Internal Audit Report Format

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28th April, 2013
The Chairman,
Audit Committee of the Board of Directors,
M/s Rocket Sales Corporation Ltd.,
Nirmal Building ”, 12th Floor
54/4 Nariman Point
Mumbai -458 545.

Dear Sir,

We have conducted the Internal Audit of the company for the period from September, 2012 to February, 2012. Subject to observations in our reports dated 9th March, 2013 & 11th March, 2013 we have to report as under :

1.    The areas covered during the period were as per schedule of period coverage attached to our Reports dated 9th March, 2013 & 11th March, 2013.

2.    The Internal Control system and the procedures followed were, adequate except as stated in our reports and summary of important points.

3. There were no significant material non-compliance or departure from the applicable procedure and systems.

4. Our other observations, not being significant or material, were satisfactorily resolved by the management and or corrective steps are being taken.

5. The Summary of Important Points together with replies of the management is enclosed, marked as Annexure “1”. In our opinion these points except the matters referred to under Para’s 1 to 3 (Mumbai Office) and Para’s 6 & 7 (Factory) may not have material effect on Company’s financial results, to the extent provisions have not been made.

6. The areas proposed to be covered during the next audit period will be more or less as per period coverage attached to our Reports dated 9th March, 2013 & 11th March, 2013.

7. On the basis of test checks, carried out and as confirmed by Mr Anil Kapoor, President, in our opinion, the Management has on behalf of the Board taken due care to comply with the Provisions of Sec. 217 (2AA) of the Companies Act, 1956, so far as it is applicable during the above period.

Thanking you,

Yours faithfully,

For ABC & CO.





Sundry Debtors of Rs.---- Lacs brought forward from earlier years were outstanding as on 31.12.12, (partly unprovided) (Annexure A-1 and A-2)

These debtors are realizable and negotiations are going on with the parties.
Statutory demands (pending in Appeals) (unprovided) :
-    Sales Tax Rs.----- Lacs
-    Excise matter Rs.------ Lacs
-    Motor Vehicle Case Rs.---- Lacs

All these statutory dues & demand are reflected in Contingent Liabilities in Notes to Accounts to the Balance Sheet

Sales Tax Declaration Forms for Rs.----- Lacs in respect of accounting year 2010-11, 2011-12 and 2012-13 were pending receipt as on 30.11.12.

Bill value of
Pending Forms as on 27.04.13
C-Form (Rs/Lacs)
F-Form (Rs/lacs)
For 2010-11


Attention is drawn to report of Production Department vide Pages D-1 and D-3 regarding variances in actual consumption (as compared to standard norms) in respect of materials (referred to therein) issued for consumption during the period from September, 2012 to November, 2012. The aggregate of loss on this account during the period from September, 2012 to November, 2012 was Rs. ---- Lacs (Rs.---- Lacs during April, 2012 to July, 2012) (Para 8 in page D-2). In this connection, it may please be considered as to whether the norms need to be reviewed or these are chances of achieving the norms. The matter needs early decision.

Regular monitoring of standard norms is being conducted.
Special Discount, Additional Discount and Discount for quality complaints of Rs. ---- Lacs from September, 2012 to December, 2012 and Rs. ---- Lacs from September, 2012 to December, 2012 were allowed to parties, on the basis of credit note approved by President  (Finance). The back up papers for such allowance were not available for checking. The same were debited to sales account instead of under respective head.  

The accounting policy in this regard may please be reviewed taking into consideration the disclosures required to be made      under the Companies Act, 1956 and as per Accounting Standards and guidelines issued by ICAI.

Details of Credit Notes issued along with back up papers are available at respective branches.

Accounting policies regarding the issue of Credit Note is mentioned in Pt. No.9 in the Accounting Policies of the Company and there has been no change in any accounting policies compared to earlier years,
Expenses of Rs.---- Lacs incurred till 30.11.12 on Mining and taken on lease from Government but no Mining being done due to pending disputes etc. The advice of Lawyer in this regard may be obtained further actions, if any.

Cases are pending with various authorities
As reported also earlier Labour supplied by labour contractors, were in most of the cases lesser than the number of labour requisitioned by concerned departments. On enquiry, no satisfactory explanations could be received as to whether or not production / work suffered due to such lesser supplies of labour from time to time it may please also be noted that Rs.--- Lacs approximately were paid for overtime hours during the period of three months from September,2012 to November,2013 but such overtime hours could not be linked by us to such short supply of labour, as aforesaid, in absence of necessary records and or statements in this regard.

Management is regularly monitoring the same and steps are being taken to rectify the same wherever practically possible.
As per practice deductions are being made for wages in respect of hours for which the workers go out of factory for personal reasons, only on the basis of basic salary and not on their gross earnings. It was noted that workers go out even for more than 4 hours. The policy in this regard may be reviewed.

Management is regularly monitoring the same and steps are being taken to rectify the same wherever practically possible.
Arrears of Electricity Demands (Disputed) of Rs.---- Lacs pending as on 30.11.12. The advice of lawyer in this regard may be obtained for further action, if any.

Case is pending in High Court.
Insurance Claims of Rs. -- Lacs relating to period from 31.03.2008 to 31.03.2012 were pending realization as on 30.11.2012.

Opening balance as on 31.03.12 is Rs. ---- lacs. Realised Rs. ---- lacs upto 31.03.2013 and balance unrealizable, so written off.


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