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Annexure - I
GUIDELINES TO THE INTERNAL AUDITORS
To check the following items specifically in addition to your existing audit programme and to include your comments and confirmations item-wise, as the case may be, against each of the following in Internal Audit Report for April 2013 to September 2013 :-
1. To check that accounting standards as prescribed to be mandatory, are being followed. Variation, if any, need be reported as well as to be explained at unit level.
2. Finance Department :
a) Whether loans (Long Term & Short Term) taken at competitive interest rates given the market scenario and tenure of the loan.
b) Proper utilization of availability funds in credit limits of the company or funds remaining idle at any point of time, cite the same.
c) Whether various bank charges borne are correct and competitive given the market scenario.
d) Scrutiny of bank reconciliations and their outstanding items and any comment thereon, if any.
e) Compliance of RBI guidelines, other banking norms and legal provisions for borrowing and utilizations thereof.
3. Tax Department :
a) Whether proper TDS on various payments have been deducted and charging of Service Tax is appropriate.
b) Whether timely deposit of TDS & Service Tax have been made.
c) Whether timely and appropriate Advance Tax payment made under Income Tax and Wealth Tax Act.
d) Whether there is any violation of Income Tax provisions while making cash payments of expenses.
e) Whether proper accounting of expenses have been made to have appropriate Income Tax & payments thereof.
f) Whether timely filing Tax Return has taken place.
g) The amount of Short/Excess Tax Deducted at Source with name of the parties, if any.
h) Whether all the TDS certificates of the amount deducted have been received. If pending, then year-wise detail with amount be given.
i) Proper valuation of perquisites of senior staff members for the purpose of TDS has been made as per the changed guidelines w.e.f. 01.04.2013.
j) Whether full credit of the Service Tax paid is taken. If not, the amount outstanding month-wise to be given.
k) Year upto which assessment has been completed. Whether payment of interest and penalty is there, if any, on the Income Tax, Wealth Tax, FBT and Service Tax etc., the details be given.
l) Any demand pending under fiscal laws, if any, which stand(s) outstanding and if so details thereof.
m) Whether any Show Cause Notice has been received. In case the answer is in affirmative, the details thereof.
4. Share Department :
a) Time taken for registration of transfer of shares – few examples.
b) Nature and time taken for redressal of complaints from shareholders - few examples.
c) Whether the payment of dividends to shareholders or interest to Debenture holders made within the time as per Companies Act, 1956.
d) Time taken for depositing unpaid dividend amount u/s 205C(1) and violation if any, of the provisions of the Companies Act, 1956 and rules/circulars as in place.
e) Comments on committees’ minutes of Share Transfer and Finance Committee & Share/Investors Grievance Committee etc.
f) Comments on various Returns filed by Share Department like Annual Return and periodical Returns filed with Stock Exchanges.
g) The number of undelivered dividend warrants issued.
h) Compliance of Clause 49 of the Listing Agreements of the Stock Exchanges.
i) Share holding pattern Return filed in time.
ii) Corporate Governance Return filed in time.
5. Secretarial Department :
a) Comments on secretarial work i.e. minutes of Board of Directors, Shareholders and their various Committees (their upto-date position and procedure as well as comments on various returns filed).
b) Whether compliance of Code of Conduct for Directors and Senior Executives and the Insider Trading Code of the Company complied with, any violation if any be cited.
- Others :
a) The current status of the observations in the last / previous Audit Report(s) pertaining to the H.O.
b) Old fixed assets & spare part items were written off subject to the following :
i) Complete separate record to be maintained.
ii) If any item is consumed, the same will be duly accounted for.
c) Physical verification of Fixed Assets as on the reporting date of your report in the phased manner as per Audit Plan.
d) Whether Bank Balances (at the end of every month) are as per Bank statements of all the Bank Accounts maintained by the Corporate Office under your reporting period.
e) Cash/Bank vouching :
i) All Cash Vouchers above Rs.2500/- should be checked for whole year.
ii) Voucher without proper supporting or not properly passed should be included in your report.
iii) Cash payments to a particular party every time should be remarked as well as any cash payment above Rs.20,000/-.
iv) Checking of Bank vouching should also include whether only crossed cheques are issued or not. This can be verified with reference to Bank Statements.
f) Journal vouching :
i) 100% journal vouching should be done.
ii) All adjustment entries should be properly justified alongwith supportings are any doubtful entry should be brought to our notice.
g) Purchase :
i) All purchases done at local level should be properly checked. There should be proper quotations and written purchase orders. Any irregularity should be remarked.
ii) Any goods purchased which are already in stock in enough quantity or any goods purchased which has not been used since long time should be remarked separately.
iii) Big variation in rates between two purchases should be properly examined.
iv) Stock of items purchased locally should be checked and a list of such items be sent with the report – showing date of purchase.
h) Stores :
i) A separate list should be given for non/slow moving items alongwith date of purchase, condition of material, etc.
ii) Stores consumption should be properly examined to check whether it has been booked under proper head. All requisition slips should be properly authorized.
iii) All directly booked items should be thoroughly checked and any doubtful purchase should be remarked.
i) Wages :
i) Atleast 8 weeks (or 2 months) wages should be checked for all workers thoroughly.
ii) Wages payment should be checked personally for atleast one day and if you feel any suspicion, you should extend your checking accordingly.
iii) After allotment of work for a particular day, you shall physically verify in the field whether all allotted workers are there or not.
j) P.F. & ESI :
The payment position of contribution and collection on account of loan refund and interest thereon need be checked in detail and the statement be furnished in report showing the date of collection, amount collected on account of employer’s and employees’ contribution, loan repayment and interest thereon, due date of payment and actual date of payment.
k) Excise & Modvat/Cenat :
Through checking of excise accounting need be made. Whether proper method of accounting has been adopted or not and also that Modvat/Cenvat has been availed in respect of all the admissible inputs. If not, details of such items, showing the excise duty impact should be furnished.
Annexure-II
GUIDELINES TO THE INTERNAL AUDITORS
Please check the following items specifically in addition to your existing audit programme and include your comments/confirmations item-wise against each of the following in your Internal Audit Report for April 2013 to September 2013 :-
1) Items for comments:
a) Sales Tax / VAT Return : (where registration is in the name of the unit)
i) That the above have been properly charged and deposited in time
ii) Necessary returns have been filed in time.
iii) Year upto which assessment has been completed
iv) Demand if any, which is outstanding and is so details thereof.
v) Whether any Show Cause Notice has been received. In case the answer is in affirmative, the details thereof.
b) Service Tax (where registration is in the name of the unit)
i) That Service Tax on Goods Transport Agency has been properly charged and deposited in time.
ii) Necessary returns have been filed in time.
iii) Whether any assessment for the above has been made? If yes, then upto which year assessment has been completed?
iv) Demand if any, which is outstanding and if so details thereof.
v) Whether any Show Cause Notice has been received. If yes, details thereof.
vi) Whether credit has been taken for eligible Service Tax payments or not? If not, details thereof.
Depositing centers and the total of the Depots under it should be cross-checked for proper and timely deposit of the statutory liability.
c) A depot-wise list of total outstanding debtors for more than 90 days, 180 days and 360 days should be incorporated in the report.
d) Amount outstanding beyond allowable period with yearly age analysis.
e) Position of all pending Sales Tax Forms with yearly age analysis.
f) The current status of the observations in the last / previous Audit Report(s) pertaining to the unit concerned.
g) Whether proper back up papers are generated at the concerned unit to support the Risk Assessment Score Sheet being sent to the Board on quarterly basis. A copy of the Guideline issued to the units is enclosed for your ready reference as Annexure-“B”.
h) Some of the debts were written off and the units were advised to put all efforts to recover the said book debts, the progress made in this respect, if any be communicated to H.O.
i) Old stores & spare part items were written off subject to the following:
i) complete separate record to be maintained;
ii) if any item is consumed, the same will be duly informed to the Corporate Office for information simultaneously;
iii) any deviation from the policy decided earlier.
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