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AUDIT PROGRAM Client : _____ ___________________________________

For the period : _______________________________________ Brief Particulars Perfor med By Remarks

1. Check out the previous years balances & comparatives !!" ## & #$% #. "hare Capital (a) Confirm Authorised & Issued Share Capital with Statutory books. 2. Check increase in Authorised Capital with Form No. 5 and resolutions passed. 3. erify that Authorised! &ssued' "ubscribed and "aid#up Capital is properly classified. $Schedule# I! "art#I%.

&. Check increase in "aid#up Capital with Form No. 2 and resolutions and note the details of shares issued. '. Check whether (Share Certificates) for fresh issue of shares ha*e been issued or not (ithin ) months. +. Issue of shares for consideration other than cash to be disclosed separately. $Schedule# I! "art#I%. ,. Issue of shares by way of fully paid bonus shares to be disclosed separately. $Schedule# I! "art#I%. -. Calls in arrears to be shown by way of deduction from the paid#up capital. $Schedule# I! "art#I%. .. /orfeited shares to be shown by way of addition to paid#up capital. $Schedule# I! "art#I%. 01. Check whether the Co. has made any preferential allotment of shares to parties co*ered in re2ister maintained under section 310 of the Act. If so whether the price at which the shares ha*e been issued is pre3udicial to the Co. $CA45 67*iii8%. 00. Check whether the mana2ement has disclosed the end use of money raised by public issue and the same has been *erified. $CA456778%.

). Reserves and "urplus (a) (b) erify that 4eser*es and Surplus is properly classified. $Schedule# I! "art#I%. erify the re*aluation reser*e if any & any ad3ustment for impairment loss & depreciation. $AS#2- and AS#01%

(c) 9nsure that ade:uate transfer to ;eneral 4eser*e is made before declaration of di*idend e7ceedin2 01< accordin2 to =>he Companies (>ransfer of profit to 4eser*es) 4ules! 0.,'=and in the case of dividends bein* declared out of reserves ade+uate compliance is bein* made to companies ,eclaration of ,ividends out of Reserves%

rules '1-.$.

/. "ecured & 0nsecured 1oans (a) 4econcile the balance as shown in books of account with that of balance confirmation by ?anks@ Institutions@5ther Aenders. 2. erify the securities for Secured loans from Register of Charges and Form (Modification of Charge) ! "#$Registration of Charges% filed with 45C. erify that secured loans and unsecured loans are properly classified. $Schedule# I! "art#I%.

3.

&. Aoans from Birectors@Cana2ers to be shown separately. $Schedule# I! "art#I%. '. Aoans 2uaranteed by Birectors@Cana2ers to be disclosed. $Schedule# I! "art#I%. +. erify that full disclosure is made about the security of the loans. $Schedule# I! "art#I%.

.. Check (hether the company has taken any loans' secured or unsecured from the companies' firms or other parties covered in the re*ister maintained u2s )31 of the !ct. &f so' *ive no. of parties and amount involved in the transactions.4C!R5 iii% e%6 7. Check (hether the rate of interest and other terms and conditions of loans taken by the company' secured or unsecured' are prima facie pre8udicial to the interest of the company9 4C!R5 iii% f%6 and .. Check (hether payment of the principal amount and interest are also re*ular. 4C!R5 iii% *%% 13. &f overdue amount is more than Rs. 1 1akh verify (hether reasonable steps have been taken for the recovery of the amount.4C!R5:iii;:c;6 00. 9nsure transactions need to recorded in the re2ister maintained u@s 310 of the Act has been so entered. Dnder section 310 e*ery company is re:uired to maintain one or more re2isters which contain all the particulars of all the contracts or arran2ements to which sec 2.,or 2.. of the act applies.$CA45 6*8 a% 02. erify that the total borrowin2s at any time durin2 the year are within the limits laid down by the shareholders in ;eneral meetin2 as per (Sec. 2.3 (0)(d)) of the Companies Act! 0 .'+.

03. 9nsure that all interest paid@due on the loans is calculated as per loan a2reements. 0&. Interest accrued and due on Secured Aoans should be included under the appropriate sub#heads under the head ES9CD49B A5AFSG. $Schedule# I! "art#I%. 0'. 0+. erify whether >BS has been properly deducted on interest pro*ided in the books if not! report in the ta7 audit report. ouch all fresh loans recei*ed durin2 the year and ensure that all re:uirements ha*e been fulfilled.

0,. Hhether any amount has been recei*ed@repaid in cash or in contra*ention with Sec. 2+.SS and 2+.> of I#>a7 Act. $/orm# 3CB! Clause (2&)%.

0-.

erify that the secured loans are fully secured at the balance sheet date otherwise classify it as unsecured loans. $Section 22,#0A (i*)%.

0.. 9nsure that a note should reflect in balance sheet re2ardin2 installments@amounts payable within ne7t financial year. 21. In case of debentures i. ii. Hhether pro*ision of interest and >BS thereon is pro*ided. Hhether terms of redemption@con*ersion with earliest date of redemption@con*ersion are disclosed. $Schedule# I! "art# I%. erify that the funds obtained on short term basis ha*e been used for lon* tem investment. If yes! the nature & amount is to be indicated. $CA45 67*ii8%.

20.

22. 9nsure that term loans were applied for the purpose for which the loans were obtained. $CA4567*i8%. 23. 9nsure that the company has complied with the pro*isions of (Section '-A & '-AA or any other relevant provisions of the Companies Act 0.'+) and the (Companies (Acceptance of deposits) 4ules 0.,') as well as the rele*ant directions of the 4?I with re2ard to the deposits from its employees etc. $CA45 6*i8%.

$. Fi<ed !ssets (a) 9nsure that the Company has maintained proper records showin2 full particulars of fi7ed assets. $CA45 6i8(a)%. 2. 4econcile the fi7ed assets account with the fi7ed assets re2ister. 3. 9nsure that fi7ed assets ha*e been physically *erified at reasonable inter*als by the mana2ement and discrepancies! if any are properly ad3usted. $CA45 6i8(b)%. &. In case there is sale of substantial part of fi7ed assets! whether it effects the 2oin2 concern concept. If yes! report. $CA45 6i8(c)%.

'. 4e*iew statement of CHI" and ensure that item shown in CHI" are not operational before year#end. +. erify the rates of depreciation as per Schedule II to the Companies Act! 0.'+. If the rate is different from the rate 2i*en in Schedule II whether the same has been appropriately disclosed. $AS#+%. erify depreciation calculations for 01 ma3or items *alue# wise.

,.

-. 9nsure that fi7ed assets are properly classified in the final accounts. $Schedule# I! "art#I%. .. 9nsure that cost of a fi7ed asset includes all cost directly attributable in brin2in2 an asset to its workin2 condition for its intended use includin2 borrowin2 costs! if any. $AS#01 & 0+%. 01. 4e*iew the repairs account for any capital e7penditure. Check the amount of current repairs eli2ible to be added to cost of asset as per sec.31 of the Income >a7 Act.

00. 9nsure that ade:uate ad3ustments are made in respect of cost and depreciation of assets sold@ discarded in the schedule of depreciation and fi<ed asset re*ister and any 2ain@loss resultin2 from their disposal is disclosed separately in "rofit & Aoss A@c. $AS#01%. 02. 03. 0&. erify that a board resolution has been passed in respect of all additions if re:uired by Articles. ouch for all additions to fi7ed assets abo*e 4s. 01!111@# ouch for all additions to plant & machinery not e7ceedin2 4s. '!111@# to determine whether indi*idual items when consolidated constitutes more than 01< of the total actual cost of plant and machinery. If yes pro*ide normal rate of depreciation. $Schedule#II ! Fote -%.

0'. Hhether in any case! any indi*idual item of asset whose actual cost does not e7ceed 4s. '111@# should be depreciated J 011< p.a. $Schedule#II ! Fote -%. 0+. Hhether depreciation chart as per Income >a7 4ules been prepared showin2! in case of additions! the date put to use and ad3ustment for Cen*at claimed! subsidy@2rant@ reimbursement! chan2e in rate of e7chan2e of forei2n currency. $/orm#3CB! Clause (0&)%. 0,. !scertain (hether there is an ade+uate internal control system commensurate (ith the si=e of the company and the nature of its business and fi<ed assets . >hether there is a continuin* failure to correct ma8or (eaknesses in internal control system9 4C!R5 :iv;6. 0-. erify that any e7chan2e differences relatin2 to forei2n currency loans taken for purchase of such assets should be ad3usted in the cost of fi7ed asset and accordin2ly take the depreciation effect. $as per AS#00%

0.. Check the impairment loss on the o*erall basis and ad3ust for the pro*ision of the same from "@A a@c or re*aluation reser*e. (/or financial year 211&#1' applicable only for listed companies) ?. &nventories F@' RA' "crap' "tores & "pares% (a) erify whether the company is maintainin2 proper records of in*entory and whether any material discrepancies were noticed on physical *erification and if so! whether the same ha*e been properly dealt with in the books of account. $CA45 6ii8(c)%. erify whether physical *erification of in*entory has been conducted by the mana2ement at reasonable inter*als. $CA45 6ii8(a)%.

2.

). Berify (hether procedures of physical verification of inventory follo(ed by the mana*ement are reasonable and ade+uate in relation to the si=e of the company and the nature of its business9 and if not' mention the inade+uacies. 4C!R5 :ii; b%6. &. erify whether *aluation of stocks is fair and proper in accordance with the normally accepted accountin2 principles. 4!"C#6 erify whether the basis of *aluation of stocks is same as in the precedin2 yearK and if not! the :uantify the effect of

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chan2e in *alutation. ?. &n the case of ra( material (hich is used for the production of the finished *oods' remain unsold and the market price of the ra( material falls belo( its cost but the finished *oods in (hich they are used' e<pected to be sold not belo( its cost then the ra( material should not be valued belo( cost. 4!"C# revised% ParaC#/6. ,. 5btain *aluation certificate from mana2ement. -. Hhether ad3ustment of 97cise@C9F A> has been made in the *alue of stock#in#trade. .. >ake ' items and check that proper e7cise duty is paid in case of duty paid finished 2oods lyin2 with the company. 01. 00. 02. erify *aluation of ' items of /;! RA and market rates. >&P each at

erify *aluation of ' lar2e items of stores and spares. erify estimated realisable *alue of scrap for 2 lar2e items.

03. 4e*iew stock led2er! identify non#mo*in2! slow mo*in2 and obsolete in*entories. &f it constitutes ma8or part of inventory find out the reason for the same. 0&. 0'. erify the obsolete in*entory as worked out by the company. erify the net realisable *alue of obsolete in*entory.

0+. 4e*iew the obsolescence pro*ision for reasonableness and ade:uacy in *iew of the net realisable *alue. 0,. erify whether there is ade:uate internal control procedure commensurate with the siLe of the company and the nature of its business! for the purchase of stores and raw materials includin2 components. $CA45 6i*8%. erify whether there has been any transaction of purchase of 2oods and materials and sale of 2oods! materials and ser*ices in pursuance of contracts or arran2ements entered in the re2ister(s) maintained u@s 310 of the Companies Act! 0.'+.If so than ensure whether the same has infact been recorded in the re2istered maintained for the purpose.. $CA45 6*8 (a)%. erify whether abo*e mentioned transaction in respect of any party a22re2ates durin2 the year to 4s. '!11!111@# or moreK and if so! whether that has been made at the prices which are reasonable ha*in2 re2ard to pre*ailin2 market prices at the rele*ant time. $CA45 6*8 (b)%.

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0..

21. Compare book balance in 97cise 4ecords with "hysical balances for /;. 20. 4econcile purchases as per stock led2er and as per financial books. 22. 5bser*e cut off procedures before physical count. 23. Attend year#end in*entory count and test count for 0' key items. 2&. /ollow up test counts and a2ree to final stock listin2s. 2'. erify :uantitati*e details of raw materials and finished 2oodsM HI" consumption.

2+. Show principal item of raw material! which are more than 01< of total *alue of 4.C consumed in :uantitati*e details.

$Schedule# I! "art#II%.

.. &nventory D >&P (a) erify o*erhead loadin2 norms for their reasonableness and conformity with A.S. 2 of ICAI.

(b) 9nsure that costin2 methods are same as in pre*ious year.

7. "undry ,ebtors (a) 4e*iew a2ein2 analysis of Bebtors. (b) 9nsure that the debtors balances are properly classified in the final accounts as followsN i ii iii i* * *i *ii *iii i7 Core than si7 months. Aess than si7 months. Secured and considered 2ood. Dnsecured and considered 2ood. Considered doubtful (this amount should not e7ceed the amount of pro*ision for bad & doubtful debts). Amount due by directors or other officers of the company. Bue by a firm or pri*ate company in which any director is a partner@director@member. Bue from other companies under the same mana2ement as per sec 3,1 (0?). Ca7imum amount due by directors or other officers of the co! at any time durin2 the year. $Schedule# I! "art#I%.

3. 9nsure that forei2n debtors are fairly stated by con*ersion at closin2 rates. $AS#00% &. 4e*iew the outstandin2 balances and identify the doubtful @disputed @lon2#term balances. '. 4e*iew year#end reconciliation for all debtors and ensure that all claims by debtors which are acceptable ha*e been pro*ided for. +. Consider ade:uacy of pro*ision for doubtful debts. ,. /or last two weeks of the year and first week of ne7t year! identify all sales in*oices@ dispatch notes to ensure that they are recorded in correct period. -. 9nsure that confirmation of balances (for ma8or amount) has been recei*ed from the debtors. .. Check postin2 of cash receipts from debtors for 0' items into the debtors led2er. 01. 9nsure that write#off of balances (if any) is accordin2 to the procedure laid down in this behalf. 00. 4econciliation of balances as per debtors and balances as per books.

-. !dvances to(ards purchase of machinery' materials etc. (a) erify that the capital ad*ances are properly classified in the final accounts as per Schedule I of the Companies Act! 0.'+.

2. 4econcile supplierOs accounts with pendin2 purchase orders and deli*ery schedules. 3. &. erify that ade:uate pro*ision has been made a2ainst ad*ances that are doubtful of reco*ery. erify whether penalty claims ha*e been made in case of delayed deli*eries of the machinery.

'. 4e*iew the a2in2 analysis of the ad*ances. +. A2ree with balance confirmation! for advances .

13. 1oans and !dvances Recoverable in cash2kind. (a) 5btain a list of all ad*ances to suppliers. (b) 4e*iew all prepaid e7penses and compare with those for pre*ious year to ensure they are fairly stated. (c) erify the a2in2 analysis of ad*ances. (d) 9nsure ade:uacy of pro*ision for doubtful ad*ances. (e) 4e*iew list of outstandin2 ad*. in the names of employees to ensure that they are still reco*erable. (f) erify reconciliation of balances as per books with balances as per rele*ant Cen*at credit records as per 97cise 4ules and 4e2ulations! at year#end. erify that the claims lod2ed with the insurance company etc. are accounted for as per the stated policy of the company. erify whether loans and ad*ances made by the company ha*e been shown as deposits. I$Section 22,(0A) (d)%. Ascertain whether security deposits are fully reco*erable or not. /or additions durin2 the year trace them to the ori2inal payment *ouchers. Hhether proper ad3ustment! if any! has been made.

(2) 4econcile the ad*ances from confirmation by the parties. (h) (i) (3)

(k) 9nsure that loans and ad*ances made by the company on the basis of security ha*e been properly secured. $Section 22,(0A) (a)%. l% Ensure that the loans' secured or unsecured to companies' firms or other parties covered in the re*ister maintained u2s )31 of the !ct. &f so' *ive the number of parties and amount involved in the transactions9 4C!R5 :iii; a%6.

m% >hether the rate of interest and other terms and conditions of loans *iven by the company' secured' are prima facie pre8udicial to the interest of the company. 4C!R5 :iii; b%6. n% Ensure (hether receipt of the principal amount and interest are also re*ular9 4C!R5 :iii; c%6 o% &f overdue amount is more than one 1akh' ensure (hether reasonable step has been taken for recovery of the

principal and interest9 4C!R5 :iii; d%6. (p) Check pro*isions for ad*ances! which are doubtful. (:) Ad*ances & loans to subsidiary are to be shown separately. (r) Check the applicability of Sec.3,2#A.

(s) Check the amount treated as deemed di*idend under section 2(22) (e) of Income >a7 Act.

(t) Ensure Compliance with Sec 295 of the companies Act, 1956
11. Cash & Bank Balances (a) 4e*iew the cash#book for e*idence of lar2e (2reater than 4s.21!111@#) or unusual payments and receipts. >hese will e7clude Statutory Aiabilities! "ersonal Aiabilities and wa2es@salaries@transactions. ouch identified items to supportin2 documentation. 2. 5btain confirmation from banks for year#end bank balances and ?@4. 3. 4e*iew year#end bank reconciliation for all bank accounts includin2 those co*ered under loans. &. 4econcile the balances of unclaimed di*idend accounts with actual unclaimed di*idends. '. "erform physical *erification of cash as at the year#end and obtain cash balance certificate from the mana2ement. +. "lease 2i*e break#up in the followin2 mannerN (i) (ii) ?alances with scheduled banks. 5thers (iii) /urther break#up in

0 Current account 2 Beposit a@c ,. >o obtain the certificate from bank re2ardin2 interest accrued on /B4s and check whether interest accrued on /B4 has been pro*ided or not. -. Check the renewal and cancellation of e7pired /B4s. 1#. Current 1iabilities & Provisions (a) 4e*iew year end creditors) reconciliation for all parties ha*in2 a balance e7ceedin2 4s.' Aacs or ma8or parties dependin2 upon the case and obtain conformation from them. 2. 4e*iew all letters of credit opened but outstandin2 at year# end and compare with the list of Acceptances. 3. 9nsure that the undisputed statutory dues includin2 "/! 9SI! Income >a7! Sales ta7! 97cise duty & Custom duty! cess & any other statutory dues are re2ularly deposited by the co. with the appropriate authority. If not than the e7tent of arrears of outstandin2 dues as at last of financial year concerned for a period of more than si7 month from the date they become payable shall be reported.$CA456i78(a)% Cention nature and amount in respect of each item. &. In case dues of sales ta7@income ta7@custom duty@wealth ta7@service ta< @e7cise duty@cess ha*e not been deposited

on account of dispute! then the amounts in*ol*ed and the forum where dispute is pendin2 may please be mentioned. $CA456i78(b)% Cention nature and amount in respect of each item. '. Check calculations of accruals e7ceedin2 4s.'1!111@# for their accuracy. +. Check calculations for interest accrued but not due. ,. 4e*iew all assessment orders of Sales ta7! 97cise duty and &ncome Fa< for any demands! which ha*e not been pro*ided for. -. 4e*iew post year payments for two to four weeks for any unrecorded accruals. .. erify that the acceptance ha*e been shown separately. 01. 9nsure that interest accrued but not due on loans is under shown under current liabilities. 00. 9nsure that the co. has not defaulted in repayment of dues to any financial institution@bank@debenture holders. If so then the period & amount of default should be reported.$CA4567i8% 02. erify that the pro*ision for di*idend & corporate di*idend ta7 is as per board appro*al.

03. 4e*iew confirmations from customers for their ad*ances. 0&. 4e*iew pro*ision for ta7. 0'. 4e*iew payroll e7penses for accruals of salaries & wa2es for the last months. 0+. 9nsure that "/ and 9SI ha*e been re2ularly deposited with the appropriate authority and prepare the statement containin2 the amount of employer contribution! employee contribution! due date and actual date of depositin2 the same. $CA45 6i78(a)% and $/orm#3CB! Clause 0+(b) & 20(ii) (?)%.

1). &nvestments (a) erify in*estments with Bepository@actual securities. (b) 9nsure that in*estments are held in the name of the company and not on behalf of or in the name of other persons e7cept under section &. of the Act. (c) 9nsure that pro*isions of Sec.3,2A of the Companies Act! 0.'+ ha*e been complied with in case of any inter corporate in*estments. d% Berify in the case of other than bankin* and investment company' (hether so' much of the assets of the co. as consists of shares' debentures and other securities have been sold at prices less than its cost. 4"ec ##. 1!%6 (e) 9nsure that the terms and conditions of the in*estments are not pre3udicial to the interest of the company. (f) 9nsure that :uoted and un:uoted in*estments are shown separately.

(2) /urther the in*estments be classified as underN

i ii iii i*

;o*ernment securities Shares! debenture or bonds in*estment in subsidiary co. Immo*able property In*estment in capital of partnership firm. showin2 separately

-. 9nsure that the in*estments ha*e been classified into EcurrentG & E1on* FermG and the same are *alued as per the AS#03. .. erify that the in*estment in Associates ha*e been *alued followin2 e:uity method & ha*e been disclosed separately. $AS#23% erify the in*estments in Point *enture. 9nsure that the *aluation & disclosure of the assets! liabilities & interest is in accordance with AS#2,.

01.

00. 9nsure that interest accrued on in*estments be shown under the head ECurrent AssetsG.

1/. ,eferred !sset21iability (a) (b) erify that there is no pecuniary loss on account of delayed deli*eries by the machinery suppliers. erify the terms and conditions of machinery purchased and ensure that all deferred payment liabilities are accounted for.

(c) 9nsure that accrued interest on deferred liabilities is properly calculated and accounted for. (d) erify that the Beferred ta7 asset has been created on the basis of con*incin2 e*idence & *irtual certainty of future ta7able income. It is to be ensured that the same is separately disclosed in ?alance SheetG. $AS#22% erify that the deferred ta7 asset@liability is ad3usted e*ery year on account of chan2e in the ta7 rate.

(e)

1$. Aiscellaneous E<penditure (a) "reliminary e7penses. Hhether amount for the year has been written off@not. Ensure the compliance (ith sec )$, of the &ncome Fa< !ct as (ell as !ccountin* "tandard #? ie accountin* for intan*ible assets. (b) Beferred 4e*enue 97penditure i ii iii State the policy of e7penses and basis of amortiLation in the notes to a@cs. Hhether amount written off durin2 the year or not. >o transfer amount from different heads to B. 4. 97p. A@c. >o disclose separately with detail. ;i*e note re2ardin2 e7penses in the notes to account.

3. "re#operati*e e7penses i ii

1?. Contin*ent 1iabilities and Capital Commitments

10

(a) 4e*iew debtor)s reconciliation for any claims by debtors! which are disputed by the company. >hey are to be shown! as claims a2ainst the company not acknowled2ed as debts. (b) 4e*iew list of ?ank 2uarantees outstandin2 at year#end. (c) 4e*iew list of ?ill discounted with ?anks and outstandin2 at year#end. (d) 5btain ?anker)s confirmation for ?;)s outstandin2 and ?ills discounted outstandin2 at year#end. (e) /or capital commitmentsN i. ii. iii. 4e*iew outstandin2 letters of credit for any AC)s a2ainst capital item purchases. 4e*iew list of ad*ances for any ad*ances a2ainst orders for capital item purchases. 5btain client)s confirmation for any other orders for capital item purchases! which are pendin2 as at year#end

+. 5btain a list of pendin2 le2al cases! which may ha*e contin2ent liabilities on the company. ,. ScrutiniLe details of Ae2al & "rofessional char2es and compare with list of pendin2 cases to ensure that there are no cases! which are not stated in the list of pendin2 le2al cases. -. erify the sales ta7 & income ta7 assessments and e7cise returns of the Company for any demands! which may be disputed! by the company.

.. Confirm contin2ent liability for e7cise duty. 13. Ensure contin*ent 1iabilities are properly disclosed in the Balance "heet as re+uired by the "chedule B& of the Companies !ct' 1-$?.

1.. @eneral points to be verified. (a) erify the >BS 4eturns filed with the I. >. Bepartment. $/orm# 3CB! Clause (2,)%.

(b) 9nsure that contributions to political party u@s 2.3A are not in e7cess of permissible limits. (c) I. II. III. I. II. (d) 5btain the :uantitati*e details of the followin2N In case of manufacturin2 company >he licensed capacity ( where license is in force ) >he installed capacity >he actual production /ollowin2 details to be obtain further 4aw material consumed ( ;i*in2 item wise breakup ) >he openin2 and closin2 stock of 2oods produced. erify whether the "@A A@c and ?alance sheet comply with the accountin2 standards referred to in sub#section (3C) of section 200. $Section 22,(3) (d)%. erify whether transactions of the company! which are represented merely by the book entries! are not pre3udicial to

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the interest of the company. $Section 22,(0A)(b)%. '. erify whether any asset in the form of shares! debentures and other securities ha*e been sold at a price less than at which they were purchased. $Section 22,(0A) (c)%.

+. In case of listed co. and the company ha*in2 paid#up capital e7ceedin2 4s. '1 lakhs as at the commencement of the financial year concerned! or ha*in2 a*era2e annual turno*er e7ceedin2 ' crore for a period of three consecuti*e /.Q immediately precedin2 the /.Q .concerned !whether the company has an internal audit system commensurate with its siLe and nature of its business. $CA45 6*ii8%. ,. Check whether any director is dis:ualified from bein2 appointed as director under clause (2) of sub. Section (0) of section 2,&.5btain Certificate from ,irectors that they are not dis+ualified u2s -. Hhether maintenance of cost records ha*e been prescribed by the Central ;o*ernment under section 21.(0)(d) of the Companies Act! 0.'+ (0 of 0.'+). Hhether such accounts and records ha*e been made and maintained. $CA45 6*iii8%. .. 9nsure that the accumulated losses at the end of financial year are less than '1< of its net worth and the co. has not incurred cash losses in /.Q. and in precedin2 /.Q. $CA45 678%. 01. 9nsure that the 2uarantee 2i*en by the Co. for loans taken by the others from the bank or financial institution! the term & condition thereof is not pre3udicial to the company. $CA45 67*8%. 00. In the case of finance! in*estment! chit fund! nidhi or mutual benefit company N i Hhether the net owned funds to deposit liability ratio is more than 0N21 as on last date of balance sheet. $CA45 67iii8(a)% Hhether the pro*isions of any special statute applicable to chit fund! nidhi or mutual benefit society ha*e been duly complied with. $CA45 67iii8%. If the company is dealin2 or tradin2 in shares! securities! debentures and other in*estments! whether proper records ha*e been maintained of the transactions and contracts and whether timely entries ha*e been made thereinK also whether the shares! securities! debentures and other in*estments ha*e been held by the company in its own name e7cept to the e7emption! if any! 2ranted under section &. of the Companies Act! 0.'+ (0 of 0.'+). $CA45 67i*8% Hhether the co. has complied with the prudential norms on income reco2nition and pro*isionin2 a2ainst substandard@default@loss assets $CA45 67iii8 (b)% whether the co. has ade:uate procedures for appraisal of credit proposals@re:uests! assessment of credit needs and repayment capacity of the borrowers.$CA4567iii8(c)% Hhether the repayment schedule of *arious loans 2ranted by the nidhi co. is based on the repayment capacity of the borrower & would be conducti*e to reco*ery of the loan amount. $CA45 67iii8 (d)%. Forei*n E<chan*e Earnin*s2E<penditure

ii

iii

i*

*i

17C!

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(a) 9nsure that proper records in respect of forei2n e7chan2e transactions has been maintained as N I. alue of imports made by the Co. durin2 the financial year in respect of a. 4aw materials b. Components and spare parts c. Capital ;oods 97penditure in forei2n currency on account of royalty! know how! professional and consultation fee! interest and other matters.

II.

(b) 9nsure that earnin2 in forei2n e7chan2e ( if any ) classified under the followin2 heads! namely a. 97port of 2oods b. 4oyalty! Rnow#how! "rofessional and Consultation fee. c. 5ther income (Indicatin2 the nature thereof )

(c) 9nsure that all the re:uirements of AS 00 has been complied with. (d) 17. "ales (a) erify whether there is ade:uate internal control procedure commensurate with the siLe of the company and the nature of its business! for the sale of 2oods and services. $CA45 6i*8%. 9nsure that the pro*ision of >BS has been complied with in respect with forei2n e7chan2e transactions.

2. Conth#wise sales (:ty wise! rate! *alue) and comparati*es with last year month#wise sales details. 3. 9nsure that the sales made to parties listed in the 4e2ister maintained u@s 310 of the Companies Act! 0.'+ ha*e been made at prices! which are reasonable at the rele*ant time (>his information is re:uired only in cases of transactions e7ceedin2 4s. 0 Aakh in respect of any party and in any one financial year). $CA456*8(b)% &. 4econcile :uantity wise sales as per Sales book with that of dispatches Re*ister maintained under the sales and e<cise act. '. 9nsure that Sales claims! rebates! incenti*es etc. are properly accounted for. +. 9nsure that cut off procedures for sales ha*e been ade:uately performed. ,. >o show each class of 2oods sold separately with their indi*idual :uantities in the notes to accounts. -. Hhether sales are inclusi*e of e7cise duty. .. Hhether treatment of C9F A> has been done properly. 01. Hhether e7cise on capital 2oods a*ailable for C9F A> has been accounted for in financial records. 00. Hhether closin2 balance of different e7cise records ha*e been reconciled. 02. Hhether sales return@2oods for replacement as per e7cise

13

records has been accounted for. 03. Hhether sales are e7clusi*e of sales ta7. 0&. Hhether sales as per led2er are reconciled with sales ta7 returns filed for the year. 0'. Is there any need to file re*ised sales ta7 returnS 0+. Hhether all statutory forms =C= form S>#l! S>#3'! has been recei*ed by the company a2ainst the current year sales. If not! whether any note has been 2i*en under the head =Contin2ent liability=.

1-. E<port "ales (a) Hhether e7port sales are accounted for in the books! as per the accountin2 policy of the company! which must be in compliance with the AS#.. (b) Hhether any uniform basis of e7chan2e rates has been consistently followed by the company. If any de*iations! please specify. (c) 9nsure that Co. has complied with 4?I ;uidelines i.e. filed form Softe7 in case of software companies and form ;4 in case of other companies. (d) Hhether e7port sales ha*e been realised within si7 months at the end of financial year. If not! please note the unrealised amount.

#3. 5ther &ncome (a) 9nsure that ade:uate records for sale and disposal of realiLable scrap are bein2 maintained. 2. 4econcile total scrap sales with the scrap 2enerated. 3. 4econcile interest recei*ed with the loans and ad*ances! in*estments and with /B4 Certificates. &. 9nsure that income from in*estment has distin2uished as income from >rade In*estment and Fon#>rade In*estment. '. 4e*iew the statement of unpaid liabilities and re*iew the list of those no lon2er re:uired. +. 9nsure that only the insurance claims accepted by the insurance companies are accounted for. ,. Hhether profit@loss on sale of assets ha*e been properly accounted for. -. Hhether any other income has been accounted for on accrual basis or any other basis re2ularly employed by the company. .. Interest 4ecei*ed from "arties 01. Sale of Ad*ance! Aicenses etc. $?asis of bookin2 this entry! also calculate profit & loss on sale of ad*ance licenses%

#1. Purchase

14

(a) 9nsure that all materials included in stock ha*e been recorded as purchases. (b) 9nsure that 2oods returned has been ad3usted properly and e7cluded from stock. (c) Catch the ;oods receipt note with the ordered :uality and :uantity. (d) 9nsure that forward purchase contracts that are outstandin2 at the year#end are properly accounted for. (e) 9nsure that the purchase of finished 2oods is separately disclosed and is not clubbed with the purchase of raw materials (f) 9nsure that the purchases made from the parties listed in the 4e2ister maintained u@s 310 of the Companies Act! 0.'+ ha*e been made at prices that are reasonable. $CA45 6*8 (b)%. (2) 9nsure that properly e7ecuted purchase orders are placed for all purchases. (h) 9nsure that all the purchase orders are properly authorised (i) 9nsure that Credit Fotes in respect of all returns! shorta2es and re3ections are recei*ed. (3) 9nsure that rate difference (if any) is properly accounted for.

##. Cost of Ra( Aaterials consumed (a) "eruse throu2h the stores led2er for any unusual fluctuations in purchase price of ma3or raw materials and en:uire into the same! if any discrepancy is found in the store led2er. (b) Compare actual consumption of 4C consumption for any unusual *ariance. with Standard

(c) 9nsure that indi*idual items of 4CC! which account for more than 01< of the total *alue of 4CC#Consumption! are fairly stated and separately disclosed. (d) (e) erify break up of consumption 4CC into imported and indi2enous. erify that 4CC does not include cost of materials sold.

#). "tores' spares and tools consumed. (a) 9nsure that stocks and spares are bifurcated into imported and indi2enous items. (b) "erform ratio analysis under ma3or subheads of stores and spare tools consumed.

#/. Po(er & Fuel E<penses (a) "erform analytical re*iew and reconcile the total to the final accounts. (b) 4e*iew the power bills for any additional demands raised by the electricity board and disputed by the company. (c) 9nsure that Security paid (if any) for 9lectricity! ad*ance payment etc. has been properly accounted. (d) erify that fuel ad3ustment char2es re*ised with retrospecti*e

15

effect (e) ! if any! ha*e been properly accounted for #$. 5ther Aanufacturin* & Aaintenance E<penses (a) 9nsure that e7penses are disclosin2 in " & A as per Schedule I re:uirements. (b) 4e*iew details of followin2 e7pensesN i. ii. "rocessin2 Char2es 4epairs & Caintenance and compare with last yearOs details. 9n:uire for any abnormal *ariations. 9nsure that no capital items ha*e been char2ed to e7penses.

#?. !dministrative' sellin*' distribution and other e<penses (a) 9nsure that e7penses are shown in "rofit & Aoss A@c as per the re:uirements of Schedule I of the Companies Act! 0.'+. (b) 9nsure that any e7penses! which are more than 0 < of the total turno*er or 4s. '111 whiche*er is hi2her! are shown separately in the "&A A@c and not clubbed with the miscellaneous e7penses. (c) 9nsure that Commission paid to sole sellin2 a2ent is accordin2 to the a2reement entered in this behalf. (d) erify that no personal e7penses been char2ed in the accounts. $Section 22,(0A) (e)%.

(e) 9nsure all e7penses relatin2 to intan2ible assets upto the sta2e of research & de*elopment ha*e been written off in accordance of AS#2+.

#.. Payments to and Provision for employees (a) 4e*iew 02 months payroll e7penses (Conthwise). (b) 9nsure that statutory deductions ha*e been made for "/! 9SI etc. and the Company has also contributed its share for such dues and deposited with appropriate authorities well in time. (c) 9nsure that separate disclosure is made for e7pense on account of contribution to "/! 9SI & such other funds. (d) 9nsure that pro*isions for bonus ha*e been made in accordance with the pro*ision of the payment of ?onus Act! 0.+'. (e) 9nsure that 2ratuity liability has been pro*ided on the basis of actuarial *aluation or per companyOs policy. $AS#0'%. (f) Aea*e encashment benefits and other retirement benefits should be in accordance with AS#0'.

#7. "ervice Fa<

(a) 97amine whether the Co. is re:uired to collect the Ser*ice >a7
or not.4 &f a**re*ate value of ta<able services provided durin* the preceedin* financial year 3/C3$ on(ards% is upto Rs. / 1akh then e<emption is there from the payment of

16

service ta<.%

(b) 9nsure that Co. has collect the Ser*ice >a7 J 01< on the 2ross (c) (d) (e)
amount char2ed to the client plus 2< 9ducation Cess.w.e.f 20.1..1&. 9nsure that the ta7 has been paid e*ery month@:uarter as the case may be . 9nsure that 4eturn of Ser*ice >a7 has been filed on or before due date. erify that the ser*ice ta7 credit has been taken accordin2 to the Ser*ice >a7 Credit 4ules #33/. pro*ision in this re2ard has been made.

(f) Check whether there is any disputed amount! if yes! proper (2) 9nsure that Assessment 5rder has been recei*ed if Assessment
has been made.

#-. Cenvat (a) (b) (c) erify Cenvat Return for any undisclosed liabilities@ demands by 97cise authorities. erify e7cise duty deposits with FRC? challans for ' items. erify e7cise 2ate passes for e7port sales to ensure that no duty is paid on such sales.

(d) "erform Corroborati*e Analytical 4e*iew "rocedure for total e7cise duty e7pense.4econcile total e7pense with final accounts. (e) 4e*iew e7cise duty reconciliation for any si2nificant differences in amounts debited in the accounts and that actually paid. (f) erify R@ #)CPart && and P1! re2isters and confirm that the balances in these at the year end ha*e been transferred to the balance sheet.

(2) In case of concerns where C4" based e7cise is applicable ad3ustment of profit should be made as per sec 0&'A of the I> Act.

)3. &nterest & Financial Char*es (a) 9nsure that interest and bank char2es are properly classified. 2. erify interest payments with Schedule of payment. 3. 9nsure that interest on debentures and other fi7ed loan should be stated separately. &. 9nsure that ta7 has been deducted at source where*er re:uired at the time of payment of interest. '. 4e*iew e7pense details to identify any e7pense to be capitaliLed. +. erify loan a2reements & subse:uent correspondence for ade:uacy of interest rates.

,. 9nsure classification of interest e7penses into =term loans= and =others=! statin2 separately! in case of >erm Aoans@Bebentures! the amount of interest! if any! paid or

17

payable to the Cana2in2 Birector and the mana2er if any. $Schedule# I! "art#II! 3(*)%. -. 4e*iew correspondence file with bank and financial institutions for any chan2e in interest rates with retrospecti*e effect.

)1. @eneral Hotes for E<penses (a) Hhether e7penses are in conformity with the ratios as compared with the last year. If there are si2nificant *ariations! whether you ha*e analyLed the reasons for such *ariations and pen do(n the reasons of variations. (b) Hhether the e7penses! which are re:uired to be shown separately as per "art II of Schedule I! are shown as such. (c) Hhether transactions with other concerns! firms@companies in which directors are interested ha*e been made at competiti*e rates. (d) "rior "eriod@97traordinary items to be shown separately. $AS# '%. (e) Hhether any personal e7penses debited to " & A A@c. $Section 22,#0A (e)%. (f) i Ii Iii >o obtain the list of e7penses as per format 2i*en in Income >a7 4ules re2ardin2. See &1(A)(2)(b)#"ayment made to specified persons 4ule +BB#97ception of cash payment in e7cess of 4s. 21!111. Birectors 4emuneration and e7penses incidental to that. ,. Hhether mana2erial remuneration in accordance with the pro*ision of Section 0.-! 3'1 & Schedule IIII of the Companies Act. -. 4e*iew ta7 pro*ision! if any! as per the pro*isions of the Income ta7 Act! 0.+0. .. 9nsure all related party transaction ha*e been entered in the certificate pro*ided by the mana2ement & control o*er the related party transactions is proper.$AS#0-% 01. >BS M e*ery assessee deductin2 ta7 has to submit :uarterly statement 0'th of the month followin2 the :uarter and yearly return. 00. Annual Information 4eturn. 02. Income from other sources M As per Section '+(0)(i*) any 2ift in cash e7ceedin2 4s. 2'111@# to any person shall be char2eable to >a7 sub3ect to e7ception. 03. 9nsure >BS has been deducted on e*ery work contract in case indi*idually it e7ceeds 4s. 21111@# or 4s. '1111@# in a22re2ate durin2 the financial year. 0&. 9nsure >BS has been deducted from the payments made for Interest! ?rokera2e! technical ser*ices! professional ser*ices! contractors@ subcontractors. In case >BS has not been deducted same payments shall not be allowed u@s &1(a)(ia) of Income >a7 Act. 0'. ?5B resolution for any donation e7ceedin2 4s. '1111 or '<

18

of a*era2e net profit durin2 last 3 financial years whiche*er is 2reater under section 2.3 of Companies Act 0.'+. 0+. 9nsure Cen*at credit has been taken ade:uately in respect of Ser*ice >a7 & 97cise Buty. )#. Fa< !udit (a) 5btain a certificate from the assessee to the effect that! where*er applicable ! ta7 has been deducted at source on the payments co*ered under items fallin2 within pur*iew of sec &1(a). (b) 5btain certified list of persons specified in section &1A(2) (b). (c) Fote down all the prior period items! i.e. e7penses of last year debited in the current year. (d) Fote "ayment made to clubs on account of N# # membership and subscription # entertainment e7penditure )).R5C (a) (b) Check whether the minute book containin2 the Birectors and Shareholders meetin2 is updated or not. Check whether appropriate form for appointment of Birector@Cana2in2 Birector! allotment of shares !chan2e in the authorised and paid up capital !chan2e in the name of the company or its re2istered office or other chan2es which re:uire reportin2 to the 45C has been properly filed with the 45C. Check whether the last year annual return has been timely filed or not. >ake a copy of the compliance Certificate from the Company Secretary in case of companies ha*in2 paid up share capital more than 4s. 01 Aakh.$Section 3-3A pro*iso of the Companies Act!0.'+% Check in case of companies ha*in2 paid up share capital 4s. 2 crore or more whether the whole time company secretary has been appointed or not as per the pro*isions of Sec 3-3A of the Companies Act! 0.'+.

(c) (d)

(e)

(Signature)

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