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 Check that all purchases orders raised are
and valid. 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 Check that more than one quotations are taken
of the company. 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 Check that vendor evaluation is done at a regular

expectation of the company. interval.
(Note: Vendor Evaluation parameters shall be
developed in due course)

Amount posted to Accounts Check vendor liability is booked only when PO,
Payable & Purchase account GRN and Vendor invoice are received.
account represents goods
actually 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 Check that statements and invoices from
the accounting system and in suppliers are reconciled in the vendors account
the appropriate period. 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 Check that all supporting documents are
made only for goods actually reviewed before approval for payment is
received. 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

All other expenses incurred are All other expenses incurred are
Other expenses authorised. approved as per the Chart Of Authority.

All other expenses are reconciled with

All other expenses incurred are supporting details and difference if any is
recorded accurately resolved.

Management reviews supporting

documentation before approving
Expenses are only made for goods payments. Supporting documentation is
or services received or valid marked once payment is made to
expenses incurred 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

All inventory procured are Check that all goods received are against a valid
only against approved purchase order (which has been approved as per
Inventory Control indent for procurement. the Chart Of Authority)

All goods received are as Ensure all receipts are checked for quality and
per the conditions of the quantity; Check that all material received are
purchase contract. 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
Rejected raw materials are adequately segregated
from other raw materials and regularly monitored to
Defective raw material are ensure timely return to suppliers.
returned to the supplier.
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 Ensure all receipts are accurately, promptly
recorded accurately. 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 Physically verify inventories at regular interval at
frauds and error 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

Check that contracts entered into or work order issued

All contracts agreements/Work to the contractor are within the authorisation limits as
Contractor Management order issued are authorised. per the chart of authority.
All work orders/contract Check that more than one quotations are taken from
agreement entered into are in contractors and the same are techno-commercially
the interest of the company 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
Contract conditions are where such clause exists as per work order or
complied with 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)

Check all change order requests are reviewed and

Change orders are authorised. 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

Allotment of flat is only against application Check that no apartments/villas

money as per the General Terms & are allotted without application
Marketing (Allotment of flat) Conditions money

Check that 10% of service charge

is deducted before refund to the
Interest is deducted as per General Terms allottee after withdrawal of
& Conditions on withdrawal of application. application/allotment.

Check that payment from allottes

are received as per the approved
Payment from allottes are received timely payment schedule.

Check that rebate to allottee is

given when the allottee pays the
Rebate on price to allottee are as per the entire price within 30 days of the
General Terms & Conditions (GTC) Allotment letter

Check that rebate is allowed to the

allottee at the approved rate
applicable in force at that point of
Rebate is allowed at an approved rate time

The apartment/villa shall be

executed in favour of the allottee
only after the total price, together
Registration of allotted flat/villa is executed with all other dues and deposit etc.
only after allottee's fulfilment of obligation are received by the company

Check that all marketing expenses

are approved as per the chart of
Marketing (Expenses) All marketing expenses are approved authority

All marketing expenses are

All marketing expenses are recorded supported with approved
accurately in the accounting system supporting documents

Track all the marketing expenses

to the general ledger.

Commission paid to Channel partners Check that commission paid to

selling of flat is as per the policy of the channel partners are approved by
company appropriate authority

Check that commission is paid to

the channel partners as per
agreement entered with them

Check that commission is

calculated as per the policy and
agreement entered into with the
Channel Partner. Also check that
Commission paid to Channel partners are commission is adjusted properly as
calculated properly 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

Check that approval as per the Chart

All Fixed Asset acquisition are Of Authority is taken prior to the
Fixed Asset approved acquisition of Fixed Asset.

Compare recorded changes to the

fixed asset register/ Fixed Asset
account to authorized source
documents.

Reconcile asset acquisition

All Fixed asset acquired are properly supporting details with entries in the
recorded in the correct period. Fixed Asset Register.

Check that depreciation charges are

calculated as per generally accepted
Depreciation charges are accurately accounting standard and at the
calculated and recorded. prescribed rate.

Check that approval as per the Chart

All disposal of fixed assets are Of Authority is taken prior to disposal
approved of fixed asset.

Compare recorded changes to the

fixed asset register/ Fixed Asset
account to authorized source
documents.

Review calculation of profit or loss

for disposal of fixed asset. Also
scrutinize the supporting
All disposal of fixed assets are documentation and the journal entry
accurately recorded. passed in this regard

Physically verify the fixed assets of

All fixed assets are safeguarded 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

Check that all investments and

disinvestments are approved by the
All investments or disinvestments investment committee decided by the
Treasury made are approved Board.

Check all investments and disinvestments

All investments or disinvestments ledger accounts with corresponding
are accurately recorded in the supporting documents. Reconcile any
accounting system. difference.

All borrowing decisions made are Check that all borrowing decisions are
approved. approved by the management/ Board

Check all borrowing ledger accounts with

All borrowings are accurately corresponding bank statement/supporting
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.

Interest are properly calculated Review all interest expenses and interest
and recorded in the accounting income to ensure all interest are recorded
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 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
Cash & Bank authorised wherever applicable).

All bank transactions are Check that bank transactions are

recorded accurately and in the recorded immediately in the
correct accounting period 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.

Check that cheque books are

Control exists over custody of lying only with the person
cheque book. assigned with this responsibility.

Review the sequence of cheque

numbers and enquire into
missing numbers

Surprise physical verification of

Cash is safeguarded cash is carried out.

Check that no single expenditure

Petty cash at site conforms with of more than Rs 15000 is made
Petty Cash at Site company policy. 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.

Insurance with respect to cash in

Cash at site is safe guarded 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 is managed to ensure
total project cost is within Review the reporting to management of
Project Cost Management budgeted cost. 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 regularly reviewed with the scheduled
Construction Schedule managed to ensure completion of activity. Delay in work schedule are
Management project on time. 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

Check that transactions are Check that approval as per the chart of
authorised as per the Chart Of authority has been taken for:
Chart Of Authority Authority
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

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
All information resources are policies on periodic change,
subject to appropriate physical confidentiality and password format
IT Systems and 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 Internal Control Objective Audit Program for test of control

Check that the Statutory obligations

The company has complied with all are complied with in the following
Statutory Compliances statutory compliances 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.