases obtain reason s for placing the order on
specific parties.
Ensure that in case of Repeat orders - fresh offers / quotations are called from the
competitive suppliers and a fresh comparative statement prepared. Further a Repeat
order should not be placed beyond 6 months from the date of the original purchase
order. A fresh order should be raised on the suppliers after 6 months have elapsed
from the date of the original PO.
Ensure that a justification note is put in writing on every comparative statement giving
reasons for awarding the PO to a supplier.
Carry out a scrutiny of Indents / Purchase requisitions to ensure that the purchase
orders are placed as per the requirements given in the Indents.
Ensure that the quantity discounts / rebates offered by the suppliers as per the
terms given in the PO have been availed by the company.
Obtain a list of Indents pending for conversion into PO and comment upon the old
pending indents.
Obtain a list of POs pending for delivery of material and comment upon the old
pending PO where the due date of delivery of material has expired.

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Ensure that the Purchase Orders have been signed / authorized by authorities as per
the financial limits given in the Purchase Manual / Policy. Deviations should be
reported.
In case of amendments to the PO ensure that the amendments are duly approved by
an appropriate authority and reasons for the amendment (Rate / Quantity) are given
by way of a Note.
Comment upon the possibilities of entering into 6 monthly / annual rate contracts
with the suppliers where the consumption trend or level is high.
Examine whether there is a system of standard costing or Budgetary Control in vogue
in the Purchase Department. Also, check the Monthly Purchase variance Report
wherein all items above + 10% in value should be highlighted and reasons thereof.

Checklist for Bank Reconciliation

Check whether an Approved Vendor list of suppliers / authorized dealers has been
prepared and is updated on a regular basis. The Approved Vendor list should carry all
the items of purchases - Raw Material / Engineering / Consumables / Packing material
etc. The approved vendor list can be Vendor - item / Item -Vendor wise.
Check whether a Purchase Manual has been prepared and approved. The Purchase
Manual should include policies / procedures / and all the matters relating to purchase
methodology.
Find out the Rate Variations over a period of time in respect of every item of
purchases. The purchase register whether prepared Manually / Computerized would
indicate the item Code / Name of the item and purchases made of the item over a
period of time at varying / same rates with reference to the Purchase Order Number.
Reasons for purchases made at varying rates should be obtained. Rate Variations
without a proper justification should be reported.
A scrutiny of Purchase Orders should be carried out to ensure that comparative
statement of quotations are prepared and the order is placed on the lowest bidder
after considering factors like quality / delivery / payment terms / profile &
competence of the vendor.
Check whether the comparative statements of quotations are duly approved by an
appropriate authority and dated.
The comparative statements should be prepared on a landed cost criteria. All the costs
such as the basic price / taxes / duties/ insurance / P&F / freight & cartage / interest

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etc. should be indicated in the comparison and the final cost of comparison should be
the landed cost of the item.
Ensure that a proper justification (Technical / Commercial) is given in writing on the
comparative statement wherever the purchases are made from a source not being the
lowest bidder.
Ensure that a sufficient number (3 or 4) of quotations / offers are called from the
suppliers at the time of making a comparative statement.
In case of single offer / quotation cases obtain reason s for placing the order on
specific parties.
Ensure that in case of Repeat orders - fresh offers / quotations are called from the
competitive suppliers and a fresh comparative statement prepared. Further a Repeat
order should not be placed beyond 6 months from the date of the original purchase
order. A fresh order should be raised on the suppliers after 6 months have elapsed
from the date of the original PO.
Ensure that a justification note is put in writing on every comparative statement giving
reasons for awarding the PO to a supplier.
Carry out a scrutiny of Indents / Purchase requisitions to ensure that the purchase
orders are placed as per the requirements given in the Indents.
Ensure that the quantity discounts / rebates offered by the suppliers as per the
terms given in the PO have been availed by the company.
Obtain a list of Indents pending for conversion into PO and comment upon the old
pending indents.
Obtain a list of POs pending for delivery of material and comment upon the old
pending PO where the due date of delivery of material has expired.
Ensure that the Purchase Orders have been signed / authorized by authorities as per
the financial limits given in the Purchase Manual / Policy. Deviations should be
reported.
In case of amendments to the PO ensure that the amendments are duly approved by
an appropriate authority and reasons for the amendment (Rate /Quantity) are given
by way of a Note.
Comment upon the possibilities of entering into 6 monthly / annual rate contracts
with the suppliers where the consumption trend or level is high.
Examine whether there is a system of standard costing or Budgetary Control in vogue
in the Purchase Department. Also, check the Monthly Purchase variance Report
wherein all items above + 10% in value should be highlighted and reasons thereof.

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Checklist for 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 in spite 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.
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.

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 Audit Checklists

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

Checklist for Accounts Department

Cash Vouchers \ Bank Vouchers:

Check authorization of Cash Vouchers \ Bank Vouchers by a responsible person.

Check supporting Bills / Invoices
Check the correctness of the accounting head expense / income
Check for cash receipts signature /acknowledgement of cash recd.
Check that all the relevant columns of the Cash/ bank vouchers have been properly filled in.
Check that all the supporting to the Vouchers is crossed as cancelled after the payment.
Check that payments are made only against original supporting.

Purchase Vouchers:

Check authorization of Purchase Vouchers by a responsible person.

Check the Purchase Voucher with the supporting documents like Bill / Invoice and
the Goods Received Note (GRN).
Check whether the rates given in the purchase invoices are as per the purchase Orders
raised/amendments to the Purchase Orders/ approved by an appropriate authority.
Check whether payment has been made/Bill passed for rejected quantity of material as per
the GRR.
Check whether a proper accounting head - expense has been debited.
Check that all the relevant columns of the Purchase Vouchers have been properly filled in.
Check that the PV is passed as per the terms given in the Purchase Orders.
Check that the purchase voucher is prepared only in respect of original Bills / Invoices.
Photocopies of invoices \ duplicate invoices should not be passed.
Check that the Bills / invoices are passed strictly as per the PO terms.

Journal Vouchers:

Check authorization of Journal Vouchers by a responsible person.

Check the Journal vouchers with supporting Bills / Invoices /documents.
Check that supporting documents are duly approved by an appropriate authority.
Check the correctness of the accounting head - debit / credit.

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 Audit Checklists

Check that all the relevant columns of the journal vouchers have been properly filled in.
In case of contractors bills check that bills submitted by the contractors are supported by
the Work Orders issued in advance to the contractors. No bill should be passed unless
supported by a/ WO and the value of the Bill should be in agreement with the WO
prepared. Check that the Work Orders are prepared in advance before the start of the work.
Check that the bills of the contractors are duly approved and certified for payment by the
person responsible for getting the work done i.e the us
for payment in writing by the user on the face of the bill.
Check that all the supporting bills / invoices to a journal voucher are approved / certified for
payment by the User Department. The user Department should specifically put a remark on
the bill for approval\ payment.
In case of contract jobs relating to labour supply the bills are to be supported by attendance
sheets duly certified by the Time Office.
In case of transporters bills - check the bills with the agreed rates and receipted copies of
consignment notes.
Check the measurement books in case of bills for civil work and ensure that the
Measurement books are signed and checked by the Engineer in charge of the Work.
In case of running and final bills for civil work check that the civil engineer has checked and
verified the measurements and entries of all running and final bills are made in the
Measurement Books.

Advance to Employees:

Check the Trial balance in respect of Advance to employees to ascertain the amount
outstanding in the name of each employee. Find out the date since when the advance is
outstanding to be settled and make a list if employees advances that have not been settled
for a long period.
Ensure that no further advance is given to an employee unless the previous
outstanding advance is cleared by him.
Advance to an employee may be towards - Travel / Official work\ loan or a salary advance.
Ensure that the recovery is made from the salary of the employee when the advance taken
by the employee is not settled by him within a reasonable period.
Further check that the recovery of instalments in respect of loan / salary advance is made
correctly on monthly basis from the salary of the employees.
Check and make a list of employees who have left the company and their full and final
settlements have not been made but debit balances are still appearing in their names in the
Advance to employees account.

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 Audit Checklists

Confirmation of Balances:

Confirmation of balances with the banks \ Lending institutions should be obtained on a

monthly basis for the purpose of preparation of bank reconciliation statements.
Confirmation of balances with the Creditors / Debtors should be obtained on a six monthly
basis. The balances in the Creditors\ Debtors Ledger account should also be reconciled with
six monthly basis.

Debtors Ledger Trial Balance \ Debtors Ledger account:

Check that the balance shown by the Debtors Ledger Trial balance agrees with the balance
shown by the Debtors control account in the General Ledger Trial balance.
Check the Age wise analysis of Sundry Debtors and comment upon it.
Check the Debtors Accounts that are stuck up for long and are doubtful of recovery.
Check the accounts where legal cases have been filed / are to be filed and
ascertain the progress in the legal cases.
Carry out a scrutiny of various Debtors Account in the debtors ledger and check for the
following :-
Match the Debit and Credit entries individually.
Give the breakup of the closing balance - Invoice wise.
Ensure that there are no such cases where the payments have been received
for later bills and the earlier invoiced are unpaid.
Give a breakup of the closing balance as above in (b) including the details of
any debits on account of debit notes raised on the parties.
Prepare a list of Debtors account showing closing credit balances.
Tally each debit with a corresponding credit to locate any under payment /
over payment for any invoices.

Creditors Ledger Trial Balance/Creditors Ledger Account:

Check that the balance shown by the Creditors Ledger Trial Balance agrees with the
balance shown by the Creditors control account in the General ledger trial balance.
Check the creditors account that are outstanding to be paid since long (unclaimed
Creditors) and that can be considered for a write back in the books of account.
Carry out a scrutiny of various Creditors account in the creditors ledger and check for
the following.
Match the Credit and Debit entries correspondingly.
Give the breakup of the closing balance Invoice wise.
Ensure that there are no such cases when the payments have been made for
later invoices and the earlier bills are unpaid.

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Give a breakup of the closing balance as above in i (b) including the details of
any credits on account of credit notes raised on the party.
Prepare a list of account showing closing debit balances along with
the reasons for debit balances. Comments or details should be taken from
the auditee in respect of every single debit balance.
Tally each credit with a corresponding debit to locate any over payment
/under payment for any invoice.
Check all the Creditors Ledger Trial balance as given below for above details.
Suppliers
Contractors
Transporters
Others

Outstanding Liabilities:

Check that the outstanding liabilities pertaining to the earlier years have been adjusted
in the books of account.

Excise V/s Accounts Reconciliation:

Ensure that a reconciliation statement is prepared on a monthly basis to reconcile the

modvat / Cenvat balance in the excise with the accounts balances.
Check if any old pending entry is appearing in the reconciliation statement.
Check the unreconciled / reconciled difference in the balances shown by the excise
records and the accounts records.
TDS
Check that all TDS deductions are deposited in time with the government - check the
monthly TDS statement and the actual date of deposit with the TDS challans.
Check whether the TDS Returns are submitted in time with the Government.
Check that the TDS deductions are made properly from all the payees wherever
applicable.

Budget V/s Actual – Expenses:

Check the Budget V/s Actual position as on a particular date with the Budget statement for
all the expenses - Fixed / Variable overheads.
Check the Variances between the Budget / Actual figures.
Obtain comments on reasons for variances between the Budget V/s Actual.
Analyse the variances between Budget / Actual in terms of percentage.

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Scrutiny of Ledger Account - Expenses / Others:

Check that in case of expenses the distination between Capital and Revenue expenditure is
properly made.
Check that proper account head has been used to debit the expenses.
Pick up a few entries from the ledger account and trace the entry to the Voucher and the
supporting bills / Invoices to ensure that the expense bills are properly approved /
authorized and accounted for.

General Ledger Trial Balance / Revenue ledger Trial Balance:

Carry out a scrutiny of the General Ledger Trial balance/Revenue ledger Trial balance
and comment on accounts that need to be reconciled like inter office account / Inter
unit account etc.
In case of accounts like TDS Receivable / Interest Receivable/ Insurance claim Receivable
/ Margin money deposit with banks ask for the break up / detailed statements of
accounts and comment upon it.
In case of Creditors / Debtors account check that the amount as given in the General
ledger agree with the balance shown by the Creditors ledger Trial balance/ Debtors
ledger Trial balance.
Check whether any special accounts like suspense account etc. are appearing in the trial
balance and carry out a scrutiny.
In case of other accounts carry out a review of the ledger of the account to locate any
irregularity / reconciliation matter

Checklist of Fixed Assets Register

Check that a Fixed Assets Register is maintained and updated at all times (Manual /
Computerized).
Check that the Fixed Assets Register gives details of the fixed assets - Quantity / No /
Location / Identification Number / Depreciation / Rate / accumulated depreciation /
original cost / additions /deletions/ written down value.
Check that the identification number given on the fixed asset tallies with the number
given in the FA Register.
Check that for purchases as well as sale of fixed assets proper authorization has been
taken from the appropriate authorities

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Check that the discrepancies observed on physical verification of fixed assets have been
correctly adjusted in the books of account after taking approval from the appropriate
authority.
Check the method and the procedure adopted for carrying out the physical verification
of fixed assets and ensure that verification was carried out as per the generally accepted
accounting practices and procedures.
Check that the physical verification sheets in respect of fixed assets are properly
prepared and duly signed by the persons responsible for carrying out the physical
verification. The name, designation of employees and the date of carrying out the
physical verification should also be clearly mentioned in the physical verification sheets.
Check that the physical verification of Fixed Assets is carried out by the Management at
least once in 3 years.

Checklist of Physical Verification of Cash

Carry out a surprise physical verification of cash.
Check that the physical cash balance tallies with the balance shown by the cash book.
Check that the cash book is up to date at all times.
Check that the cash in safe/cash in transit is within the insurance cover taken.
Check that fidelity insurance cover is taken in the names of persons who have the
custody of cash.
Check that receipts are issued by the cashier at the time of receipt of cash from the
employees / others.
Check that signatures of the payee are taken by the cashier on the cash payment
Voucher at the time of making cash payment.

Checklist of Investment

Check whether a Register of Investment is maintained. (Manual / On computer)

Check that the Register of Investment gives the necessary details like
(a) Description of the Investments.
(b) Name of the corporate bodies / other entities where the Investments
have been made.
(c) Distinctive number of certificates
(d) No. of certificates -shares/ debentures / other securities.

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(e) Face value / paid up values of Investment made

Check that the certificates of investment are kept securely and in safe custody.
Ensure that a physical verification of investment scripts is carried out say at least once in
a year and physically found scripts are tallied with the details given in the Register of
Investment. Discrepancies if any should be reported.
Ensure that the proper record is made in the Register of Investment in respect of Bonus
Issue of shares and debentures, Rights Issue of shares/ debentures etc. .
The entries in the Register of Investment should be tallied and reconciled with the
entries in the printed Annual Accounts. Balance sheet - to locate any differences.
Ensure that all the investments made are in the name of the company and all the
transfers have been made and recorded and affected in the name of company.
Ensure that all the income accounted / due in respect of all the investment made
is received and accounted for in the name of company.
Ensure that all the transactions in investment are authorized by a resolution of the
Board of Directors or by the person to whom the powers have been delegated.
Check that where any shares or securities in which investment have been made by the
company are not held by it in its own name the company has entered the details in a
register in terms of section (7) of the Companies Act .The register shall disclose
(a) The nature, value and such other particulars as may be necessary fully to
identify the shares or securities and
(b) The bank and person in whose name or custody the shares or securities
are held.
Carry out a scrutiny of the investment account in the ledger to ensure that proper
accounting entries have been passed in the ledger account - .Vouchers may also be
verified to ensure proper authorization etc.

Checklist of Administration Department

Enquire into the activities that are covered under the Administration of the
organization. Normally the following activities would come within the Administration
Department of an organization.
Security Services
Canteen Services
Housekeeping Services
Courier Services
Fax / Photo copy machines

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Telephone lines
Renovation and routine repairs
Dispatch of correspondence
Incoming correspondence
Visitors Register at the Reception
Travel air / train / taxi
Hotel reservations
Fixed Assets for maintenance / repair
Vehicles
Guest Houses
Colony upkeep / maintenance.

Security:
Check the contract with the security contractor.
Ensure that the terms and conditions and other general matters are being complied
with by the contractor.
The bill of the contractor should be accompanied by the attendance sheet of the
security personnel deployed during a particular period / month.
The bill of the contractor should be accompanied by a certificate from the
contractor that the statutory obligations have been complied with by the contractor.
The Bill should be approved by the Head of the Administration.
Ensure that a specific clause has been put in the contract regarding the PF / ESI liability
of the employer of security personnel. It should be clearly mentioned in the contract
(The company or the
contractor.)
In case the contractor is to bear the PF liability then the company should ask for copies
of monthly challans in respect of PF deposits from the contractor.
Study the various clauses of the contract and ensure their compliance.
Ensure that contract has been awarded to the contractor on the best possible terms.
Quotations/offers of other contractors should be verified to ensure that financial
terms as well as general profile/standing & reputation of the contractors have been
considered for appointing the contractor.
Check that the security personnel are properly deployed over the area under their
jurisdiction and responsibility. Ask for a deployment plan from the Head of security.
Check the Registers and records maintained at the security gates/ security points and
ensure that the registers and records are kept up-to-date / maintained properly / all
columns are filled in completely.
In case Gun men have been deployed ensure that they hold valid licenses and that the
licenses are renewed in time.

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Ascertain the responsibility of the Security Department / contractor in the form of a check
list. The check list should give point wise duties of the security. The activities/work to be
performed by Housekeeping should be documented in the form of a check list.

Canteen Services
Check the contract with the canteen contractor and ensure that the terms and
conditions of the contract are being complied with.
Check compliance with point No(s) 3 to 8 as stated in the case of security
services. The points are applicable to Canteen Services also.
Ensure that a duly approved Rate list of food items has been prepared and is displayed
at the canteen.

Housekeeping Services:
Check the contract with the Housekeeping contractor and ensure that the terms and
conditions of the contract are being complied with.
Check compliance with point No(s)3 to 8 as stated in the case of security services. The
points are applicable to Housekeeping services also.
Ascertain the responsibility of the Housekeeping Department / Contractor in the form
of a check list. The check list should give point wise duties of the Housekeeping /
contractor. The activities / work to be performed by Housekeeping should be
documented in the form of a check list.
Courier Services
Check the contract with the courier companies.
Ensure that the terms and conditions of the contract are complied with, by the
contractor.
Check that the Bill of courier is checked in detail with the copies of consignment Notes
and the Proof of delivery. The Administration Department should not pass the bill
unless all the consignment notes are matched with the Proof of Delivery (POD).
The bill should be approved by the Head of Administration.
Ensure that the Contract(s) have been awarded to the contractor / Courier Company
on the best possible terms. Quotations / Offers of other contractors / Courier
companies should be verified to ensure that the financial terms as well as the general
profile / reputation of the courier agencies have been considered before appointing
the contractor / courier company.

Fax Machines / Photocopy Machines

Check the total number of fax machines installed and their location.
Ensure that a budget has been fixed in respect of every single fax machine.
Compare the Budget V/s Actual position in respect of all the fax machines and
comment upon the negative variances between the budget and actual.

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 Audit Checklists

Ensure that a proper control is kept over the paper issued for photocopy purpose. A
record should be kept by the photocopy operator of the number of sheets of paper
received in a month and the number of photocopies made during that month. A
monthly control report should be prepared.
Ensure that system of requisition slips for fax / photocopy is in place. Requisition slip
system would ensure that there is no misuse of the fax/ photocopy machines.
Ensure that the fax / photocopy machines are maintained properly and that the
operators of the machines do not allow any unauthorized entry of persons to operate
machines.
In case the work of photocopy has been given to an outside agency check the
contract entered into with the party and ensures that the terms and conditions of the
contract have been complied with.
Ensure that the contract with the outside agency is renewed in time i.e. before the
expiry of the validity of the contract.
A monthly record should be maintained by the company in respect of paper issued to
the contractor and the number of photocopies made during the month. The variation
/ differences should be explained by the Department.
In case the photocopy / fax work is carried out after the office hours the requisition
slips be kept and the employees instructed and encouraged to enter the details of
number of photocopies made / fax done, after the working hours in the register.

Telephones
Ensure that a budgeted amount has been fixed in respect of every telephone. The
budget amount should be approved in writing.
A monthly Budget v/s Actual statement Telephone wise should be prepared and
reviewed.
In case the actual expenses exceed the budgeted amount on a quarterly /six monthly /
annual bases, ensure that the approval for the excess amount is obtained from the
appropriate authority.
Ensure that the telephone bills are duly approved / certified for payment by the
concerned users.

Guest House
Check that the record of fixed assets installed at the Guest House is kept properly in a
bound register / computer. The record of fixed assets (FA Register) should contain all
the details of FA like -Quantity / location/ Make & type / Identification Number / value
etc.
A six monthly verification of the FA should be carried out and the physical balances
compared with the book balances. The discrepancies should be reported.
Similarly a record of electricity / water / and telephone bills should be kept in a
register / computer.

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 Audit Checklists

A register should be kept for recording all STD / ISD calls. The visitors should be
requested to enter the details of call made in the register.
A bound register should be maintained to record on a daily basis the Bill number -
amount and the type of purchases made - Milk / Vegetables / Food items etc. The
register should be kept up to date.
Per meal cost should be worked out on a monthly basis (By dividing the total expenses
on food / milk / vegetables etc. by the No of meals provided during the month). The
per meal cost would indicate the expenses actually incurred on meals provided to the
guests and assess whether the meal cost is high/ normal.
A guest / occupancy register should be maintained at the guest house and all the
particulars of the guest like - Name / Time in / Time out / date of arrival / date of
departure / address / Room No allotted etc. should be entered.
A Meal register / slip should be made to record the details of meals provided to the
guests. The meal slip should be prepared by the caretaker and the signatures of the
guest should be taken on the slip.
The register / slip should clearly indicate the No of Breakfast / lunch / dinner /tea /
milk / snacks etc. provided to the guest.
A register / statement of consumables (other than Fixed Assets) should be maintained
and all particulars of items like - buckets / room heaters / mattresses / cutlery / Bed
sheets / covers / utensils should be entered. The Register / Statement should be
prepared Room wise.
In case the guest house is in a rented / leased premises - verify the rental / lease
agreement and see whether the terms and conditions are complied with.

Visitors Register at the Reception

Ensure that the system of issuing Visitors Card to the visitors is in existence. The cards
should have a serial control.
The visitors Card Number should be entered in the Visitors register.
The visitors register should be complete in all aspects i.e. all the entries as prescribed
in the format should be filled in properly and completely. No column in the register
should be kept as blank.
The visitors register should be maintained clearly in a legible hand.

Travel - Air / Taxi / Train

The bookings in respect of Air / Taxi / Train should be made on the basis of Requisition
slips. The Requisition slips should be properly filled in by the employees with

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 Audit Checklists

necessary details like Approval of the HOD / authorized by / Date and time / details
of travel / Name and Designation / purpose / signature etc.
The Administration Department should not accept the Requisition Slips not filled in
completely and properly.

Stationery
Ascertain whether there is any system / procedure to ascertain the book quantity of
stock of stationery at any point of time.
Check whether there is a procedure wherein the opening balances, Receipts, Issues
and the closing balances of each stationery item (costing say Rs.25/- or more per
number) are recorded in the stationery stock Register (manual / computerized).
Carry out a physical verification of stationery items (costing say Rs.25/- or more) in
stock and compare the physical balances with the book balances and locate the
discrepancies, if any.
Ensure that there is a system of issuing stationery items to various
Departments against duly approved Requisition slips.
Check whether a monthly statement of stationery issued to various Departments is
made. The statement should reflect the details of items of stationery issued
Department wise.

Hotel Reservations / Guest House reservations

Ensure that there is a proper procedure for making Hotel / Guest House reservations.
The procedure should ensure that the details in respect of Hotel/Guest house
reservations are recorded in a control book / register. The details should include

Sl Na Design Loca Ho Reservati Type of

N me ation tion tel on period accommo
o of Na From dation
the m To
per e
son
(i (ii) (iii) (iv) (v) (vi) (vii)
)

Whether booking Bill details Bill paid by Any other

is Bill (Name / information
confirmed/pending No. Date Amount Date/ like
Mode of cancellation
payment)
(viii) (ix) (x) (xi

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 Audit Checklists

Check whether all the columns of the Control Register are filled in properly and
completely. All the necessary details as given in the format should be entered in the
Control Register.

Fixed Assets for maintenance - Repair

A record of fixed Assets for which the Administration Department is responsible for
carrying out the repairs / maintenance or upkeep should be kept by way of a register (
Manual / computerized). The FA would include Air conditioners, Refrigerators, Water
coolers, Fax / photocopy machines, Electrical Equipment etc. The record should
include details of FA like - Quantity / location / Identification Number / make or
type. Check whether such a record of FA is maintained by the Administration
Department.
A physical verification of such FA should be carried out on a six monthly / annual basis
to find out the discrepancies, if any.

Renovation and Routine interior maintenance

Check whether quotations / comparative statements were invited / prepared before
issuing a Purchase / Work Order to a contractor / party.
Ensure that the Purchase / Work Order were issued keeping in view the commercial
considerations - lowest quotation / offer / profile / experience/ technical competence
/ recommendation of architects Engineers etc.
Check whether the Purchase / Work Order were issued before the start of the work by
the parties. Confirmatory orders should not be issued except under special
circumstances.
Check whether the Comparative statements are duly approved and dated by a
competent authority.
Ensure that the variation between the actual Quantity / Value and the Quantity /
Value as per the PO / WO does not exceed + 5%. The Qty. / Value as given in the PO /
WO should be as accurate and as possible and all work should be estimated and
planned in advance and provided for in the PO / WO. The amendments to the PO /
WO should be issued in special cases only. The cases of amendment orders being
issued for an increase in the scope of work should be minimum and the full scope of
work / activities should be estimated / calculated in advance.
Ensure that the amendments to PO / WO are issued before the start of the extended
work/scope of activities and not after the completion of work.

Colony upkeep / Maintenance

Check whether the Administration Department has prepared a list of Fixed Assets
provided to the employees at their residential premises.

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 Audit Checklists

Check whether an acknowledgement has been taken in the list of FA provided to the
employees from the employees. The signatures of concerned employees should be
taken in the list of FA, as a token of their acceptance towards having received the FA.
The Administration Department should carry out a physical verification of FA at the
residential premises of the employees and compare it with the list. The discrepancies
if any between the physical balances and the book balances should be enquired into.
The Administration Department should maintain a Register / book wherein all the
complaints received from the colony residing employees should be entered into,
serially. The specific nature of the complaint should also be entered, whether
Electrical / Mechanical / Civil / Electronics etc. along with the date / time of lodging
the complaint by the employee. Similarly, the date and the time of attending /
rectifying the problem should also be entered along with the signatures of the
complainant. The Register would enable the Administration Department to exercise a
proper control over the complaints / maintenance work.

Vehicles
Ensure that the details of company owned Vehicles are available by way of a register.
Check whether insurance cover is renewed in time.
Check the Registration books / Insurance papers of all the vehicles to locate any
discrepancies, if any.
Check whether log books are properly maintained in respect of vehicles. Check the
entries in the log books.
Ensure that a Vehicles register is maintained and details of running and maintenance
expenses in respect of every vehicle are entered vehicle-wise, giving Bill No / Date and
the amount.
Check whether a monthly exercise is carried out to calculate the running and
maintenance cost of every vehicle per km. This can be worked out by dividing the total
of running and maintenance expenditure by No of Kms run by the vehicle as per the
log book. The Administration would know at a glance the per Km cost of running and
maintaining a particular vehicle on a monthly basis.

Incoming / Outgoing Correspondence

Ensure that a separate manual register is maintained for the incoming and outgoing
correspondence.
Check whether all the relevant information is recorded in the incoming / outgoing
registers.
The registers should be kept updated at all times and entries should be made on a day
to day basis.
A stamp / seal should be put on the cover of every incoming correspondence
indicating the date of receipt of the document / correspondence.
A separate record/ register should be kept for documents / correspondence sent
through the Registered post. (Copies of Registry receipts should be preserved).

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 Audit Checklists

A proper record should be kept of Postage stamps.

In case of Franking machine - check the use and the balance amount at the end of the
day.

Checklist of dispatch of Goods and Receipt of Materials

DESPATCH OF GOODS ( FINISHED PRODUCTS):

Check that the plan for the dispatch of finished products is received by the Dispatch section
clearly indicating the Quantity/ location and the description of the material.

Examine the method and the procedure for the dispatch of material to ensure that the
dispatches are affected smoothly.

Check the dispatch report prepared as at the end of the day to ensure that the dispatches
planned for the day are in fact affected in totality.

Check the pending delivery / dispatch status for a particular period (on a day to day basis).
This information can be maintained in the form of a report.

Ensure that there is a proper system to weigh the finished goods for dispatch. The
weighbridges and the related equipment should always be properly maintained (including
calibration of weighing machines)

If the sales invoices are prepared at the dispatch section check a few invoices spread over a
period to ensure that the invoices are prepared correctly as regards Rates / Excise duty /
Sales Tax etc. Ensure that a proper control is kept over the stationery of blank invoices. The
sales invoices should be authorized by a person duly authorized in writing in this behalf.
Check that the Freight consignment Notes are properly prepared.

Check that the consignment of finished goods once weighed and okayed at the dispatch
section are checked for the necessary papers - Gate pass / Sales Invoice / Road permit /
Freight Consignment No, etc. at the exit gate by security or by a responsible person deputed
in the sales dispatch section.

Verify the status of transporter wise trucks provided against the trucks ordered. Also,
ensure that penalty for not providing the trucks is charged without exception.

Check that all the trucks being dispatched are not being loaded less than the minimum
weight agreed for payment. If so, proper justification & approval should be reviewed.

Status of marine insurance, if any to be checked.

Check that all the transporters are approved transporters and their contract is approved
by authorized person from Head Office.
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 Audit Checklists

INWARD MATERIAL (GOODS):

Check that entry for the incoming material is made at the entry gate register.
Ensure that the weighment / Counting of the incoming material are made properly and
correctly at the receiving section.
Check that stamp / acknowledgement of the receipt of the incoming material is made
on the back side of Freight consignment Note. The remark should indicate the quantity
(weight / number of pieces etc.) of the material recorded at the receiving section along with
condition (ok / damaged / wet etc.) in which material has been received.
The receiving section should maintain a record of all the incoming material received
consignment wise, clearly giving the date / No. of vehicle / Description of the material /
Quantity etc. This record can be maintained in the form of MIS report prepared on a daily
basis.

QUALITY ASSURANCE:
Check the procedure for the clearance of RM for use in the production

Ensure that the procedure for quality testing of raw material / finished goods is well
documented in the form of a quality manual.

Ensure and check that the raw material / finished goods once rejected are not
subsequently cleared under deviation. In special cases ensure that the approval under
the deviation is duly approved.

Check the specification / laid down standards for the testing and clearance of the raw
material / finished goods and ensure that the actual test result conform to the laid down
specification.

Whenever there is a change in the laid down specification ensure that the change is
approved and authorized in writing by an appropriate authority and that the change is
incorporated in the manual of specification.

Check the time taken at the quality assurance to clear the sample received for testing.
The test sample of raw material and finished goods should be cleared within a short
time.

Check the management level to which the Head of Quality Assurance reports- As a
matter of fact in order to ensure that the quality assurance function as an independent
arm the quality assurance should report to the Head of the Organization / Unit.

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 Audit Checklists

Ensure that the testing samples accepted / rejected are segregated and kept separately
with proper and clear marking. Ensure that the sample do not get mixed up.

Checklist of Excise:

Ensure that the Modvat / Cenvat is claimed and credit is taken in the excise records
immediately after the receipt of the material. There should be no delay in taking the credit
of Modvat / Cenvat once the material has been received. Calculate the loss of interest due
to delay in Modvat / Cenvat claim.
Challans / invoices in respect of material sent for processing should be received back in the
plant within 6 months. Ensure that the material sent outside the factory for processing is
received back in the factory within 6 months from the date of dispatch. (180 days). (A delay
beyond 180 days would result in a loss of Modvat / Cenvat to the sender).
Check whether the statutory records PLA and RG - I are properly maintained.
Check whether the classification, declaration, Price declaration or MRP value, declaration of
marketing pattern, and discount structure are filed by 15th April every financial year.
Check whether RT-12 returns have regularly been filed with the excise authority by 10 th day
of the following month accompanied by copies of PLA and TRG challan and Cenvat monthly
return. An acknowledgement should be obtained from the Excise Department.
For export sales ensure that applications in Form AR4 and the original invoices have been
submitted to the excise authorities.
Credit on Capital goods is to be taken immediately in the same financial year up to 50% of
duty paid and the balance credit in any subsequent financial year provided capital goods are
still in possession and use of the manufacturer. Ensure that the above provision is taken
care of.
Further the cenvat credit is allowed even if the goods (Input / Capital) are acquired by the
manufacturer on lease, hire purchase or loan agreement from a financing company. The
credit is not allowed if the manufacturer claims depreciation under Section 32 of the
Income Tax Act on the amount of duty paid. Check whether the above provisions have
been considered while considering the Modat / Cenvat Credit.
The Excise law / rules should be referred from time to time as the provisions change every
year.
Ensure that full Credit for Modvat / Cenvat / PLA has been taken by 20 th of every month in
respect of duty debited for dispatches made during 10/15th day of the month and full credit
is taken by the 5th of the next month in respect of duty debited for dispatches made
between 16th to 30/31st of the month. Ensure that there is no lapse on this account and
that the duty credited is equivalent to the duty debited on fortnightly basis.

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 Audit Checklists

Ensure that Cenvat account debit should be limited to the Credit balance available on the
15th day and the last day of the month respectively.

Checklist of Export Sale of Goods

Check whether the export obligation have been fulfilled / short fulfilled before the
expiry of the validity of the Advance license / export obligation period.
Ensure that the documents to be submitted to the bank are processed and submitted in
time to avoid any delay in/late credit by the banks in case of sight LC.
Check whether there are cases of short payments received from the banks in respect of
Export bills.
Check whether the contracts for commission for export sales are finalized / renewed in
time.
Check whether there are cases of unutilized Advance licenses.
Check whether any penal interest has been paid due to the non-fulfillment of export
obligation.
Check whether any undue delay has taken place for the dispatch of goods from the date
of the shipping bill.
Verify the export invoices with reference to the export sales register and ensure that the
invoicing is made as per the terms of the orders received from the export customers.
Check whether any amount has been paid towards the extension of the validity of the
Advance license / revalidation charges towards Advance licenses.
Check whether interest paid on Discounted LCs after the credit period are recovered
from the importers.

Checklist of Outsourcing/Job Work:

Ensure that Norms are set in respect of Input - Output of outsourcing jobs.
Ensure that control is kept over the outsourcing jobs on a consignment to consignment
basis. The consignment wise control should be exercised for Input - Output. Any shortages

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 Audit Checklists

/ deviation from the set input-output Norms on the basis of every consignment should be
inquired into and suitable recovery made from the processor. Norms should also be set for
process loss / Wastage/ Scrap etc.
Quantity / Value reconciliation with the processor should also be made on a consignment to
Consignment basis and a monthly stock certificate are obtained from the processor. Any
shortage / Excess in input-output should be adjusted / accounted for in the books also on a
consignment to consignment basis. This would ensure a proper control over the quantity of
raw material sent to the job processor and the quantity of finished product received from
the processor.
The contract with the job processors should be entered for a fixed period subject to
renewal. The contract should clearly lay down the terms and conditions (including the Input
- Output Norms).
The rates for carrying out the jobs work should be finalized after a proper comparison of the
rates and further negotiation.
The terms and conditions of the contract should include the period within which the
processor has to carry out the job after the receipt of the material. A penal clause should be
included in the contract to this effect.
Ensure that there is a proper control on molds sent to outsourcing parties and the same are
reconciled with periodic statements received from the parties with the total quantity /no
despatched by plants.
As far as possible there should be a central Agency (such as Outsourcing Department, H.O.)
who deals with all the moulders and distribute the work accordingly from the plants. Also
ensure that mould directly received by party from vendors / suppliers are reported to /
accounted for by the respective plants.
Ensure that all moulds are returned by parties concerned to the respective locations /
plants, once the jobs are completed.
Check if the moulds sent to the contractors are not returned to the Company within a
period of six months, whether a debit note or invoice on the excise duty paid by the
company is raised on the contractor.

Checklist of Personnel and Time Office:

Obtain a list of sanctioned strength - Department wise and compare with the actual
strength of the employees. Note the variation and comment upon the cases where
the actual strength of the employees is more than the sanctioned strength. Check
approval for the extra man power deployed.

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 Audit Checklists

Review the personnel service files of employees kept by the Personnel Department to
check whether
All the copies of certificates / testimonials have been taken from the employees at the
time of joining.
Nomination in case of Gratuity / Pension / PF / superannuation etc. have been
collected from the employees
All the other documents like increment letters / promotion letters etc. are properly
filed in the service files.
Copies of appointment advice / appointment letters / confirmation letters etc. are
kept in the service files.
Obtain a list of all the pending legal cases being handled by the Personnel
Department. Check the status of all the legal cases including the date of next
hearing. Comment upon the speedy settlement of the legal cases. For keeping an
effective control over the legal cases the Personnel Department should prepare a
status report of pending legal cases on a monthly basis.
Ensure that the Personnel Department is taking due care in case of contract labor
employed by it to ensure that legal and statutory obligation like FPS / PF / ESI are
taken care of. The Personnel Department should maintain proper attendance record
in respect of the contract labor and should obtain copies of monthly PF / ESI challans
from the contractor.
Check that the various licenses like the Factory license / license under the Contract
labor (abolition + regulation) act 1970 / license for storage of inflammable and
hazardous chemicals etc. are renewed in time.
Ensure that the various provisions of industrial and labor laws
The Apprentices Act / Factories Act / Payment of wages Act
Minimum wages Act etc. are duly taken care of.
Ensure that proper attendance / leave records are maintained by the Personnel
Department is respect of all the workmen / staff / officers/ managers / higher
management.
Check the leave / attendance record of employees (register /
Punch card/ computerized attendance printouts) to ensure that there are no
irregularities. Comment on the irregularities. if any, observed .\
Examine the agreement with the Union and ensure that the terms and conditions as
agreed to by the parties to the agreement are duty complied with. Examples :
Incentive scheme, loan / advance scheme , facilities, attendance procedure, leave
procedure , festival advance , canteen / tea, transport ,uniform, production etc.
Further check the various schemes linked to production / output to ensure that the
payment under various incentive schemes are made strictly as per the laid down
productivity linked / incentive scheme.

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 Audit Checklists

Ensure that the system installed at various locations to mark the attendance (in/out)
are working properly and are giving consistent results.
Check the record relating to attendance / leave including a cross verification of data
and ensure that the methods and procedure for recording of attendance / leave are
sound and sufficient internal controls exist. Point out the lacunae / weakness in the
internal control system.
In case of productivity linked schemes ensure that there is a proper system to record
and measure the quantity / quality / output of each employee.
Check whether the consent letters have been obtained from the State Pollution
Control Boards in respect of AIR / WATER.

Checklist of Production and Planning Process

PRODUCTION:
Verify the production records such as production slips / memos to ensure that the
records are properly maintained. Also verify the log books of machinery to check the
details of production. Check the production log books.
Check the budgeted production of all the products with the actual result on a monthly /
annual basis. Ascertain the reason for a shortfall in the production if any and comment
upon it.
Check the production capacity utilization of all the production plants and enquire in to
the reasons for lower capacity utilization and comment upon it.
Check the system / procedure / method of recording the input and output.
Check whether the Input / Output Norms have been determined of each process of
manufacture / process loss/ wastage (Accounted) losses and the Unaccounted loss and
gain.
Check format of the Input and Output statement and ensure that all the relevant
data/information related to the following are shown separately.
Opening stocks of RM / WIP}.
Closing stock of RM / WIPRM issued.
Other material issued.
Accounted losses various types (Norm v/s Actual)
Finished goods (Norm v/s Actual )
Unaccounted losses (Norm v/s Actual)
Check the production slips with the entries in the excise record (RG-1).
Comment upon the deviation in the norms set for Input / Output i.e. Norm v/s actual
position.
Check the production schedules to verify whether the production has been carried out
as per the scheduled production.
Check the details in respect of yield - Budgeted yield v/s actual yield in respect of all the
products and enquire in to the reason for lower yield and comment upon it.

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 Audit Checklists

PRODUCTION PLANNING AND CONTROL:

Study the system / method and the procedure of production planning and the procedure
for the preparation of weekly / monthly / annual production budgets.
Check the status of orders received from the Marketing Department for production of
various products.
Check the machine utilization status report and comment upon the idle time - reason
thereof and the steps to reduce idle time.
Ensure that the log book in respect of all the plant machinery and equipment are kept
properly and up to date. Verify the machine log books and comment on the
discrepancies observed.
Check that there is a proper lay out for free flow of materials.
Ensure that the actual production is carried out as per Production Planning and comment
upon the deviation from the production planning figures.
Carry out a study of machine efficiency and utilization to ensure that the machine are
utilized as per the laid standards of efficiency and utilization.

Checklist of Publicity and Advertisement

Advertisement and Publicity
PRESS
Press estimates to be verified with the Rate Cards.
Press estimates to be approved by the Head of Advertisement.
Ensure that the approval estimates are serially numbered / recorded in the job order
register.
Ensure that the Rate Cards are separately filed.
The Bills submitted by the agencies / casual parties should be checked with the
approved estimates to ensure that the ads have been published correctly, the bill has
been raised for correct size at correct rate and that all applicable discounts have been
allowed.
Check whether the Bills are recorded in the Bills Control Register duly approved by the
Head of Advertisement with his signature and date on the bill.

OUTDOOR ADVERTISEMENT
Hoardings / Neon Signs / Bus Panels and Shelters / Wall painting etc
Ensure that competitive Quotations (with site plans / size / material to be used and job
completion schedule) have been obtained from at least 3 reputed parties.

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 Audit Checklists

Check whether a written contract has been entered into with the party finally selected for
awarding the work. Entry should be made in the Job Order register. The order should be
serially numbered.
A physical verification should be carried out of various sites where the Ads are displayed
and Job Inspection Report should be sent to the Advertisement Department / outside
locations - area offices / branches / depots etc.
Ensure that the Advertisement Department has taken the following steps on receipt of the
Bill along with Job Inspection Report / Physical verification Report from various locations:
Deduction of proportionate rental for the period during which the Defect remains
unrectified.
Deduction for the number of days for which rental was paid for the period during which Ad
was not displayed.
The Bills are duly approved by the Head of Advertisement under signature and date and
recorded in the Bills Control Register.

Fabrication of Neon Sign / Glow Sign / Stalls at Exhibitions / Banners at Company’s cost
Ensure that Competitive Quotations were obtained from at least 3 reputed parties stating -
size / design / rate / item wise cost / Qty. / payment terms / time required for execution of
job etc.
Check whether the order was placed on the party giving lowest quotation. Ensure that the
order is signed by the Head of Advertisement with date.
A physical verification is to be carried out and the job inspection report to be sent by the
local / outside locations to the Advertisement Department.
The duly approved Bill (approved by the Head of Advertisement) to be entered in the Bill
Control Register and necessary deductions to be made from the bill on the basis of physical
verification Report / Job inspection report.

Printing + Sales promotional / Gift items / Give aways

Ensure that competitive Quotations from reputed printers were called giving all
essential details like Quantity / Quality of paper / size / cost-break up etc.
Ensure that the Order is placed on the printer giving lowest quotation and all details are
recorded in the Job Order Register.
Bills to be recorded in the Bills Control Register and passed for payment after
verification of Quality / Quantity / Rate etc.

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 Audit Checklists

Telecast / Broadcast of spots and sponsorships

Card, if any.
Check whether the approved estimate has been entered in the job control Register.
Ensure that the Bill submitted to the Advertisement Department is supported by
documentary evidence of telecast / broadcast.

Master record of Company property

Ensure that a master record is maintained wherein should be entered full particulars of
procurement, Fabrication / Storage / disposal / reuse of the following items paid for by
the Company.
o Hoarding , Exhibition stalls
o Neon sign structures, Glow signs, Boards.
Kiosks, Solar poles, Bus shelters, Bus Panels etc.
General
Ensure that the orders are placed on the parties after calling competitive quotations from at
least 3 parties.
The order / Contracts awarded should be entered in the Job Order Control Register with a
serial control.
The Bills duly approved should be entered in the Bill Control Register.
Ensure that Physical Verification Report / Job Inspection Report is prepared in respect of
the jobs carried out by the Agencies and check whether deductions have been made from
the bills on the basis of physical verification Report / Job Inspection Report.

Checklist of Repair and Maintenance

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 Audit Checklists

Check that the preventive maintenance schedules of plant & machinery and equipment
have been made at regular intervals in respect of all the branches of engineering ->
Mechanical /Electrical Instrumental / Electronics etc.
Ensure that the preventive maintenance schedule is approved in writing by the Head of
Engineering.
Ensure that preventive maintenance schedule is carried out as per the plan. Comment
on the back log, if any.
Ensure that the preventive maintenance schedule includes all the plant machinery and
equipment.
The entries are respect of actual preventive maintenance should be made in the
schedule drawn along with the date / name and designation of the employee who have
actually carried out the preventive maintenance.
Check whether there is any deviation from the planned preventive maintenance
schedule. Enquire in to the reason for such a deviation and comment upon it.
Enquire in to the system / method / procedure of carrying out breakdown.
Maintenance. Check the format of Job Order / Complaint form / Break down form by
the Engineering Department to attend the breakdown of machines / equipment.
Ensure that the necessary details are incorporated such as Department, detail of site of
breakdown / date and time of breakdown / date and time of breakdown rectification /
signature with name and designation of the person who has initiated the job order /
signature with name and designation of the person who has actually attended the
problem and rectified it.
Carry out a review of the job order forms to locate the time taken to attend to the break
down. Ensure that the breakdown is attended to speedily and also make / obtain a list
of pending job order / complaints.
Check that the job order form / complaint form format is proper and all the columns are
filled in properly and completely. Also ensure that one copy of the job order form is
filled and kept by the Engineering Department for record, safely and securely.
Check the log books of machines / equipment to ascertain the time lag between the
breakdown of the machine and the time when machine started working .
Check the budget v/s actual position of the Engineering Department. Comment on the
negative variances from the budget.
Work Order for repairs / fabrication work etc. Given to the outside parties: Ensure that
the work order given to the outside parties for carrying out any kind of repair /
fabrication work related to engineering are issued before the start of the work. This
aspect has to be strictly adhered to. The bills submitted by the contractor should be
compared with the Work order and then the bill may be passed accordingly.

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No work should be started by the contractors unless the work order containing estimate
of quantity and value has been issued before the start of the work.
5% variation in quantity and value may be allowed only in those cases where it is not
possible to estimate in advance with 100% accuracy the quantity and value of work.
Rates should be negotiated with the parties before the start of the work.

Checklist of Secretarial Department

SECRETARIAL
Carry out a review of the statutory records required to be maintained by the Secretarial
Department. The records include the following
Register of Members.
Register of Debenture holders.
Directors Attendance Register.
Minute book of the - Board meeting / General Meeting / other Meetings.
Register of Contracts
Register of Directors shareholding.
Register of Investment.
Register of Fixed Deposits.
Register of Share Transfers.
Register of Charges.
Index of Members.
Index of shareholders.
Register of Foreign Members.
Ensure that compliance with the S E B I guidelines is made by referring to the S E B
I guidelines / circular / notifications etc.
Check that the company is regular in meeting its obligations towards the
shareholders/ debenture holders / banks / financial institutions / fixed deposit holders
etc. Check whether the company has defaulted in making payment to the fixed
deposit holders / payment to the financial institution / members / banks / debenture
holder etc. and comment upon the nature and the extent of default.

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Ensure that the Company has adhered to the various compliance matters falling under
Corporate Governance. Refer to the guidelines on Corporate Governance - Terms of
Reference of Audit Committees etc.
Ensure that all the share transfers lodged are duly affected in the records.
In case of acceptance of Fixed Deposits from the public, ensure that the provisions of
section 58 A /58AA / 58AAA to the Companies act 1956, have been complied with.
Ensure that the provisions of Companies (Acceptance of Deposits) - Rules 1975 are
complied with
In case the company has issued debenture / bonds etc. ensure that the terms and
condition of the issue, as given in the prospectus to the issue, debenture deed / trust
deed have been complied with.
Ensure that the statutory records and registers as required to be maintained under the
Companies Act (point 1 above ) are properly maintained and are kept updated at all
times.

Checklist of Stores and Spares

Store may be categorized into the following categories:
1. Raw Material Store.
2. Engineering / General Stores.
3. Finished Goods Store - Warehouse.

Categories the Total Store Inventory into the following classification.

Slow moving inventory items that have moved slowly during the period of audit ( A
criteria may be set in this regard )
Nonmoving inventory item that have not moved during the period of audit ( A criteria
may be set in this regard )

o The classification into Slow Moving / Non Moving inventory should be made
for all the stores RM / Engineering / Finished Goods.

The Slow / Nonmoving inventory should be further classified into the following
categories The value and quantity of -
Item that will be consumed in the next few months.
Items that can be sold off being not required.
Insurance spares - in case of engineering stores.
Items that have to be scrapped useful life being over.

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Check the Goods Received Notes (GRN) to ensure that the GRN are properly filled
in. Ensure that all the columns of the GRN have been completely filled in.
Ensure that inspection by the proper person has been made and his remark has been
entered on GRN. Locate the cases where unreasonable delay has taken place in carrying
out the inspection of the material. Check that the date of inspection is put on the GRN
by the person who has carried out the inspection.
The GRN should have a serial control and the GRN should be authorized by a responsible
official.
Ensure that an action plan has been drawn to dispose of / sell the Non-moving
inventory.
Check the Material Requisition Notes / Material Issue Note (MRN / MIN) in respect of
the issue of material to production. Ensure that the Material Requisition Notes /
Material Issue Notes are properly and completely filled in.
Further check that details of quantity of stock in hand is filled in all the Material
Requisition Notes before the MRN are sent to the Purchase Department for effecting
further purchases. All the columns in the NMRN / MIN should be filled in.
Ensure that the MRN / MIN are authorized by a responsible official.
Ensure that the stores stock ledgers are kept up-to-date and entries in respect of
receipts / issues are made on a daily basis.
Carry out a physical verification of say 10% items in the inventory (All
should be verified 100%)and check whether the physical balances agree with the book
balances appearing in the stores ledger. Comment upon the discrepancies, if any.
Enquire whether there is a system of Perpetual Inventory in force where at any point of
time the book balances agree with the physical balances. The system of continuous
stock taking - perpetual inventory should be such that every single item is covered at the
physical stock take at least once in a year.
Check that Norms (No of days consumption) have been determined in respect of
inventory level of Raw Material. The inventory level should be maintained at that
level. Comment if the inventory levels are at a higher level as compared to the Norms.
Ensure that the stores - warehouse inventory is kept properly segregated with clear
identification marks. Further, the imported material and the material bought under
Advance license should be stored separately and with prominent identification tags.
Check that entries in the records of the gate have been made for all the inward
material. Check the entries in the gate register with the GRR / Invoices of the
supplier.

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Ensure that the Rejected Material is kept separately and the material is returned back
to the supplier only after adjustment of outstanding balance in Accounts.
Ensure that the Material Requisition Note - INDENT - format has separate columns for
showing - stock in hand and - Item consumption pattern for the last 6 months.
Ensure that the shortages in the receipt of material are duly taken care of by
recovering the amount from the transporters / supplier/insurance companies. Check
that there is a proper control over the claims pertaining to shortage of material.
In case of Engineering Stores ensure that proper identification tags / codes are put on
the bins for identification of material.
Check that the return of material from shop floor - production to the stores is affected
through Material Return Note (MRN) only. Ensure that the MRN are duly authorized
by a responsible person and all the columns of the MRN are properly and completely
filled in.
Check whether an ABC analysis of the stores inventory is carried out both by value and
consumption. Comment upon the need for an ABC classification of inventory for
ensuring a proper control
Ensure that a proper control is kept by Stores over items sent outside for job
work/repair etc. (Material sent under a Returnable Gate Pass)Check that the list of
pending items (RGP) is prepared on a regular basis and the materials sent are received
back within a reasonable period.
Ensure that various items forming part of the Stores inventory are stored properly and
safely. For example in case of chemicals, ensure that the containers are kept safely
and not exposed to rain / heat /sunlight etc. Carry out a review of all the items Stores-
Raw material/General/Engg/Packing material and the finished goods warehouse.
Check the procedure adopted in the Stores for carrying out the inspection of
material. Ensure that a place is earmarked for inspection in stores.
Ascertain the status of Pending GRR in the stores - (a) Items where the material has
been received but the GRR have not been made and (b) cases where the GRR is made
but pending to be sent to the Accounts for further processing on account of want of
information. Check that the material received/ GRR preparation and authorization /
sent to accounts cycle is completed within the shortest possible time.

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