Cash Vouchers \ Bank Vouchers

Check authorization of Cash Vouchers \ Bank Vouchers by a responsible

person.

Check supporting Bills / Invoices

Check the correctness of the accounting head expense / income

Check for cash receipts signature /acknowledgement of cash recd.

Check that all the relevant columns of the Cash/ bank vouchers have been
properly filled in.

Check that all the supportings to the Vouchers are crossed as cancelled after
the payment.

Check that payments are made only against original supportings.

Purchase Vouchers

Check authorization of Purchase Vouchers by a responsible person.

Check the Purchase Voucher with the supporting documents like Bill / Invoice
and the Goods Received Note(GRN).

Check whether the rates given in the purchase invoices are as per the
purchase Orders raised/amendments to the Purchase Orders/ approved by an
appropriate authority.

Check whether payment has been made/Bill passed for rejected quantity of
material as per the GRR.

Check whether a proper accounting head - expense has been debited.

Check that all the relevant columns of the Purchase Vouchers have been
properly filled in.

Check that the PV is passed as per the terms given in the Purchase Orders.

Check that the purchase voucher is prepared only in respect of original Bills /
Invoices.

Photocopies of invoices \ duplicate invoices should not be passed.

Check that the Bills / invoices are passed strictly as per the PO terms.

Journal Vouchers

Check authorization of Journal Vouchers by a responsible person.

Check the Journal vouchers with supporting Bills / Invoices /documents.

Check that supporting documents are duly approved by an appropriate

authority.

Check the correctness of the accounting head - debit / credit.

Check that all the relevant columns of the journal vouchers have been
properly filled in.

In case of contractors bills check that bills submitted by the contractors are
supported by the Work Orders issued in advance to the contractors. No bill should
be passed unless supported by a/ WO and the value of the Bill should be in

agreement with the WO prepared. Check that the Work Orders are prepared in
advance before the start of the work.

Check that the bills of the contractors are duly approved and certified for
payment by the person responsible for getting the work done i.e the user. All the
bills must have Approval for payment in writing by the user on the face of the bill.

Check that all the supporting bills / invoices to a journal voucher are approved
/ certified for payment by the User Department. The user Department should
specifically put a remark on the bill for approval\ payment.

In case of contract jobs relating to labour supply the bills are to be supported
by attendance sheets duly certified by the Time Office.

In case of transporters bills - check the bills with the agreed rates and
receipted copies of consignment notes.

Check the measurement books in case of bills for civil work and ensure that
the Measurement books are signed and checked by the Engineer in charge of the
Work.

In case of running and final bills for civil work check that the civil engineer
has checked and verified the measurements and entries of all running and final bills
are made in the Measurement Books.

Advance to Employees

Check the Trial balance in respect of Advance to employees to ascertain the

amount outstanding in the name of each employee. Find out the date since when
the advance is outstanding to be settled and make a list if employees advances
that have not been settled for a long period.

Ensure that no further advance is given to an employee unless the previous

outstanding advance is cleared by him.


Advance to an employee may be towards - Travel / Official work\ loan or a
salary advance. Ensure that the recovery is made from the salary of the employee
when the advance taken by the employee is not settled by him within a reasonable
period.

Further check that the recovery of installments in respect of loan / salary

advance is made correctly on monthly basis from the salary of the employees.

Check and make a list of employees who have left the company and their full
and final settlements have not been made but debit balances are still appearing in
their names in the Advance to employees account.

Confirmation of Balances

Confirmation of balances with the banks \ Lending institutions should be

obtained on a monthly basis for the purpose of preparation of bank reconciliation
statements.

Confirmation of balances with the Creditors / Debitors should be obtained on

a six monthly basis. The balances in the Creditors\ Debtors Ledger account should
also be reconciled with the balances as per the partys books on a six monthly
basis.

Debtors Ledger Trial Balance \ Debtors Ledger account

Check that the balance shown by the Debtors Ledger Trial balance agrees
with the balance shown by the Debtors control account in the General Ledger Trial
balance.

Check the Agewise analysis of Sundry Debtors and comment upon it.

Check the Debtors Accounts that are stuck up for long and are doubtful of
recovery.


Check the debtors accounts where legal cases have been filed / are to be filed
and ascertain the progress in the legal cases.

Carry out a scrutiny of various Debtors Account in the debtors ledger and
check for the following :-

Match the Debit and Credit entries individually.

Give the break up of the closing balance - Invoice wise.

o Ensure that there are no such cases where the payments have been received for
later bills and the earlier invoiced are unpaid.

o Give a break up of the closing balance as above in (b) including the details of
any debits on account of debit notes raised on the parties.

Prepare a list of Debtors account showing closing credit balances.

o Tally each debit with a corresponding credit to locate any under payment / over
payment for any invoices.

Creditors Ledger Trial Balance/Creditors Ledger Account

Check that the balance shown by the Creditors Ledger Trial Balance agrees
with the balance shown by the Creditors control account in the General ledger trial
balance.

Check the creditors account that are outstanding to be paid since long
(unclaimed Creditors) and that can be considered for a write back in the books of
account.

Carry out a scrutiny of various Creditors account in the creditors ledger and
check for the following.

Match the Credit and Debit entries correspondingly.

Give the break up of the closing balance Invoice wise.

o Ensure that there are no such cases when the payments have been made for
later invoices and the earlier bills are unpaid.

o Give a break up of the closing balance as above in i (b) including the details of
any credits on account of credit notes raised on the party.

o Prepare a list of creditors account showing closing debit balances alongwith the
reasons for debit balances. Comments or details should be taken from the auditee
in respect of every single debit balance.

o Tally each credit with a corresponding debit to locate any over payment /under
payment for any invoice.

Check all the Creditors Ledger Trial balance as given below for above details.

Suppliers

Contractors

Transporters

Others

Outstanding Liabilities

Check that the outstanding liabilities pertaining to the earlier years have been
adjusted in the books of account.

Excise V/s Accounts Reconciliation

Ensure that a reconciliation statement is prepared on a monthly basis to

reconcile the modvat / Cenvat balance in the excise with the accounts balances.

Check if any old pending entry is appearing in the reconciliation statement.

Check the unreconciled / reconciled difference in the balances shown by the

excise records and the accounts records.

TDS

Check that all TDS deductions are deposited in time with the government check the monthly TDS statement and the actual date of deposit with the TDS
challans.

Check whether the TDS Returns are submitted in time with the Government.

Check that the TDS deductions are made properly from all the payees
wherever applicable.

Budget V/s Actual - Expenses

Check the Budget V/s Actual position as on a particular date with the Budget
statement for all the expenses - Fixed / Variable overheads.

Check the Variances between the Budget / Actual figures.

Obtain comments on reasons for variances between the Budget V/s Actual.

Analyse the variances between Budget / Actual in terms of percentage.

Scrutiny of Ledger Account - Expenses / Others

Check that in case of expenses the distination between Capital and Revenue
expenditure is properly made.

Check that proper account head has been used to debit the expenses.

Pick up a few entries from the ledger account and trace the entry to the
Voucher and the supporting bills / Invoices to ensure that the expense bills are
properly approved / authorized and accounted for.

General Ledger Trial Balance / Revenue ledger Trial Balance

Carry out a scrutiny of the General Ledger Trial balance/Revenue ledger Trial
balance and comment on accounts that need to be reconciled like inter office
account / Inter unit account etc.

In case of accounts like TDS Receivable / Interest Receivable/ Insurance claim

Receivable / Margin money deposit with banks ask for the break up / detailed
statements of accounts and comment upon it.

In case of Creditors / Debtors account check that the amount as given in the
General ledger agree with the balance shown by the Creditors ledger Trial balance/
Debtors ledger Trial balance.

Check whether any special accounts like suspense account etc are appearing
in the trial balance and carry out a scrutiny.

In case of other accounts carry out a review of the ledger of the account to
locate any irregularity / reconciliation matter

Internal Audit Checklist of Physical

Verification of Cash

(1)

Carry out a surprise physical verification of cash.

(2)
Check that the physical cash balance tallies with the balance shown by the
cash book.

(3)

Check that the cash book is upto date at all times.

(4)
Check that the cash in safe/cash in transit is within the insurance cover
taken.

(5)
Check that fidelity insurance cover is taken in the names of persons who
have the custody of cash.

(6)
Check that receipts are issued by the cashier at the time of receipt of cash
from the employees / others.

(5)
Check that signatures of the payee are taken by the cashier on the cash
payment Voucher at the time of making cash payment.

Internal Audit Checklist of Bank Reconciliation

Statement
(1)

Check that Bank reconciliation statements in respect of all the bank accounts

are prepared on a monthly basis.

(2)

Check that the entries appearing in the Bank reconciliation statements are

cleared in the subsequent month.

(3)

Check for any old pending entry and inquire into the nature and details of

such an outstanding entry.

(4)

Check that entries relating to cheques issued but not presented for payment

for more than 6 months are reversed.

(5)

Check that all post dated cheques received are kept in safe custody until

deposited.

(5)

Cheque that all cancelled cheques are kept properly in the cheque book.

(7)

Check the cheque signing authorization levels of management and ensure

that the cheques are signed according to the prescribed and delegated authority.

Internal Audit Checklist of Investments

(1).

Check whether a Register of Investment is maintained. (Manual / On computer)

(2).

Check that the Register of Investment gives the necessary details like
(a)

Description of the Investments.

(b)

Name of the corporate bodies / other entities where the Investments have

been made.
(c)

Distinctive number of certificates

(d)

No. of certificates -shares/ debentures / other securities.

(e)

Face value / paid up values of Investment made

(3).

Check that the certificates of investment are kept securely and in safe

custody.
(4).

Ensure that a physical verification of investment scripts is carried out say at

least once in a year and physically found scripts are tallied with the details given in
the Register of Investment. Discrepancies if any should be reported.
(5).

Ensure that the proper record is made in the Register of Investment in

respect of Bonus Issue of shares and debentures, Rights Issue of shares/

debentures etc .

(6).

The entries in the Register of Investment should be tallied and reconciled with

the entries in the printed Annual Accounts. Balance sheet - to locate any differences.
(7)

Ensure that all the investments made are in the name of the company and all the
transfers have been made and recorded and effected in the name of company .

(8)

Ensure that all the income accounted / due in respect of all the investment made is
received and accounted for in the name of company.

(9).

Ensure that all the transactions in investment are authorized by a resolution of the
Board of Directors or by the person to whom the powers have been delegated .

(10).

Check that where any shares or securities in which investment have been made by
the company are not held by it in its own name the company has entered the details
in a register in terms of section (7) of the Companies Act .The register shall
disclose
(a)

the nature, value and such other particulars as may be necessary fully to
identify the shares or securities and

(b)

the bank and person in whose name or custody the shares or securities are
held.

(11).

Carry out a scrutiny of the investment account in the ledger to ensure that
proper accounting entries have been passed in the ledger account .Vouchers may also be verified to ensure proper authorization etc.

Internal Audit Checklist of Administration Deptt.

ADMINISTRATION

Enquire into the activities that are covered under the Administration of the
organisation. Normally the following activities would come within the Administration
Department of an organisation.

o Security Services

o Canteen Services
o Houskeeping Services
o Courier Services
o Fax / Photo copy machines
o Telephone lines
o Renovation and routine repairs
o Despatch of correspondence
o Incoming correspondence
o Visitors Register at the Reception
o Travel air / train / taxi
o Hotel reservations
o Fixed Assets for maintenance / repair
o Vehicles
o Guest Houses
o Colony upkeep / maintenance.

Security

o Check the contract with the security contractor.

o Ensure that the terms and conditions and other general matters are being
complied with by the contractor.
o The bill of the contractor should be accompanied by the attendance sheet of the
security personnel deployed during a particular period / month.
o The bill of the contractor should be accompanied by a certificate from the
contractor that the statutory obligations have been complied with by the
contractor.
o The Bill should be approved by the Head of the Administration.
o Ensure that a specific clause has been put in the contract regarding the PF / ESI
liability of the employer of security personnel. It should be clearly mentioned in the
contract as to who will bear the employers contribution towards PF / ESI. ( The
company or the contractor.)

o In case the contractor is to bear the PF liability then the company should ask for
copies of monthly challans in respect of PF deposits from the contractor.
o Study the various clauses of the contract and ensure their compliance.
o Ensure that contract has been awarded to the contractor on the best possible
terms. Quotations/offers of other contractors should be verified to ensure that
financial terms a well as general profile/standing & reputation of the contractors
have been considered for appointing the contractor.
o Check that the security personnel are properly deployed over the area under
their jurisdiction and responsibility. Ask for a deployment plan from the Head of
security.
o Check the Registers and records maintained at the security gates/ security points
and ensure that the registers and records are kept uptodate / maintained properly /
all columns are filled in completely.
o In case Gun men have been deployed ensure that they hold valid licences and
that the licences are renewed in time.
o Ascertain the responsibility of the Security Department / contractor in the form of
a check list. The check list should give point wise duties of the security. The
activities/work to be performed by Housekeeping should be documented in the form
of a check list.

Canteen Services

o Check the contract with the canteen contractor and ensure that the terms and
conditions of the contract are being complied with.
o Check compliance with point No(s) 3 to 8 as stated in the case of security
services. The points are applicable to Canteen Services also.
o Ensure that a duly approved Rate list of food items has been prepared and is
displayed at the canteen.

House keeping Services

o Check the contract with the Housekeeping contractor and ensure that the terms
and conditions of the contract are being complied with.
o Check compliance with point No(s)3 to 8 as stated in the case of security
services. The points are applicable to Housekeeping services also.

o Ascertain the responsibility of the Housekeeping Department / Contractor in the

form of a check list. The check list should give point wise duties of the
Housekeeping / contractor. The activities / work to be performed by Housekeeping
should be documented in the form of a check list.

Courier Services

o Check the contract with the courier companies.

o Ensure that the terms and conditions of the contract are complied with, by the
contractor.
o Check that the Bill of courier is checked in detail with the copies of consignment
Notes and the Proof of delivery. The Administration Department should not pass the
bill unless all the consignment notes are matched with the Proof of Delivery (POD).
o The bill should be approved by the Head of Administration.
o Ensure that the Contract(s) have been awarded to the contractor / courier
company on the best possible terms. Quotations / Offers of other contractors /
Courier companies should be verified to ensure that the financial terms as well as
the general profile / reputation of the courier agencies have been considered before
appointing the contractor / courier company.

Fax Machines / Photocopy Machines

o Check the total number of fax machines installed and their location.
o Ensure that a budget has been fixed in respect of every single fax machine.
o Compare the Budget V/s Actual position in respect of all the fax machines and
comment upon the negative variances between the budget and actual.
o Ensure that a proper control is kept over the paper issued for photocopy purpose.
A record should be kept by the photocopy operator of the number of sheets of paper
received in a month and the number of photocopies made during that month. A
monthly control report should be prepared.
o Ensure that system of requisition slips for fax / photocopy is in place. Requisition
slip system would ensure that there is no misuse of the fax/ photocopy machines.
o Ensure that the fax / photocopy machines are maintained properly and that the
operators of the machines do not allow any unauthorised entry of persons to
operate machines.

o In case the work of photocopy has been given to an outside agency check the
contract entered into with the party and ensure that the terms and conditions of the
contract have been complied with.
o Ensure that the contract with the outside agency is renewed in time i.e. before
the expiry of the validity of the contract.
o A monthly record should be maintained by the company in respect of paper
issued to the contractor and the number of photocopies made during the month.
The variation / differences should be explained by the Department.
o In case the photocopy / fax work is carried out after the office hours the
requisition slips be kept and the employees instructed and encouraged to enter the
details of number of photocopies made / fax done, after the working hours in the
register.

Telephones
o Ensure that a budgeted amount has been fixed in respect of every telephone.
The budget amount should be approved in writing.
o A monthly Budget v/s Actual statement Telephone wise should be prepared and
reviewed.
o In case the actual expenses exceed the budgeted amount on a quarterly /six
monthly / annual basis, ensure that the approval for the excess amount is obtained
from the appropriate authority.
o Ensure that the telephone bills are duly approved / certified for payment by the
concerned users.

Guest House

o Check that the record of fixed assets installed at the Guest House is kept
properly in a bound register / computer. The record of fixed assets (FA Register)
should contain all the details of FA like -Quantity / location/ Make & type /
Identification Number / value etc.
o A six monthly verification of the FA should be carried out and the physical
balances compared with the book balances. The discrepancies should be reported.
o Similarly a record of electricity / water / and telephone bills should be kept in a
register / computer.
o A register should be kept for recording all STD / ISD calls. The visitors should
be requested to enter the details of call made in the register.

o A bound register should be maintained to record on a daily basis the Bill number
- amount and the type of purchases made - Milk / Vegetables / Food items etc. The
register should be kept upto date.
o Per meal cost should be worked out on a monthly basis ( By dividing the total
expenses on food / milk / vegetables etc by the No of meals provided during the
month). The per meal cost would indicate the expenses actually incurred on meals
provided to the guests and assess whether the meal cost is high/ normal.
o A guest / occupancy register should be maintained at the guest house and all the
particulars of the guest like - Name / Time in / Time out / date of arrival / date of
departure / address / Room No allotted etc should be entered.
o A Meal register / slip should be made to record the details of meals provided to
the guests. The meal slip should be prepared by the caretaker and the signatures of
the guest should be taken on the slip.
o The register / slip should clearly indicate the No of Break fast / lunch / dinner /tea
/ milk / snacks etc provided to the guest.
o A register / statement of consumables (other than Fixed Assets) should be
maintained and all particulars of items like - buckets / room heaters / mattresses /
cutlery / Bed sheets / covers / utensils should be entered. The Register / Statement
should be prepared Room wise.
o In case the guest house is in a rented / leased premises - verify the rental / lease
agreement and see whether the terms and conditions are complied with.

Visitors Register at the Reception

o Ensure that the system of issuing Visitors Card to the visitors is in existence. The
cards should have a serial control.
o The visitors Card Number should be entered in the Visitors register.
o The visitors register should be complete in all aspects i.e. all the entries as
prescribed in the format should be filled in properly and completely. No column in
the register should be kept as blank.
o The visitors register should be maintained clearly in a legible hand.

Travel - Air / Taxi / Train

o The bookings in respect of Air / Taxi / Train should be made on the basis of
Requisition slips. The Requisition slips should be properly filled in by the employees

with necessary details like Approval of the HOD / authorized by / Date and time /
details of travel / Name and Designation / purpose / signature etc.
o The Administration Department should not accept the Requisition Slips not filled
in completely and properly.

Stationery

o Ascertain whether there is any system / procedure to ascertain the book quantity
of stock of stationery at any point of time.
o Check whether there is a procedure wherein the opening balances, Receipts,
Issues and the closing balances of each stationery item (costing say Rs.25/- or more
per number) are recorded in the stationery stock Register (manual / computerised).
o Carry out a physical verification of stationery items (costing say Rs.25/- or more)
in stock and compare the physical balances with the book balances and locate the
discrepancies, if any.
o Ensure that there is a system of issuing stationery items to various Departments
against duly approved Requisition slips.
o Check whether a monthly statement of stationery issued to various Departments
is made. The statement should reflect the details of items of stationery issued
Department wise.

Hotel Reservations / Guest House reservations

Ensure that there is a proper procedure for making Hotel / Guest House
reservations.

The procedure should ensure that the details in respect of Hotel/Guest house
reservations are recorded in a control book / register. The details should include

SlNo
Name of the person
Designation
Location

Hotel Name
Reservation period
From

To

Type of accommodation
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

Whether booking is confirmed/pending

Bill details
Bill No. Date

Amount

Bill paid by
(Name / Date/ Mode of payment)
Any other information like cancellation
(viii)
(ix)
(x)
(xi

Check whether all the columns of the Control Register are filled in properly
and completely. All the necessary details as given in the format should be entered
in the Control Register.

Fixed Assets for maintenance - Repair

o A record of fixed Assets for which the Administration Department is responsible

for carrying out the repairs / maintenance or upkeep should be kept by way of a
register ( Manual / computerized). The FA would include Air conditioners,
Refrigerators, Water coolers, Fax / photocopy machines, Electrical Equipment etc.
The record should include details of FA like - Quantity / location / Identification
Number / make or type. Check whether such a record of FA is maintained by the
Administration Department.
o A physical verification of such FA should be carried out on a six monthly / annual
basis to find out the discrepancies, if any.

Renovation and Routine interior maintenance

o Check whether quotations / comparative statements were invited / prepared

before issuing a Purchase / Work Order to a contractor / party.
o Ensure that the Purchase / Work Order were issued keeping in view the
commercial considerations - lowest quotation / offer / profile / experience/ technical
competence / recommendation of architects Engineers etc.
o Check whether the Purchase / Work Order were issued before the start of the
work by the parties. Confirmatory orders should not be issued except under special
circumstances.
o Check whether the Comparative statements are duly approved and dated by a
competent authority.
o Ensure that the variation between the actual Quantity / Value and the Quantity /
Value as per the PO / WO does not exceed + 5%. The Qty / Value as given in the
PO / WO should be as accurate and as possible and all work should be estimated
and planned in advance and provided for in the PO / WO. The amendments to the
PO / WO should be issued in special cases only. The cases of amendment orders
being issued for an increase in the scope of work should be minimum and the full
scope of work / activities should be estimated / calculated in advance.
o Ensure that the amendments to PO / WO are issued before the start of the
extended work/scope of activities and not after the completion of work.

Colony upkeep / Maintenance

o Check whether the Administration Department has prepared a list of Fixed Assets
provided to the employees at their residential premises.
o Check whether an acknowledgement has been taken in the list of FA provided to
the employees from the employees. The signatures of concerned employees should

be taken in the list of FA, as a token of their acceptance towards having received the
FA.
o The Administration Department should carry out a physical verification of FA at
the residential premises of the employees and compare it with the list. The
discrepancies if any between the physical balances and the book balances should
be enquired into.
o The Administration Department should maintain a Register / book wherein all the
complaints received from the colony residing employees should be entered into,
serially.

The specific nature of the complaint should also be entered, whether

Electrical / Mechanical / Civil / Electronics etc along with the date / time of lodging
the complaint by the employee. Similarly, the date and the time of attending /
rectifying the problem should also be entered along with the signatures of the
complainant. The Register would enable the Administration Department to exercise
a proper control over the complaints / maintenance work.

Vehicles
o Ensure that the details of company owned Vehicles are available by way of a
register.
o Check whether insurance cover is renewed in time.
o Check the Registration books / Insurance papers of all the vehicles to locate any
discrepancies, if any.
o Check whether log books are properly maintained in respect of vehicles. Check
the entries in the log books.
o Ensure that a Vehicles register is maintained and details of running and
maintenance expenses in respect of every vehicle are entered vehicle-wise, giving
Bill No / Date and the amount.
o Check whether a monthly exercise is carried out to calculate the running and
maintenance cost of every vehicle per km. This can be worked out by dividing the
total of running and maintenance expenditure by No of Kms run by the vehicle as
per the log book. The Administration would know at a glance the per Km cost of
running and maintaining a particular vehicle on a monthly basis.

Incoming / Outgoing Correspondence

o Ensure that a separate manual register is maintained for the incoming and
outgoing correspondence.
o Check whether all the relevant information is recorded in the incoming /
outgoing registers.
o The registers should be kept updated at all times and entries should be made on
a day to day basis.
o A stamp / seal should be put on the cover of every incoming correspondence
indicating the date of receipt of the document / correspondence.
o A separate record/ register should be kept for documents / correspondence sent
through the Registered post. ( copies of Registry receipts should be preserved).
o A proper record should be kept of Postage stamps.
o In case of Franking machine - check the use and the balance amount at the end
of the day.

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Internal Audit Checklist of Scrap Material

SCRAP MATERIAL

Ensure that a separate space / scrap yard is earmarked for keeping the scrap material. The
scrap yard should have an enclosure and a gate with a lock and key.

Ensure that a proper record is kept of receipts, issues, opening and the closing balances quantity
of each item of scrap in the scrap yard

Check that proper slips are kept at the point of generation of scrap and at the receiving end ie the
scrap yard. At the generation point(s) the output / production / scrap generation slip should be
made in 2 copies giving details of the item of scrap and the Qty of scrap.

The weighment / measurement / counting can take place either at the point(s) of generation or at
the scrap yard. However, the scrap generation slip should contain the details of the quantity. The
slips should have a serial control and should be authorised by a responsible person. The scrap
yard should receive the material on the basis of slip and enter the receipt in the scrap register.
Weighment should be carried out at the scrap yard if not already made at the production floor. The
weighment should be carried out in the presence of a person each from the scrap yard and the
production. Thus the scrap yard entries for receipt of scrap should be made on the basis of
generation slips only. The issues entries should be made on the basis of sales invoices raised on
customers / issue slips for consumption within the plant.

It should be ensured that the entries in respect of receipts and issues in the Scrap Stock Register
are made on the basis of generation slips / Sales invoices / issues slips.

The generation slips / Sales invoices / issue slips should be authorised by a responsible person.

Scrap Generation points should be identified and a booklet of generation slips with a serial
control given at each generation point. The scrap yard person should sign on one copy of the slip
as an acknowledgement of having received the scrap qty as given in the slip and return the slip
back to the generation point. The second copy of the slip is to be retained at the scrap yard.

For sale of scrap ensure that a comparative chart of offers / quotations is prepared and the Sales
order is made in the name of the best quoted party. All the offers / quotations should be properly
evaluated.

Scrap sale should be effected on spot payment terms - cash / DDs at the time of delivery. Ensure
that full amount is collected from the customer before the material is allowed to be lifted.

Ensure that Sales Tax / excise duty is properly charged in the Sales Invoice.

Ensure that no debit balances appear in the Sundry Debtors ledger in respect of scrap
customers.

Ensure proper counting / weighment / measurement of scrap at the Scrap generation point(s) /
Scrap yard.

The Scrap Stock Register should be kept updated at all times.

A gate pass should be issued at the time of despatch of material from the Scrap Yard and the
gate pass should then be checked at the exit gate by the security.

A periodical physical verification of scrap stock in scrap yard should be made and the physical
Qty tallied with the book quantity. The discrepancies, if any should be reported.

The total scrap generation as per the Scrap Stock Register should be tallied with the quantity
of scrap generation of various types as shown by the costing data. Comment if any difference /
discrepancy is observed.

Internal Audit Checklist of Personnel & Time

Office
PERSONNEL & TIME OFFICE

Obtain a list of sanctioned strength - Department wise and compare with the actual strength of
the employees. Note the variation and comment upon the cases where the actual strength of the
employees is more than the sanctioned strength. Check approval for the extra man power
deployed.

Review the personnel service files of employees kept by the Personnel Department to check
whether
o all the copies of certificates / testimonials have been taken from the employees at
the time of joining .
o Nomination in case of Gratuity / Pension / PF / superannuation etc
collected from the employees

have been

o all the other documents like increment letters / promotion letters etc are properly
filed in the service files .
o Copies of appointment advice / appointment letters / confirmation letters etc are kept
in the service files.

Obtain a list of all the pending legal cases being handled by the Personnel Department. Check
the status of all the legal cases including the date of next hearing. Comment upon the speedy
settlement of the legal cases . For keeping an effective control over the legal cases the Personnel
Department should prepare a status report of pending legal cases on a monthly basis.

Ensure that the Personnel Department is taking due care in case of contract labour employed
by it to ensure that legal and statutory obligation like FPS / PF / ESI are taken care of. The
Personnel Department should maintain proper attendance record in respect of the contract labour
and should obtain copies of monthly PF / ESI challans from the contractor .

Check that the various licenses like the Factory license / license under the Contract labour
(abolition + regulation ) act 1970 / license for storage of inflammable and hazardous chemicals etc.
are renewed in time.

Ensure that the various provisions of industrial and labour laws

like The Apprentices Act / Factories Act / Payment of wages Act
/ Minimum wages Act etc. are duly taken care of.

Ensure that proper attendance / leave records are maintained by the Personnel Department is
respect of all the workmen / staff / officers/ managers / higher management.

Check the leave / attendance record of employees (register /

punch card/ computerized attendance printouts) to ensure that there are no irregularities.
Comment on the irregularities. if any, observed .\

Examine the agreement with the Union and ensure that the terms

and conditions as agreed to

by the parties to the agreement are duty complied with. Examples : Incentive scheme, loan /
advance scheme , facilities, attendance procedure, leave procedure , festival advance , canteen /

tea, transport ,uniform, production etc. Further check the various schemes linked to production /
output to ensure that the payment under various incentive schemes are made strictly as per the
laid down productivity linked / incentive scheme .

Ensure that the system installed at various locations to mark the attendance(in/out) are working
properly and are giving consistent results.

Check the record relating to attendance / leave including a cross verification of data and ensure
that the methods and procedure for recording of attendance / leave are sound and sufficient
internal controls exist. Point out the lacunae / weakness in the internal control system.

In case of productivity linked schemes ensure that there is a proper system to record and
measure the quantity / quality / output of each employee.

Check whether the consent letters have been obtained from the State Pollution Control Boards in
respect of AIR / WATER.