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
Purchase & Procurement

Internal Control Objective

All purchases are authorised
and valid.

Audit Program for test of control

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 technocommercially 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 memo's 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

Other expenses

Internal Control Objective

Audit Program for test of control

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

Inventory Control

Internal Control Objective

Audit Program for test of 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.

Defective raw material are

returned to the supplier.

Check that cement lot received is not more than 90

days old
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.

Check that all issue of raw materials to the

contractor are against 'indent for material
All issue of raw materials to issue'(IMI). Check also that the IMI are approved
the contractor are approved by the RDPL appropriate authority (Land Parcel
by RDPL.
Construction Manager)
All transfer of materials
between Land Parcels are Check that transfer of material to projects are only
approved by RDPL
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

Contractor Management

Internal Control Objective

All contracts agreements/Work
order issued are authorised.
All work orders/contract
agreement entered into are in
the interest of the company

Contract conditions are

complied with

Audit Program for test of control

Check that contracts entered into or work order issued
to the contractor are within the authorisation limits as
per the chart of authority.
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.
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

Marketing (Allotment of flat)

Marketing (Expenses)

Internal Control Objective

Audit Program for test of control

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

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

Fixed Asset

Internal Control Objective

All Fixed Asset acquisition are
approved

Audit Program for test of control

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

Treasury

Internal Control Objective

Audit Program for test of control

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

Check all borrowing ledger accounts with

corresponding bank statement/supporting
All borrowings are accurately
recorded in the accounting system. documents. Reconcile any difference.
Review loan repayments to ensure all
repayments are recorded correctly
Loan repayments are as per Loan Check that loan repayment requests are as
agreement
per the loan agreement.
Review all interest expenses and interest
Interest are properly calculated and income to ensure all interest are recorded
recorded in the accounting system 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

Cash & Bank

Internal Control Objective

Audit Program for test of control

All Bank and cash transactions

are authorised.( Authorisation as
All bank & Cash transactions are per the Chart Of Authority
authorised
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

Check that all cash & bank

transactions are made only
All cash & bank transactions are against duly approved bills and
made against proper supportings 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

Petty Cash at Site

Cash is safeguarded

Surprise physical verification of

cash is carried out.

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

Project Cost Management

Construction Schedule
Management

Internal Control Objective

Project cost is managed to ensure
total project cost is within
budgeted cost.

Audit Program for test of control

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.
Actual construction activities are
Construction schedule is managed regularly reviewed with the scheduled
to ensure completion of project on activity. Delay in work schedule are
time.
regularly analysed.

XYZ Pvt Ltd

Financial Year: 2008-09
Audit Program for Chart Of Authority
Business Area

Chart Of Authority

Internal Control Objective

Check that transactions are
authorised as per the Chart Of
Authority

Audit Program for test of control

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

All information resources are

Audit Program for test of control

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,

IT Systems

subject to appropriate physical and confidentiality and password format

logical security.
(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 Check that all critical system files are
as and when required
backed up in a timely manner.

XYZ Pvt Ltd

Financial Year: 2008-09
Audit Program for Statutory Compliance
Business Area

Statutory Compliances

Internal Control Objective

The company has complied with all

statutory compliances

Audit Program for test of control

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.