Introduction to Books of Accounts Jjjjjj

8/11/2019 Introduction to Books of Accounts Jjjjjj

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INTRODUCTION TO BOOKS OF ACCOUNTS

Every company must maintain proper books of accounts of its affairs. The

following transactions must be entered in the books of accounts of the companywhich must be kept at its registered office :-

a.all sums of money received and expended by the company and the matters

in respect of which the respect of which the receipt and expendi ture took

place;

b.all sales and purchases of goods by the company; and

c. the assets and l iabil i ties of the company.

d.in the case of a company engaged in production, processing,

manufactur ing or mining activi ties, such particulars relating to uti li sation

of material or other items of cost as may be prescri bed relating to certain

class of companies as the Central Government may require.

The books of accounts must comply with the following conditions :-

1.The books must give a true and fair view of the state of af fair s of the

company or the branch off ice, if any, and explain its transaction.

2.The books must be kept on accrual basis and according to double entry

system of accounting.

Every company must keep its books of account at its registered office. However,

some of the books of account may be kept at such other place in India as the Board

of Directors may decide, provided a notice in writing giving full address of thatother place alongwith requisite filing fee is filed with the Registrar of Companieswithin seven of such decision.

If the company has a branch office, the books of account relating to transactions at

the branch office may be kept at that branch office, but proper summarized reports

and statements must be sent to the registered office or such other place where the

books are kept, at intervals of not more than three months. The books of account of

the branch must give a true and fair view of the affairs of the branch and clearlyexplain its transactions.


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Auditors of Other Companies

It is the duty of the auditor conduct the audit of the books of accounts of the

company and to make his report to the members of the company on the accountsexamined by him, and on every balance sheet, every profit and loss account and on

every other document declared by the Act to be part of or annexed to the balance-

sheet or profit and loss account and laid before the company in general meeting

during his tenure of office. The auditors report, besides other things necessary inany particular case, must expressly state-

1.whether, in his opinion and to the best of his information and according to

explanation given to him, the accounts give the information requi red by the

Act and in the manner as required;

2.

whether the balance-sheet gives a true and fai r view of the company's

affair s as at the end of the financial year and the profi t and loss account

gives a true and fair view of the profi t or loss for the financial year;

3.whether he has obtained all the information and explanations required by

him for the purposes of h is audit;

4.whether in his opinion, the profi t & loss account and balance sheet refered

to in his report comply with the accounting standards recommended by the

I nstitute of Chartered Accountants of I ndia;

5.whether, in his opinion, proper books of account as required by law have

been kept by the company, and proper retur ns for the purposes of his audit

have been received fr om the branches not visited by him;

In case any of the above matters is answered in the negative or with a qualification,

the auditor's report must state the reason for the same. Where the auditor is unable

to express any opinion in answer to a particular question, his report shall indicate

such fact together with the reasons why it is not possible for him to give an answer

to such question. The Central Government is empowered to issue orders requiring

the auditor to include in his report a statement on such matters as may be specified.

In exercise of this power the Central Government has issued an order called "TheManufacturing and other Companies (Auditor's Report) Order, 1975. It is the dutyof the auditor to comply with this order when making his report to the shareholders.

Only the person appointed as auditor of the company or where a firm of auditors is

so appointed, only a partner of that the firm practising in India, can sign the

auditor's report or sign or authenticate any other document of the company requiredby law to be signed or authenticated by the auditor.


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Appointment

Section 252 throws light upon the appointment of an auditor:

Appointment of First Auditor by Directors

F ir st Audi tor

The co-operative law authority can appoint the first auditor of a company if the

company in the general meeting does not appoint the first auditor within 120 daysof the date of incorporation of a company.

Casual VacancyThe board of directors is empowered to fill any casual vacancy in the office of an

auditor except one, which is caused by prior resignation.

Appointment By Shareholders

In case the board of directors fails to appoint the auditor, the company can appoint

the first auditor within 120 days of the date incorporation of the company.

Removal of an Auditor

According to Section 224(3)of the Companies Act, any auditor may be removed

from the office before the expiry of his term but it can be done only by the company

in its general meeting and with the previous approval of the control Government.

The auditor may be removed in the following cases.

The auditor can be removed by the members in the general meeting of the company.

It is immaterial whether the auditor has completed his term of appointment or not.

Another person can be appointed in place of first auditor in the general meeting.

Notice of nomination of such other person to be appointed as auditor must be given

at least 14 days prior to the general meeting.

Other than the member in the general meeting of the company prior approval of the

central Government to remove can remove the first auditor the auditor must be

obtained in that behalf.


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Right of Attending the Meeting

According to Section 231 the auditor has a right to attend any general meeting and

to be heard there at any part of the business, which concerns him as auditor,

however, the right to attend a general meeting and to speak there at in not

mandatory.

Report to Member

According to Section 227(2) the auditor has a right to make a report to the members

on the account examined by him and to state whether the said account give the

information required by the companies act in the manner which is required.

Sign Audit Report

According to Section 229, the auditor has a right to sign the auditor's report or

authenticate any other document of the company.

Seek Legal and Technical Advice

The auditor has a right to seek opinions of experts in different fields whenever he

feels it necessary as he is not expert in all the areas.

Receive Remuneration

According to Section 224(8) the auditor has a right to receive remuneration forauditing the accounts of the company after he has completed the work of audit even

if he is dismissed in the middle he has a right to get full remuneration of the year.

Speak

The auditor has a right that he can speak in the annual general meeting for the

explanation of some matters, which are related, with the accounts of business.

Present in MeetingFor the safeguard of his right the auditor has a right to remain present in the

meetings of the company. Sometimes the business accounts may not be presented

before the shareholders for the approval. In this time the auditor can protect

himself.

Opinion

The auditor has also a right to consult the experts for some matters. In order to clear

the doubt he may get the help of the technical services. So the auditor has also aright of seek the opinion.


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Correction

The auditor has also a right of correction. He can make correction in the written or

spoken matters. Even that he can make a revised statement if he founds any writtenmistake in it.

Representation

The auditor has also a right to defend himself if he is asked to leave the office in the

meeting. So he can make the representation in meeting. He has a right to remain in

business for the full tenure.

Important NoteIt is clear that the right of an auditor cannot be limited either by the articles of

association or by the resolution of the members.


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AUDITING OF HOSPITALS

To understand the concept of hospital audit in the Indian context we have to look at

the types of audits performed in India. There are two types of audits; internal audit,which is conducted by the hospitals themselves, and external audit, which isconducted by QCI (Quality Control of India).

An internal audit is usually conducted by an internal audit committee on the basis of

peer review and consists of senior doctors, nurses, infection control officers and

other medical professionals. It follows a calendar or routine and this differs from

hospital to hospital. But in case of any complain or emergency situation, departmentwise audits are conducted.

And as for the external audit or third party audit, it is conducted by NABH(National Accreditation Board for Hospitals and Healthcare Providers), which is a

part of QCI. The latter is a quasi-government organisation established in 1997,

which started its own accreditation format; NABH from 2005. Once a hospital

applies for an NABH accreditation NABH conducts a pre-assessment. Based on the

findings of pre-assessment, the hospital takes corrective action and applies for final

assessment. Once the accreditation is granted, a surveillance audit is conducted

within 18 months of accreditation. Thus, it is a continuous quality improvement tool

rather than one time exercise. Process audits, document audits, mortality and

morbidity audits, infection control and hand hygiene audits, medication safetyaudits, clinical audits are requirements for NABH standard implementation.

And for few special chains of hospitals like Fortis or Apollo both the procedures arefollowed.


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Apollo group of Hospitals

It is often said that nothing happens, unless there is a dream first. At the genesis of

the Apollo story there was a dream. A dream so powerful, that it helped transformthe medical landscape in India.

Company Vision

Apollo's vision for the next phase of development i s to 'Touch a Bil li on L ives' .

M ission Statement

" Our mission i s to bring healthcare of I nternational standards with in the reach of

every individual . We are committed to the achievement and maintenance of

excel lence in education, research and healthcare for the benefi t of humanity"


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The dream nurtured and grew within Dr. Prathap C Reddy, the founder Chairman ofApollo Hospitals, until the point of inflection happened in 1983. A young man

succumbing to an ailing heart was what it took to ignite Dr. Reddy's vision into a

reality - a vision where quality healthcare was given, where the pursuit of clinical

excellence was daily endeavor, India a hub in the medical tourism map and wherethe Apollo family touches and enriches lives every minute, every day.

Today, with over 8500 beds across 54 hospitals, and a significant presence at every

touch-point of the medical value chain, Apollo Hospitals is one of Asias largest

healthcare groups. Commenced as a 150 bed hospital, today the group has grown

exponentially both in India and overseas. Its growth is often said to be synonymouswith India emerging as a major hub in global healthcare.

Apollo Hospitals is driven by a single thrust, to provide the best standards of patient

care. It is this passion that has lead to the development of unique centers of

excellence across medical disciplines, within the Apollo Hospitals network. Apollo

Hospitals has JCI accreditations for 7 of its hospitals, the largest by any hospitalgroup in the region.

True to its founding principles, the group has made quality healthcare accessible to

the people of India, and even overseas. It has become an institution of trust, and abeacon of hope to so many searching for a cure for their ailments.

The legacy of touching and enriching lives stems from the pillars of the Apollo

philosophy - experience, excellence, expertise and research. We pride ourselves for

constantly being on the cutting edge, and going the extra mile to stay relevant and

revolutionary.

The Apollo Hospitals Group is the pioneer of integrated healthcare delivery in

India. This vision led the group to earmark time and resources to strengthen each

vital cog in the process of healthcare delivery. As a result of these efforts, the group

today is in a unique position to exponentially increase its healthcare cover. This willbe critical in order to meet future requirements.

Apollo Hospitals Group, today, is an integrated healthcare organization with owned

and managed hospitals, diagnostic clinics, dispensing pharmacies and consultancyservices. In addition, the groups service offerings include healthcare at the patients

doorstep, clinical & diagnostic services, medical business process outsourcing, third

party administration services and health insurance. To enhance performance and

service to customers, the company also makes available the services to support

business, telemedicine services, education, training programs & research servicesand a host of other non-profit projects.


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VERIFICATION OF BALANCE SHEET

SCHEDULE A- SHARE CAPITAL

In the first year of existence of the company ,the auditor should examine the

Memorandum and Ar ticles of the Associationof the company and the prospectus

to ascertain the details of the capital.

The auditor should also check the cash book, pass book and minutes book of the

directors and find out the allotment of shares , calls made on shares.

In subsequent years, the auditor should see that there is any fresh issue of capital

or capital is redeemed or there is reduction in capital when the provision of

companies act are complied with.

SCHEDULE B- RESERVES & SURPLUS

The auditor should see that provisions of transfer of profit to reserves are

complied with and whether reserves are created out of the profits.

The auditor should see that reserves are created out of profit or on revaluation of

the assets or sale of asset or as per statutory requirements.

The auditor should see that the reserves created are properly utilized as per law.

SCHEDULE C AND D- SECURED AND UNSECURED LOAN

The auditor should ensure that provisions of company Act regarding maximumamount of loan that a company can pay have been complied with in to the detail of

security given against loan.

Incase the loan is secured and such factor is disclosed in balance sheet, the

auditor should obtain a confirmation letter from the party and should verify that the

books of accounts and balance sheet agree with the statement and by the lender.

In case of debentures, the company should comply with SEBI guidelines.


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SCHEDULE H - CURRENT ASSETS, LOANS AND ADVANCES

DEBTORS

Confirmation of balances to clients should be sent within 15 to 20 days of the

year ending day. After reply is received the same should be tallied with balance

shown in debtors ledger and difference if any should be reconciled.

Scrutiny of debtors individual account and test check technique can be applied.

CASH AND BANK BALANCES

According to the guidance note on audit of cash and bank balance issued by ICAI,

the auditor must follow the following procedures :-

1. Physically verify the cash on the date of balance sheet.

2. Obtain Information from the bankers, regarding the bank account.

3. Examine the Bank Reconciliation Statement.

LOAN & ADVANCES

It is very Important as an auditor to verify the amount of Loan & Advances given

To the Customers. This can be verified from the receipt given to the customers, and

Apollo Hospitals account in their book. The Auditor can also check the liability

side of the customers and verify the amount.


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VERIFICATION PROFIT & LOSS ACCOUNT

SCHEDULE 1

Schedule 1 includes all I ncomes like interest earned, dividend from current and

long term investments, income from treasury operations, profit on sale of

investments and others. The verification of the same can be done by checking the

bill book, bank statement and invoices.

SCHEDULE 2

This schedule includes Operating Expenseslike power and fuel, house keeping

expenses and water charges.

The Operating Expenses have to be checked by the Auditor from cash book, and for

each item or expenditure incurred, he should check the receipts and voucher related

to that Expenses.

SCHEDULE 3

This Schedule includes Payments to and Provisions for Employeeslike :-

a.

Salaries and Wages

b.

Contribution to Provident Fund

c.

Employee State Insurance

d.

Employee Benefits

e.

Staff Welfare Expensesf.

Staff Education and Training

g.

Bonus

These items have to be checked by the Auditor from cash book, and for each

item or expenditure incurred, he should check the receipts and voucher related to

that Expenses.


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SCHEDULE 4

This Schedule includes Administrative and Other Expenseslike :-

a.

Rentb. Rates

c. Printing and Stationery

d. Postage and Telegram

e. Insurance

f. Directors Sitting Fees

g. Advertisement, Publicity and Marketing

h. Travelling and Conveyance

i.

Subscriptionsj. Security Charges

k. Legal and Professional Fees

l. Continuing Medical Expenses and Hospitality Expenses

m.Hiring Charges

n. Seminar Charges

o. Telephone Expenses

p. Books and Periodicals

q.

Miscellaneous Expensesr. Provision for Bad Debts

s. Repairs and Maintainance of Equipment, Building and Vehicles

t. Outsourcing Expenses

These Expenses have to be checked by the Auditor from cash book, and for each

item or expenditure incurred, he should check the receipts and voucher related to

that Expenses.

SCHEDULE 5

This Schedule includes F inancial Expenseslike Interest on Loans and

Debentures, Bank Charges amd Brokerage and Commission.

The Financial Expenses have to be checked by the Auditor from cash book, and

for each item or expenditure incurred, he should check the receipts and voucher

related to that Expenses.


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AUDITORS REPORT

1. We have audited the attached Balance Sheet of APOLLO HOSPITALSENTERPRISE LIM ITEDas at 31st March 2011, the related Profit and LossAccount and the Cash Flow statement for the year ended on that date annexed

thereto. These financial statements are the responsibility of the Companys

management. Our responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally

accepted in India. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of

material misstatement(s). An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. We have also considered the independent audit observations of the divisional

auditors for the Pharmacy Division, Projects Division, Hyderabad Division,

Bilaspur Division, Mysore Division, Vizag Division, Pune Division, Karim Nagar

Division and Mandya Division for forming an opinion on the accounts for therespective Divisions.

4. As required by the Companies (Auditors Report) Order 2003, as amended by the

Companies (Auditors Report) (Amendment) Order 2004, issued by the Central

Government of India, in terms of sub-section (4A) of Section 227 of the CompaniesAct, 1956, and on the basis of such checks of the books and records of the Company

as we considered appropriate and according to the information and explanations

given to us, we set out in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

5. In the absence of any notification from the Central Government with respect to

the Cess payable under Section 441A of the Companies Act, 1956, no quantification

is made. Hence, no opinion is given on Cess unpaid or paid, as per the provisions of

Section 227(3) (g) of the Companies Act, 1956.


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6. Further to our comments in the Annexure referred to in paragraph 4 above, we

report that:

(i) We have obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purpose of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by

the company so far as appears from our examination of those books;

(iii) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement

dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash

Flow Statement dealt with by this report comply with the Accounting Standards

specified by the Institute of Chartered Accountants of India, referred to insubsection (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st

March 2011 and taken on record by the Board of Directors, we report that none of

the directors is disqualified as on 31st March 2011 from being appointed as a

director in terms of clause (g) of sub-section (1) of Section 274 of the Companies

Act, 1956, and

(vi) In our opinion and to the best of our information and according to theexplanations given to us, the said financial statements together with the notes

thereon and attached thereto , give the information required by the Companies Act,

1956, in the prescribed manner and also give a true and fair view in conformity with

the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March 2011;

(b) in the case of the Profit and Loss Account, of the PROFIT of the Company forthe year ended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for

the year ended on that date.


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CONCLUSION

The process of Hospital Audit is not completely flawless; it has certain areas that

need to be worked upon.

Some of the major loopholes are on the part of commitment, participation andseriousness for the audits. Audits in Indian scenario are still more or less

considered as an obligation and are done only to fulfill the requirement of various

accreditation or other external agencies rather than for the improvement of hospital

processes and quality in actual. Low number of auditors is also a concern forhospital audit in this country.

Hospital audits if utilised efficiently and rigorously help the hospital to perform

better both for itself and its patients, but until now they have never been

meticulously implemented in India. But the scene is changing with changing

attitude of both doctors and patients. It has just begun to gain momentum in Indiaand needs acceptability by the hospital systems and medical fraternity as an

improvement initiative rather than a fault finding mechanism.


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BIBLIOGRAPHY

AUDI TING & I TS PROCEDURE

-ICAI

AUDITING

TY.BCOMTAXMAN

BASIC CONCEPT OF AUDI TING

-R.N.SHETTY

WEBLIOGRAPHY

WWW.GOOGLE.COM

WWW.ICAI.ORG

WWW.APOLLOHOSPITALS.COM
http://www.google.com/http://www.icai.org/http://www.apollohospitals.com/http://www.apollohospitals.com/http://www.icai.org/http://www.google.com/

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