XYZ Pvt Ltd

Internal Audit Program

Financial Year: 2008-09
XYZ Pvt Ltd
Internal Audit Manual
Financial Year: 2008-09
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Purchase & Procurement
Business Area Internal Control Objective Audit Program for test of control
Purchase & Procurement All purchases are authorised
and valid.
Check that all purchases orders raised are
against approved Indent For Procurement (IFP).
Check that approval as per Chart of Authority is
taken before formally issuing a PO to the vendor.
Check that regular reconciliation of open
purchase order and actual receipt is done
All PO raised are in the interest
of the company.
Check that more than one quotations are taken
from vendors and the same are techno-
commercially evaluated.
Check that where more than one quotation is not
available, note for reason for single quotation
has been provided and approved.
Vendor performance is as per
expectation of the company.
Check that vendor evaluation is done at a
regular interval.
(Note: Vendor Evaluation parameters shall be
developed in due course)
Amount posted to Accounts
Payable & Purchase account
account represents goods
actually received.
Check vendor liability is booked only when PO,
GRN and Vendor invoice are received.
Map procedures for vendor returns. Ensure that
returns are communicated to the purchasing
department and debit memos are prepared and
forwarded to accounts payable in a timely
manner.
Check that all adjustments related to Accounts
Payable are approved.
All purchases are recorded in
the accounting system and in
the appropriate period.
Check that statements and invoices from
suppliers are reconciled in the vendors account
regularly and the differences are investigated.
Supplier invoices and GRN before, or after the
end of an accounting period are scrutinized
and/or reconciled to ensure complete and
consistent recording in the appropriate period.
All payment for purchases are
made only for goods actually
received.
Check that all supporting documents are
reviewed before approval for payment is
made.Also check that vendor payment is
approved as per the chart of authority
Check that all vendor invoices are marked in
such a manner that they cannot be submitted for
payment for second time.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Other expense
Business Area Internal Control Objective Audit Program for test of control
Other expenses
All other expenses incurred are
authorised.
All other expenses incurred are
approved as per the Chart Of Authority.
All other expenses incurred are
recorded accurately
All other expenses are reconciled with
supporting details and difference if any is
resolved.
Expenses are only made for goods
or services received or valid
expenses incurred
Management reviews supporting
documentation before approving
payments. Supporting documentation is
marked once payment is made to
prevent duplicate payment.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Inventory Control
Business Area Internal Control Objective Audit Program for test of control
Inventory Control
All inventory procured are
only against approved
indent for procurement.
Check that all goods received are against a valid
purchase order (which has been approved as per
the Chart Of Authority)
All goods received are as
per the conditions of the
purchase contract.
Ensure all receipts are checked for quality and
quantity; Check that all material received are
verified by actual weight
Check that procedure is in place to record excess
receipt and to inform the same to the purchasing
dept.
Check materials received but not tested are
separately kept and marked until test certificate is
received.
Check that cement lot received is not more than 90
days old
Defective raw material are
returned to the supplier.
Rejected raw materials are adequately segregated
from other raw materials and regularly monitored to
ensure timely return to suppliers.
Defective raw materials received from suppliers
are logged; the log is monitored to ensure that the
defective goods are returned promptly and that
credit is received timely.
All goods received are
recorded accurately.
Ensure all receipts are accurately, promptly
recorded in inventory records
Check whether there is any break in the sequence
of GRN numbers. Any gap in the sequence are
investigated.
All issue of raw materials to
the contractor are approved
by RDPL.
Check that all issue of raw materials to the
contractor are against 'indent for material
issue'(IMI). Check also that the IMI are approved
by the RDPL appropriate authority (Land Parcel
Construction Manager)
All transfer of materials
between Land Parcels are
approved by RDPL
Check that transfer of material to projects are only
against indent approved by RDPL.
Check all transfer of raw materials are documented
Inventory are under proper
custody and free from
frauds and error
Physically verify inventories at regular interval at
sites.
Security personnel monitor all incoming and
outgoing vehicles and ensure all goods leaving the
premises are accompanied by duly completed
documentation (e.g., delivery note or goods
returned note).
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Contractor Management
Business Area Internal Control Objective Audit Program for test of control
Contractor Management
All contracts agreements/Work
order issued are authorised.
Check that contracts entered into or work order issued
to the contractor are within the authorisation limits as
per the chart of authority.
All work orders/contract
agreement entered into are in
the interest of the company
Check that more than one quotations are taken from
contractors and the same are techno-commercially
evaluated.
Check that where more than one quotation is not
available, note for reason for single quotation has
been provided and approved.
Contract conditions are
complied with
Check that the contractor has executed and submitted
Corporate guarantee before the commencement of
any portion (package) of the work. (Only for cases
where such clause exists as per work order or
agreement)
Check that guarantee is kept valid upto the
completion of the work. (Only for cases where such
clause exists as per work order or agreement)
Check that the contractor has taken insurance and
submitted necessary documents as per the terms of
contract.(Only for cases where such clause exists as
per work order or agreement)
Check that certified (by both contractor and RDPL)
measurement sheet are attached with R.A bill. Also
check that R.A bills are attached with supportings as
mentioned in the contract.
Check that monthly statutory compliance declaration
and certified stock reconciliation statement are
attached with the R.A bill. Check that the stock
reconciliation statement are properly calculated. (Only
for cases where such clause exists as per work order
or agreement).
Check that retention money is held correctly as per
the terms of contract.Also check that R.A bill has been
calculated as per terms of the contract. (Only for
cases where such clause exists as per work order or
agreement)
Check that the retention money is not returned to the
contractor before the completion of the Defects
Liability period. (Only for cases where such clause
exists as per work order or agreement)
Check that contractor payment is authorised as per
the chart of authority before payment.
Check that arithmetical accuracy of the R.A bill is
checked before payment
Check raw material consumption pattern as per BOQ.
Any significant deviation is analysed and approved by
the company. Also check that stock reconciliation
statement is submitted monthly with every R.A bill and
is approved by the company.
Check that the contractor maintains a Quality Manual
for the project. Also check the measures and reports
submitted by the contractor for Quality assurance.
(Only for cases where such clause exists as per work
order or agreement)
Check that the contractor maintains a Site Safety
Manual for the project. Also check the measures and
reports submitted by the contractor for Quality
assuance.(Only for cases where such clause exists
as per work order or agreement)
Change orders are authorised.
Check all change order requests are reviewed and
approved by RDPL.
Check that change order log is maintained by the
company.
Check that all change order requests are assessed for
possible impact (to project cost and functionality)
before approval. Check that explanations,documented
cost,schedule and technical support are attached with
Change Order proposal.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Marketing
Business Area Internal Control Objective Audit Program for test of control
Marketing (Allotment of flat)
Allotment of flat is only against application
money as per the General Terms &
Conditions
Check that no apartments/villas
are allotted without application
money
Interest is deducted as per General Terms
& Conditions on withdrawal of application.
Check that 10% of service charge
is deducted before refund to the
allottee after withdrawal of
application/allotment.
Payment from allottes are received timely
Check that payment from allottes
are received as per the approved
payment schedule.
Rebate on price to allottee are as per the
General Terms & Conditions (GTC)
Check that rebate to allottee is
given when the allottee pays the
entire price within 30 days of the
Allotment letter
Rebate is allowed at an approved rate
Check that rebate is allowed to the
allottee at the approved rate
applicable in force at that point of
time
Registration of allotted flat/villa is executed
only after allottee's fulfilment of obligation
The apartment/villa shall be
executed in favour of the allottee
only after the total price, together
with all other dues and deposit etc.
are received by the company
Marketing (Expenses)
All marketing expenses are approved
Check that all marketing expenses
are approved as per the chart of
authority
All marketing expenses are recorded
accurately in the accounting system
All marketing expenses are
supported with approved
supporting documents
Track all the marketing expenses
to the general ledger.
Commission paid to Channel partners
selling of flat is as per the policy of the
company
Check that commission paid to
channel partners are approved by
appropriate authority
Check that commission is paid to
the channel partners as per
agreement entered with them
Commission paid to Channel partners are
calculated properly
Check that commission is
calculated as per the policy and
agreement entered into with the
Channel Partner. Also check that
commission is adjusted properly as
and when any deal is cancelled.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Fixed Asset
Business Area Internal Control Objective Audit Program for test of control
Fixed Asset
All Fixed Asset acquisition are
approved
Check that approval as per the
Chart Of Authority is taken prior to
the acquisition of Fixed Asset.
Compare recorded changes to the
fixed asset register/ Fixed Asset
account to authorized source
documents.
All Fixed asset acquired are properly
recorded in the correct period.
Reconcile asset acquisition
supporting details with entries in the
Fixed Asset Register.
Depreciation charges are accurately
calculated and recorded.
Check that depreciation charges are
calculated as per generally accepted
accounting standard and at the
prescribed rate.
All disposal of fixed assets are
approved
Check that approval as per the
Chart Of Authority is taken prior to
disposal of fixed asset.
Compare recorded changes to the
fixed asset register/ Fixed Asset
account to authorized source
documents.
All disposal of fixed assets are
accurately recorded.
Review calculation of profit or loss
for disposal of fixed asset. Also
scrutinize the supporting
documentation and the journal entry
passed in this regard
All fixed assets are safeguarded
Physically verify the fixed assets of
the company including at site.
Check whether system exists
wherein security personnel whether
all goods leaving the premises are
accompanied by duly completed
documents like Goods Returned
Note, delivery note etc.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Treasury
Business Area Internal Control Objective Audit Program for test of control
Treasury
All investments or disinvestments
made are approved
Check that all investments and
disinvestments are approved by the
investment committee decided by the
Board.
All investments or disinvestments
are accurately recorded in the
accounting system.
Check all investments and disinvestments
ledger accounts with corresponding
supporting documents. Reconcile any
difference.
All borrowing decisions made are
approved.
Check that all borrowing decisions are
approved by the management/ Board
All borrowings are accurately
recorded in the accounting system.
Check all borrowing ledger accounts with
corresponding bank statement/supporting
documents. Reconcile any difference.
Review loan repayments to ensure all
repayments are recorded correctly
Loan repayments are as per Loan
agreement
Check that loan repayment requests are as
per the loan agreement.
Interest are properly calculated
and recorded in the accounting
system
Review all interest expenses and interest
income to ensure all interest are recorded
correctly in the accounting system.
Check that interest is reconciled to the bank
statement and difference if any is acted
upon.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Cash & Bank
Business Area Internal Control Objective Audit Program for test of control
Cash & Bank
All bank & Cash transactions are
authorised
All Bank and cash transactions
are authorised.( Authorisation as
per the Chart Of Authority
wherever applicable).
All bank transactions are
recorded accurately and in the
correct accounting period
Check that bank transactions are
recorded immediately in the
Accounting system.
Check bank reconciliations are
prepared monthly and any long
outstanding items are taken care
of immediately.
Verify accuracy of the Bank
reconciliation prepared
Inspect postings of bank
transactions to the general ledger
accounts
All cash & bank transactions are
made against proper
supportings
Check that all cash & bank
transactions are made only
against duly approved bills and
documents.
Control exists over custody of
cheque book.
Check that cheque books are
lying only with the person
assigned with this responsibility.
Review the sequence of cheque
numbers and enquire into
missing numbers
Cash is safeguarded
Surprise physical verification of
cash is carried out.
Petty Cash at Site
Petty cash at site conforms with
company policy.
Check that no single expenditure
of more than Rs 15000 is made
from the petty cash at site.
Check all the expenditure above
5000 are pre-approved by
Sr.Vice President - Projects.
Check all expenses are approved
by the Site-in-Charge and have
post facto authorisation of
Sr.Vice President-Projects.
Cash at site is safe guarded
Insurance with respect to cash in
transit and cash at site is taken.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Project Cost & Schedule Management
Business Area Internal Control Objective Audit Program for test of control
Project Cost Management
Project cost is managed to ensure
total project cost is within
budgeted cost.
Review the reporting to management of
actual cost related to the project.
Check that actual cost is compared with
budgeted cost at regular interval.
Reasons for variance also analysed on
a regular basis.
Check that any significant revisions to
the budget are approved
Check that status of project completion
are compared with budgeted and actual
cost.
Construction Schedule
Management
Construction schedule is managed
to ensure completion of project on
time.
Actual construction activities are
regularly reviewed with the scheduled
activity. Delay in work schedule are
regularly analysed.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Chart Of Authority
Business Area Internal Control Objective Audit Program for test of control
Chart Of Authority
Check that transactions are
authorised as per the Chart Of
Authority
Check that approval as per the chart of
authority has been taken for:
a) Placement of construction contract
b) Placement of supply contract
c) Issue of Purchase orders & Work Orders
d) Issue of orders for Projects
e) Purchase of Hardware/Software or Rental
of Hardware/Software
f) Rental of Fixed Assets
g) Approval for disposal of fixed assets
h) Orders for Printing & Stationery
i) Repairs & Maintenance of company vehicles
j) Accept/Reject materials and approve
payments
k) Approval of Gate pass
l) Approval of payments, receipts,write offs,
Losses & Misc, Bank & Cash Transactions
m) Travelling & Conveyance
n) Other Contracts
o) Gifts & Subscription
p) Cost allocations
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for IT Systems
Business Area Internal Control Objective Audit Program for test of control
IT Systems
All information resources are
subject to appropriate physical and
logical security.
The identity of users (both local and
remote) is authenticated to the
system through passwords or other
authentication mechanisms. The use
of passwords should incorporate
policies on periodic change,
confidentiality and password format
(e.g. password length)
Physical access to computer
equipment is monitored and
restricted to individuals who require
such access to perform their job
responsibilities. Management
approval is required before access is
granted.
Data is retained to enable retrieval
as and when required
Check that all critical system files are
backed up in a timely manner.
XYZ Pvt Ltd
Financial Year: 2008-09
Audit Program for Statutory Compliance
Business Area Internal Control Objective Audit Program for test of control
Statutory Compliances
The company has complied with all
statutory compliances
Check that the Statutory obligations
are complied with in the following
areas:
a) Income Tax
b) Works Contract Tax
c) Service Tax
d) Profession Tax
e) Any Other project related statutory
compliance
Check that the contractors statutory
obligations (For e.g.; PF & ESI of it's
labours) are met.