Manual on Internal Audit - ICAI Knowledge...

Manual on Internal Audit

DISCLAIMER : The views expressed in the Manual on Internal Audit are those of the

author(s). The Institute of Chartered Accountants of India may not

necessarily subscribe to the views of the author(s).

The Institute of Chartered Accountants of India

(Set up by an Act of Parliament) New Delhi

ii

© The Institute of Chartered Accountants of India

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic mechanical, photocopying, recording, or otherwise, without prior permission, in writing, from the publisher.

Edition : January, 2009

Website : www.icai.org

Email : [email protected]

Price : Rs. 400/- (Including CD)

ISBN : 978-81-8441-179-9

Published by : The Publication Department on behalf of CA. Puja Wadhera, Senior Assistant Director, Internal Audit Standards Board, The Institute of Chartered Accountants of India, Indraprastha Marg, New Delhi – 110 002

Printed by : Sahitya Bhawan Publications, Hospital Road, Agra 282 003

January/2009/1000 Copies

iii

Foreword

The year 2008-09 has been a very active year for the Internal Audit Standards Board. The year has seen the Board issuing a number of Standards on Internal Audit as well as other technical literature such as generic and industry specific technical guides. I am happy to note that the Board is brining out this Manual on Internal Audit.

This is first of its kind of Manual on internal audit to be published by the Institute as it contains a step by step approach to conduct internal audit, right from appointment to reporting. The Manual has been developed by a team of experts in the field of internal audit and risk management and the fact is amply reflected in the fine balancing of conceptual vis a vis practical approach to internal audit in the Manual.

I appreciate that despite being a highly technical document, the Manual has been written in a very simple and lucid manner. Besides, the guidance contained herein being generic in nature, the Manual can be gainfully used by all the internal auditors across the cross section of industry type and size.

At this juncture, I wish to compliment all members of Internal Audit Standards Board, especially, the Chairman, CA. Abhijit Bandyopadhyay for having conceived the idea.

I am sure that this Manual, like other publications of the Board, would be warmly received and appreciated by the members and other interested readers.

January 16, 2009

New Delhi

Ved Jain

President, ICAI

v

Preface

Contemporary internal audit is a vast field with a number of facets to be understood and addressed. The Internal Audit Standards Board has been working relentlessly to bring out more and more quality literature for the guidance of the members. Till date the Board has brought out not only more than ten Standards on Internal Audit (SIAs) on various significant aspects of internal audit, it has published a number of widely appreciated generic as well as industry specific technical guides for the benefit of the members.

When the Board conceived the idea of having a Manual on Internal Audit, the basic objective behind the same was to bring out a comprehensive publication on internal audit, containing practical guidance on conducting an internal audit in a real life scenario. Accordingly, the Board roped in the services of an expert in the area of internal audit and risk management to prepare this Manual. The Manual, as you would see, is quite comprehensive, providing a step by step guidance on every aspect of internal audit. It is divided into four main parts. Part A deals with Internal Audit Engagement Management, Part B deals with Internal Audit Project Management, Part C deals with Close Outs and Part D deals with General Annexures. While each of the Parts is further divided into relevant sub topics, Part B contains, guidance on aspects such as overall planning, pre audit opening, detailed walk throughs, report, checklists, audit programmes, report compilation, exit meeting and report issuance.

The Manual contains a number of templates as well as checklists for ready reference and easy use of the readers. The Manual has therefore, a wider usage and appeal. I personally feel that the Manual has turned out to be the first of its kind one stop reference for the internal auditors to be issued by the Institute.

I wish to place on record my thanks for Shri Ved Jain, President, and Shri Uttam P Agarwal, Vice President, ICAI for their vision and unstinted support in the activities of the Internal Audit Standards Board. I also wish to express my sincere gratitude to all my colleagues from the Council at the Internal Audit Standards Board, viz., CA. Bhavna G. Doshi, Vice Chairperson, CA. Sunil H. Talati, CA. Mahesh P. Sarda, CA. Shanti Lal Daga, CA. K. P. Khandelwal, CA. Manoj Fadnis, CA. Anuj Goyal, CA. Amarjit Chopra, Shri Manoj K Sarkar, Shri K. P. Sasidharan, Dr. Pritam Singh and Shri O. P. Vaish for their vision and support. I also wish to place on records my gratitude for the co-opted members on the Board, viz., CA. Partha Sarathi De, CA. N. K. Aneja, CA. Charanjit S. Attra, CA. Nagesh D. Pinge as also special invitees on the Board, viz., CA. Harinderjit Singh (my Council colleague), CA. Deepak Wadhawan, CA. Manu Chadha, CA. Santosh Nair and CA. Amit Roy for their free and frank views, invaluable guidance as also their dedication and support to the various initiatives of the Board. I also wish to thanks to CA. K. Raghu (my Council colleague), for his support in bringing out the Manual. I also wish to express my thanks to CA. Puja Wadhera, Secretary, Internal Audit Standards Board and her

vi

team of officers, CA. Gurpreet Singh, Senior Executive Officer and CA. Arti Aggarwal, Executive Officer for their efforts in giving final shape to the Manual.

I am sure that the Manual would be warmly received by the interested readers and would be recounted as a landmark publication of the Institute. January 19, 2009

Kolkata

Abhijit BandyopadhyayChairman, Internal Audit Standards Board

Contents

Page No

Foreword……………………………………………………………………………………….……….(iii)

Preface……………………………………………………………………………………………….… (v)

Format No

Part - A Internal Audit Engagement Management A/1 Initial Introduction Letter 3A/2 Proposal of Internal Audit Services 4A/3 Engagement letter 9A/4 Scope and Objective 15A/5 Organization Background 16A/6 Industry Research 18A/7 List of Files and Contents 20

Paet - B Internal Audit Project Management B/1 Overall Planning 23

Pre Audit Opening 25B/2.1 Opening Meeting Control Statement 25B/2.2 General Process Understanding 26B/2.3 Data Needs Identification and Collection 28B/2.4 Data Analysis and Summary Preparation 29B/2.5 Previous Audit Report Analysis 30B/2.6 Brain Storming Sessions (Internal) 31

Detailed Walk Throughs 32B/3.1 Selection of sample 32B/3.2 Walk Through Tracking 33B/3.3 Documentation of Walk Through 34

Risks, Checklists, Audit Programme 37 Listing of Risks and Audit Programme (Checklists) 37

B/4.1.1 Corporate Risks Review Checklist 37B/4.1.2 Finance and Accounts Risks Review Checklists 43B/4.1.3 Human Resources Process Review Checklists 51B/4.1.4 Inventory Risks Review Checklists 65B/4.1.5 Information Security Review Checklists 74B/4.1.6 Marketing Risks Review Checklists 83B/4.1.7 Purchases Risks Review Checklists 88

viii

B/4.1.8 Production Risks Review Checklists 93B/4.1.9 Sales and Despatch Risks Review Checklists 101

B/4.1.10 Statutory Compliances Review Checklists 106B/4.1.11 Administration Risks Review Checklists 120

B/4.2 Planning and Execution of Audit Programme 124B/4.3 Compilation of Observations and Draft Reporting 129B/4.4 Quality Check of Evidences Collection 132

Report Compilation 133B/5.1 Draft Audit Report 133B/5.2 Covering Letter for Draft Report – by Email/ Letter Head 136B/5.1 Collection of Management Comments 137

Exit Meeting 138B/5.2 Fixing of the Meeting Time 138

B/6.2A, B/6.2B Presentation and Action Plan Preparation 139

B/5.1 Updation of the Action Plan into the Draft Report 144 Report Issue 145

B/7.1 Final Report Release Checklist 145B/7.2 Audit Committee Presentation (Where Applicable) 147B/7.3 Audit Feedback Collection 154

Work Paper Closures 157 Work Papers Compilation and Quality Audit Closures 157

B/8.1A Quality Audit Checklist 157B/8.1B Quality Audit Action Plan Statement 161B/8.2 Knowledge Bank Updation 162

Part -C Close Outs C/1 Invoice Format 165C/2 Out of Pocket Expenses Tracking 166C/3 Overall Closure Checklists 167

Part - D General Annexures D/1 Confirmation of Meetings Format 171D/2 Minutes of Meetings Formats 172D/3 Agenda of the Meeting 173D/4 Standards on Internal Audit Issued by the ICAI 175

1

PART – A

Internal Audit Engagement Management

3

Initial Introduction Letter

Format No: A/1

Date: <DD MMM YYYY>,

<City>.

To

Mr./Mrs. <Name of the Client Representative>, <Designation>,

<Name of the Company>,

<City>.

Dear Sir,

Sub: Introduction of Our Internal Audit Services

In continuation to your request, we are very happy to introduce XYZ & Co, one of a specialist in delivering you high value Internal Audit Services based at <City>. We are a team of XX Chartered Accountants, XX Information Systems Auditors, XX Internal Auditors.

Our methodology is adopted from global standards and ICAI standards and would be providing required value add. Some of the clients whom we have delivered the services are Client 1, Client 2, Client 3, Client 4 etc. to name a few.

Please also find attached a detailed profile1 of our organization for your review. We look forward to hear from you in this regard.

Warm Regards,

For XYZ & Co.

XYZ,

Partner 2 3

1 Attach your organization’s profile to this letter. Please comb-bind the profile for presentation. 2 The objective of this letter is just to introduce your organization subject to a request from the client. 3 The letter should be preferably signed by the Partner of the organization or an authorized representative. Keep an

office copy of this letter. A file viz., “Initial Introduction Letters” may be opened to track all the letters.

4

Proposal for Internal Audit Services1

Format No: A/2

Overview: <Write a brief overview about the company you are giving a proposal>

<Write a brief overview about the Industry Segment to which the client belongs>

<Write briefly about the general challenges faced by the Industry>

<Write briefly about how Internal Audit can help eliminate them>

<Write briefly about your organization’s capabilities in providing Internal Audit Services>

<Write briefly about the contents of this proposal>

Scope and Objective: The objectives for the internal audit are as under:

Evaluate the business processes to ensure that they are aligned to the business objectives.

Evaluate the compliance to both the internal policies and procedures of the company and external regulations to the extent applicable to the following key processes.

Evaluate the effectiveness and efficiency of the identified processes and related internal controls.

Evaluate the accuracy of accounting information systems supporting the process.

Evaluate progressively the risks relating to the business management covering information technology and general process

Scope of work / Areas to be covered as part of Internal Audit:

The scope shall be covering the transactions for the period <Month, Year> to <Month, Year>

Management Process

Process 12

Process 2

Marketing

Process 1

Process 2

1 Proposal may be printed on the letter head of the organization or a simple A4 Size Sheet. 2 You may also add a list of risks that shall be looked into in the process.

Proposal for Internal Audit Services

5

Contract/Project Management

Process 1

Process 2

Client Relationship Management

Process 1

Process 2

HR Process

Process 1

Process 2

Finance and Accounts

Process 1

Process 2

Administration and Logistics

Process 1

Process 2

Information Technology

Process 1

Process 2

The depth and sample size under the above business processes will be decided based on Risk assessment, where incase the Risk level is high, the area shall be analyzed in depth and the sample size shall also accordingly increase. The coverage shall be based on significant risks identified in the area of concentration. The methodology adopted for internal audit deliveries is separately given in this proposal.

Methodology and Deliverables3

We have structured methodology starts from mapping the corporate vision to audit deliveries and value-add. The following chart displays the steps generally followed by us in an Internal Audit Outsourcing Service.

3 Each firm may have its own methodology / format of deliverables. This is model only.


6

The following are the benefits for the organization from outsourcing:

• Global best methodology for handling Internal Audits

• Relevant business / process / internal audit expertise and access to best practices

• Structured deliveries with performance indicators and terms of delivery

• Saving costs and efforts for the organization and help management concentrate on core competency

Our strong methodology also includes taking the input of the top management, process management and audit management to design a solution that means value addition. Our deliverable will give a road map to make the necessary process improvements that gives a big seat for practicality of implementation of recommendations.

Pre Audit Opening

• General Process Understanding

• Data Analysis and Summary Preparation

• Planning of Audit

Detailed Walk Through

• Detailed Walk Through

• Documentation of Walk Through Results

Risks, Checklists, Audit Programme

• Listing of Risks and Audit Programme (Checklists)

• Generation of Exceptions through Analytics

• Planning of Audit Programme Delivery

• Execution of Audit Programme

• Compilation of Observations and Draft Reporting

• Quality Check of adequacy of Evidences and Work Paper Linking

• Supervisory Review and Confirmation

Report Compilation

• Preparation of Audit Report

• Circulation of the Draft Report for Management Comments

• Collection of Management Comments

Exit Meeting

• Fixing of the Meeting Time

• Presentation and Action Plan Preparation

• Updation of the Action Plan into the Draft Report

Proposal for Internal Audit Services

7

Report Issue

• Final Official Report Issue as per Standards on Internal Audit (SIAs) Issued by the ICAI

• Audit Committee Presentation (Where Applicable)

• Audit Feedback Collection

Each Audit Report shall contain the following information:4

• Executive summary

• High, Medium, Low Risk Areas classified separately

• Detailed audit observations, covering Risks, Impact, Recommendations, Auditee Comments, Annexures of evidences

• Audit Implementation Action Plans with time lines and responsibility shall be updated after management discussion.

• Presentation to management and Audit Committee

The Audit shall be conducted as per the Standard on Internal Audit (SIA) 4 for Reporting released by ICAI.

Team, Schedule and Professional Fees:

Based on the Information provided to us with regard to the infrastructure and statistics, we estimate the following:

Sl No Particulars / Name of the Resource5

No of man days / man

months Qualifications

1 Partner

2 Senior Manager

3 Senior Associates / Consultants

4 Associates / Consultants

5 Junior Associates / Consultants

Total Time

Taking the above deployments into account, the fee for the assignment is estimated as Rs. XXXXXXX/- excluding applicable service taxes. Incase there is any travel incidental to the delivery of the project we shall adhere to internal policies and shall be reimbursed on actual.6

4 Incase you would like to expand the deliverables, it can be done. Sometimes clients would like to know what is the format of deliverable, in such cases, an annexure may be added. 5 A detailed resource list may be given where necessary. 6 It is always good practice to add commentary about service tax and out of pocket expenses (OPEs) applicability / inclusion.


8

Resources Required

• An audit room will be set up having the sufficient no. of Table and chairs along with White board for meeting and discussion.

• Access to all the data, record, employees required for the effective performance of internal audit.

• Computers with access to company ERP, email and other systems with printing facility with adequate stationary.

Project Coordination:

We understand the importance of a project coordinator over the period of the assignment. The team shall be interacting with the process owners through the project coordinator.

About XYZ & Co

<Write about your organization, history, locations, its team members, no of man years of experience totally, specific points about your organization’s capabilities etc.,>

<Write a list of services your firm offers apart from internal audits>

<Give a list of clients and work experiences where applicable>7

8

7 Logos of clients may be given, whereas prior permission of clients may be necessary. 8 Some firms also add confidentiality clause / non-compete clause in the proposal itself.

9

Engagement Letter

Format No: A/3 <on the letter head>

Date: <DD MMM YYYY>,

<City>.

To

Mr./Mrs. <Name of the Client Representative>,

<Designation>,

<Name of the Company>,

<City>.

Dear Sir,

Sub: Internal Audit Engagement Letter

With regards to the discussions we had on DD/MM/YYYY and in continuation with the proposal given on DD/MM/YYYY, please find the Engagement Letter for the Internal Audit Assignment with the following Scope, Objective and Timelines:

Scope and Objective:1 The objectives for the internal audit are as under:

Evaluate the business processes to ensure that they are aligned to the business objectives.

Evaluate the compliance to both the internal policies and procedures of the company and external regulations to the extent applicable to the following key processes.

Evaluate the effectiveness and efficiency of the identified processes and related internal controls.

Evaluate the accuracy of accounting information systems supporting the process.

Evaluate progressively the risks relating to the business management covering information technology and general process

1 Specific objectives of client may be elaborated here.


10

Scope of work / Areas to be covered as part of Internal Audit: The scope shall be covering the transactions for the period <Month, Year> to <Month, Year>

Management Process

Process 1

Process 2

Marketing

Process 1

Process 2

Contract/Project Management

Process 1

Process 2

Client Relationship Management

Process 1

Process 2

HR Process

Process 1

Process 2

Finance and Accounts

Process 1

Process 2

Administration and Logistics

Process 1

Process 2

Information Technology

Process 1

Process 2

The depth and sample size under the above business processes will be decided based on Risk assessment, where incase the Risk level is high, the area shall be analyzed in depth and the sample size shall also accordingly increase. The coverage shall be based on significant risks identified in the area of concentration. The methodology adopted for internal audit deliveries is separately given in this proposal.

Engagement Letter

11

Methodology and Deliverables2 We have structured methodology starts from mapping the corporate vision to audit deliveries and value-add. The following chart displays the steps generally followed by us in an Internal Audit Outsourcing Service.

The following are the benefits for the organization from outsourcing:

• Global best methodology for handling Internal Audits

• Relevant business / process / internal audit expertise and access to best practices

• Structured deliveries with performance indicators and terms of delivery

• Saving costs and efforts for the organization and help management concentrate on core competency

Our strong methodology also includes taking the input of the top management, process management and audit management to design a solution that means value addition. Our deliverable will give a road map to make the necessary process improvements that gives a big seat for practicality of implementation of recommendations.

Pre Audit Opening

• General Process Understanding

• Data Analysis and Summary Preparation

• Planning of Audit


• Detailed Walk Through

• Documentation of Walk Through Results


• Listing of Risks and Audit Programme (Checklists)

• Generation of Exceptions through Analytics

• Planning of Audit Programme Delivery

• Execution of Audit Programme

2 Some clients may not want a detailed methodology to be given in the engagement letter.


12

• Compilation of Observations and Draft Reporting

• Quality Check of adequacy of Evidences and Work Paper Linking

• Supervisory Review and Confirmation

Report Compilation

• Preparation of Audit Report

• Circulation of the Draft Report for Management Comments

• Collection of Management Comments

Exit Meeting

• Fixing of the Meeting Time

• Presentation and Action Plan Preparation

• Updation of the Action Plan into the Draft Report

Report Issue

• Final Official Report Issue as per Standards on Internal Audit (SIAs) Issued by the ICAI

• Audit Committee Presentation (Where Applicable)

• Audit Feedback Collection

Each Audit Report shall contain the following information: • Executive summary

• High, Medium, Low Risk Areas classified separately

• Detailed audit observations, covering Risks, Impact, Recommendations, Auditee Comments, Annexures of evidences

• Audit Implementation Action Plans with time lines and responsibility shall be updated after management discussion.

• Presentation to management and Audit Committee

Team, Schedule and Professional Fees: Based on the Information provided to us with regard to the infrastructure and statistics, we estimate the following:

Sl No Particulars / Name of the Resource No of man days /

man months Qualifications

1 Partner 2 Senior Manager 3 Senior Associates / Consultants 4 Associates / Consultants 5 Junior Associates / Consultants Total Time

Engagement Letter

13

3Taking the above deployments into account, the fee for the assignment is estimated as Rs. XXXXXXX/- excluding applicable service taxes. Incase there is any travel incidental to the delivery of the project we shall adhere to internal policies and shall be reimbursed on actual.

Resources Required • An audit room will be set up having the sufficient no. of Table and chairs along with White

board for meeting and discussion.

• Access to all the data, record, employees required for the effective performance of internal audit.

• Computers with access to company ERP, email and other systems with printing facility with adequate stationary.

Project Coordination: We understand the importance of a project coordinator over the period of the assignment. The team shall be interacting with the process owners through the project coordinator. It is the duty of the Project Coordinator to organize the information and time of the process owners. Any delay due to coordinator or process owner shall not be the responsibility of the Internal Audit Service Provider.

Confidentiality Clause: We shall maintain confidential all the information collected as part of the engagement and shall not disclose them unless until necessary as per the regulations of the land of assignment. Incase of need to disclose the information, we shall take the permission of the client coordinator before disclosing.

Termination Clause: The assignment can be terminated by either parties by giving a notice in advance of atleast 1 month. Thereafter the information / documentation collected shall be returned back to the client.

4Incase of negligence, quality standards compromise, and willful default, the client shall have the right to be indemnified for all the costs till the date of termination.

3 Some clients may be interested to add a detailed Gantt chart of the project. 4 Some clients may also be interested to add a Quality Assurance Clause.


14

Signing of the Contract:

For XYZ & Co.,5

XYZ,

Partner

On behalf of Client

For <Name of the Client>

<Name of the Authorized Representative>

<Designation>

5 Please ensure that the seal is put on the Contract. The engagement letter shall be made in two copies, one for each party.

15

Scope and Objective Statement

Format No: A/4

Assignment No Assignment Name

Engagement Manager

Company Name

Objective of the Assignment1 a.

b.

c.

d.

Scope of the Assignment2 a.

b.

c.

d. 3

1 Please define in as much detail as possible the objectives for which the assignment is being handled. Objective is the element, one is trying to achieve at the end of the project. It is very important that the objectives are defined as clearly as possible to eliminate ambiguity. 2 Define the areas of coverage, it may be in period / departments / divisions / business processes / locations / units etc., The scope should be linked to objectives. 3 It is recommended to do as much brainstorming as possible to define this document at the planning stage.

16

Organization Background

Format No: A/5


Engagement Manager

Company Name

General Business Understanding

Overview of Business

Overview of Industry Segment1

Specific Risks faced by Industry Segment

1 Use Internet search engines, industry publications, websites, research reports.

Organization Background

17

Important Statistics (Financial, Manpower etc.) Collected2

Organization Structure and Decision Hierarchy3

Business Goals, Objectives

Description about the Business Systems, IT Infrastructure4

2 Obtain important performance statistics which shall help understand organization’s current state of affairs. 3 Please give annexure where necessary. You may use MS-Visio or MS-Excel to prepare organization structures. 4 Detail about the systems and procedures currently in place. Also capture the level of standardization in the organization ie. Existence of Standard Operating Procedures, Policies etc.,

18

Industry Research

Format No: A/6


Engagement Manager

Company Name

The objective of this document is to identify the industry practices / competitor practices so as to enable the organization under to benchmark itself.1

List of Competitors and availability of Information with regards to financials, processes etc.

List of Best Practices Adopted by Industry

Sl No Area / Best Practice Source Name of the Company

1 The strength of this document projects you as an industry resource to the clients.

Industry Research

19

Key Performance Indicators of Various Business Processes in Industry

Sl No Performance Indicator Business / Business Process Source Name of the Company

Names of Industry Publications, Associations, Websites, Industry Consultants, Specialists

20

List of Files and Contents

Format No: A/7


Engagement Manager

Company Name

Sl No Contents of the Files A Name of the File: Client Master File (Project wise divider)

1 Proposal Copy

2 Engagement Letter, Purchase Order, Service Order, Appointment Order

3 Client Strategic Communications

4 Invoices, Cheque Receipts, OPE Claims

5 Any other relevant information

B Name of the File: Assignment File (Phase of Assignment wise divider)1

1 Scope, Objective Document

2 Organization Background

3 Industry Research

4 Minutes of Various Meetings

5 Work Papers

6 Risks Listing and Audit Programme with completed work papers

7 Draft Audit Report

8 Management Exit Meet Minutes

9 Final Report and Presentation2

10 Implementation Status Updates

11 Quality Audit Checklist

12 Documents Collected from the Client for Audit purposes3

13 Feedback Form

14 Overall Closure Checklist

1 Open multiple files if one file is not adequate. 2 It is a good practice to show links between the observations in the final report to the work papers evidencing them. 3 If the data collected is in bulk form, it may be written on a CD and filed.

21

PART – B

Internal Audit Project Management

23

Overall Planning

Format No: B/1


Engagement Manager

Company Name

Team Identification for the Engagement:

Sl.no Type of Competency Required Period for Which Required

Name of Person Selected

Project Costing: Sl.no Expenditure type Planned

1 Man month Costing

2 Other Direct Costing

3 Administrative Costs

Total

Amount Billed

Profitability

% age of Profitability

Detailed Planning Sl. No Form Name Planned Date Auditor

1 Opening Meeting

2 Scope and Objective of the Assignment

3 Assignment Scheduling


24

Sl. No Form Name Planned Date Auditor

4 Planning

4.1 General Process Understanding

4.2 Data Analysis

4.3 Walk Through

4.4 Documentation of Walk Through

4.6 Risks and Audit Programme Generation

4.7 Field Work Scheduling

5 Field Work

5.1 Field Work Execution

5.2 Draft Report Generation and Circulation

6 Exit Meeting

6.1 Draft Report with management comments

7 Final Report Issue

7.1 Structured Reporting

7.2 Presentation of Finding

8 Follow up and Implementation

8.1 Follow Up Check list

9 General Administrative Closures

9.1 Invoice Generation

9.2 Out of Pocket Expenses Collection

9.4 Client Feedback

9.5 Opportunity for future Businesses

9.6 Knowledge Base Updation

10 Quality Audit

10.1 Quality Review Report and Action Statement

10.2 File Closure

Any Other Remarks Manager Partner

Pre – Audit Opening

2.1 Opening Meeting Control Statement

Format No: B/2.1


Engagement Manager Company Name

Date of Meeting Department Participants from Auditees Participants from Internal Audit Team Name Designation Name Designation

Sl No Steps of Opening Meet Handled by Documentation 1 Introduce the Internal Audit members to the

Auditees and explain about the objectives and methodology of the Audit

2 Explain about the time schedule of the project and the names of persons from the Auditee end to coordinate

3 Understand specific objectives of the Auditees and the business goals etc.,

4 Understand the specific performance indicators used to measure in the area under Audit

5 Get a general understanding of the business process, ERP etc.

6 Collect various operating procedures, policies

7 (Reffer footnote)

Any further specific questions may be raised apart from generic. Whereas, the objective of the meet is to give a very high level understanding on the audit.


26


Format No: B/2.2

Assignment No Assignment Name Engagement Manager

Company Name

Name of the Process1

Major Process Name

Process Owner Division Location

Date of Process Analysis

No of Employees

System ERP / Manual

Process Objectives

Process – Performance Measures

Process Map2

1 Document only the most important processes which relate to our audit objectives. 2 Process Maps can also be done using MS-Visio, Excel. Whereas, MS-Word may be most frequently used tool.

Pre- Audit Opening

27

Type of Boxes for Process Mapping34

3 We recommend basic flow charting techniques for process flow. You may also use advanced techniques where necessary. 4 Process flow should be signed off with the process owners.

Process / Activity /

Action Box Decision

Box

Filing, Document, Form etc.,

Process Gap

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28

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audi

t rep

orts

in a

n in

fere

nce

docu

men

t whi

ch s

hall

be a

n in

put t

o va

rious

oth

er p

hase

s,

repo

rts e

tc.

8 Th

is d

ocum

ent a

lso

acts

as

a be

st p

ract

ice

inst

rum

ent a

nd is

gen

eral

ly h

ighl

y ap

prec

iate

d du

ring

Qua

lity

Assu

ranc

e / A

udits

/ P

eer R

evie

ws.

9

Infe

renc

e m

ay b

e th

e co

nclu

sion

dra

wn

afte

r the

ana

lysi

s w

hich

in-tu

rn m

ay le

ad to

furth

er a

naly

sis,

in-d

epth

ver

ifica

tion,

dire

ct re

porti

ng e

tc.

29

Pre- Audit Opening

Man

ual o

n In

tern

al A

udit

30

2.5

Prev

ious

Aud

it R

epor

t Ana

lysi

s1011

Fo

rmat

No:

B/2

.5

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

Sl N

o A

udit

Rep

ort N

ame

/ Pe

riod

Det

ails

of I

nfer

ence

s12

Upd

ates

to th

e R

isk

List

ing

/ Aud

it Pr

ogra

mm

e / A

udit

Rep

ort

Rem

arks

10

The

obj

ectiv

e of

the

docu

men

t is

to c

onso

lidat

e th

e an

alys

is, r

esea

rch,

pre

viou

s au

dit

repo

rts in

an

infe

renc

e do

cum

ent

whi

ch s

hall

be a

n in

put

to v

ario

us o

ther

ph

ases

, rep

orts

etc

. 11

Thi

s do

cum

ent a

lso

acts

as

a be

st p

ract

ice

inst

rum

ent a

nd is

gen

eral

ly h

ighl

y ap

prec

iate

d du

ring

Qua

lity

Assu

ranc

e / A

udits

/ P

eer R

evie

ws.

12

Infe

renc

e m

ay b

e th

e co

nclu

sion

dra

wn

afte

r the

ana

lysi

s w

hich

in-tu

rn m

ay le

ad to

furth

er a

naly

sis,

in-d

epth

ver

ifica

tion,

dire

ct re

porti

ng e

tc.

30


Pre

- A

udit

Ope

ning

31

2.6

Bra

in S

torm

ing

Sess

ions

(Int

erna

l)1314

Fo

rmat

No:

B/2

.6

A

ssig

nmen

t No

Ass

ignm

ent N

ame

Eng

agem

ent M

anag

er

Com

pany

Nam

e

Sl N

o D

etai

ls o

f Pro

cess

es /

Ris

ks D

iscu

ssed

in

the

Sess

ion

Impo

rtan

t Con

clus

ions

U

pdat

es to

the

Ris

k Li

stin

g /

Aud

it Pr

ogra

mm

e / A

udit

Rep

ort

Rem

arks

13

Brai

nsto

rmin

g se

ssio

ns a

re a

ver

y go

od p

ract

ice

whe

re th

e C

onsu

ltant

s, M

anag

ers

and

Par

tner

s di

scus

s as

to th

e un

ders

tand

ing

of th

e pr

oces

ses,

risk

s an

d th

reat

s in

th

e or

gani

zatio

n an

d ev

olve

a d

eepe

r tho

ught

pro

cess

. Th

is is

als

o a

good

way

to e

xcha

nge

know

ledg

e in

you

r org

aniz

atio

n.

14

Th

is d

ocum

ent a

lso

acts

as

a be

st p

ract

ice

inst

rum

ent a

nd is

gen

eral

ly h

ighl

y ap

prec

iate

d du

ring

Qua

lity

Assu

ranc

e / A

udits

/ P

eer R

evie

ws.

31

Pre- Audit Opening

Detailed Walk Throughs

3.1 Selection of Samples1

Format No: B/3.1


Engagement Manager

Company Name

Mechanism for Selection of Sample:

Sl No Area of Verification Type of Sampling Technique to be used

1 To verify a process of very high concern with significant materiality and impact on the bottom line of the organization

100% Verification

2 To verify a process in an ERP for the purpose of controls built inside the system (Automated Controls)

1 Sample

3 To verify a process not inside the ERP involving verification of a manual control and the objective is to get confidence on the entire population

Random Sampling2

4 To verify a process and understand the controls are working adequately only incase of significant value transactions

Random Sampling of transactions above threshold limit

5 To verify the controls in a specific attribute of transactions viz., of an individual, location, unit, time zone etc.,

Random Sampling of transaction satisfying the attribute

Samples Selected and Result Documentation

Sl No

Process to be verified and Objective to be achieved

Type of Sampling Adopted

No of Samples Selected3

Result of Verification4

Conclusions

1 Incase of usage of an Audit Tool viz., ACL, IDEA generally 100% transactions can be verified for exceptions study. 2 Seed technique may be used for random sample pick up. All the transactions should have equal probability of being picked up. Random number generator may be used for selection to avoid bias. 3 Attach a list of samples selected and the result of verification as an annexure. 4 Incase of high critical observations to be made, and the result is negative, you may confirm the conclusion by picking up further more sample.

Det

aile

d W

alk

Thro

ugh

33

3.2

Wal

k Th

roug

h Tr

acki

ng5 6

Fo

rmat

No:

B/3

.2

A

ssig

nmen

t No

Ass

ignm

ent N

ame

E

ngag

emen

t Man

ager

Com

pany

Nam

e

Sl N

o Sa

mpl

e Tr

ansa

ctio

n C

ontr

ol 1

C

ontr

ol 2

C

ontr

ol 3

C

ontr

ol 4

C

ontr

ol 5

C

ontr

ol 6

5 T

his

docu

men

t sho

uld

be u

sed

to tr

ack

the

wal

k th

roug

h / v

erifi

catio

n on

the

sam

ples

sel

ecte

d fo

r stu

dy.

6 Thi

s do

cum

ent m

ay b

e us

ed a

t the

tim

e of

pla

nnin

g or

at t

he ti

me

of fi

eld

wor

k.

33



34

3.3 Documentation of Walk Through7

Format No: B/3.3


Engagement Manager

Company Name

Process 1: 8

Sl No

Sub Pro-cess

Area Comments Form / Format

Objective

Critical Control Description

ERP / Application Used

Maker

Authorizer

Report Generated

Input

Output

Operating Procedures

Policies

Objective



Maker

Authorizer

Report Generated

Input

Output


Policies

7 It is not mandatory to document the processes always in the format given above, whereas once documented, it increases the clarity of the auditor on the business process and hence mistakes at the time of report are significantly reduced. 8 Process – Sub Process can be as detailed as possible till it identifies an auditable area with clarity.

Detailed Work Throughs

35

Sl No

Sub Pro-cess


Objective



Maker

Authorizer

Report Generated

Input

Output


Policies

Process 2:

Sl No

Sub Pro-cess


Objective



Maker

Authorizer

Report Generated

Input

Output


Policies

Objective



Maker

Authorizer

Report Generated

Input


36

Output


Policies

Objective



Maker

Authorizer

Report Generated

Input

Output


Policies

Man

ual o

n In

tern

al A

udit

38

Ris

k Li

stin

g (W

hat W

rong

Can

H

appe

n)

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

The

risk

that

ther

e is

no

clea

r suc

cess

ion

plan

, le

adin

g to

unc

erta

inty

a. D

oes

the

com

pany

hav

e cl

ear O

rgan

izat

ion

Cha

rt b.

Are

the

posi

tions

ad

equa

tely

fille

d in

c.

Is

ther

e a

succ

essi

on

plan

with

the

man

agem

ent f

or k

ey

posi

tions

a.

Org

aniz

atio

n C

hart

Ope

ratio

nal R

isks

Pos

sibi

lity

of fr

auds

, ill

egal

act

s a.

Has

th

e C

ompa

ny

desi

gned

pr

oces

ses

to

ensu

re t

hat

ther

e is

no

laps

e of

con

trol

lead

ing

to fr

auds

b.

Doe

s th

e M

anag

emen

t ac

t on

S

tatu

tory

an

d In

tern

al A

udit

Rep

orts

c.

Is

th

ere

a sy

stem

fo

r ev

alua

ting

lega

l co

mpl

ianc

e is

sues

a. A

udit

Com

mitt

ee

actio

n po

ints

The

use

of

inap

prop

riate

co

ntro

ls/p

erfo

rman

ce

mea

sure

s,

lead

ing

to

wro

ng c

oncl

usio

ns a

nd

infe

renc

es

abou

t pe

rform

ance

of

th

e

a. I

s th

ere

a M

IS

syst

em

high

light

s th

e pe

rform

-an

ces

of

the

vario

us

depa

rtmen

t an

d fu

nctio

ns

b. D

oes

the

Man

agem

ent

revi

ew

the

perfo

rm-

a.

M

IS

Rep

orts

re

ceiv

ed

by

Man

agem

ent

38


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

39

Ris

k Li

stin

g (W

hat W

rong

Can

H

appe

n)

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

firm

's o

pera

tions

an

ces

and

take

effe

ctiv

e ac

tions

Ris

k of

ab

senc

e of

bu

dget

or

pl

anni

ng

syst

em

lead

ing

to

defo

cusi

ng o

f co

rpor

ate

oper

atio

ns

apar

t fro

m

lack

of i

mpo

rtant

con

trol

on s

pend

ing

a. I

s th

ere

a pr

oces

s of

ev

olvi

ng

annu

al

budg

et

in th

e or

gani

zatio

n b.

Is

budg

et c

onve

rted

into

O

pera

ting

plan

s

c.

Are

bu

dget

vi

s-à-

vis

actio

ns

mon

itore

d an

d co

rrec

tive

actio

ns t

aken

on

dev

iatio

ns

a.

A

nnua

l B

udge

t P

lan

b.

Ope

ratin

g P

lans

Ope

ratio

nal n

on c

larit

y af

fect

ing

perfo

rman

ce

a. D

oes

the

Com

pany

hav

e a

Sta

ndar

d O

pera

ting

Pro

cedu

re d

ocum

ent

for

each

pro

cess

es

b. I

s th

e S

OP

impl

emen

ted

succ

essf

ully

c.

Is

ther

e a

revi

ew o

f SO

P

frequ

ently

fo

r in

corp

orat

ing

chan

ges

a.

Sta

ndar

d O

pera

ting

Pro

cedu

res

Man

ual

Com

mun

icat

ion

Ris

ks

Inab

ility

of t

he c

ompa

ny

to

capt

ure

and

inst

itutio

naliz

e le

arni

ng

acro

ss th

e fir

m

a.

Are

tra

inin

g pr

ogra

ms

held

in

the

orga

niza

tion

for

trans

ferr

ing

know

ledg

e

a.

Li

st

of

train

ing

prog

ram

s an

d fe

edba

ck g

iven

39


Man

ual o

n In

tern

al A

udit

40

Ris

k Li

stin

g (W

hat W

rong

Can

H

appe

n)

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

b.

Doe

s th

e co

mpa

ny h

ave

a kn

owle

dge

base

The

risk

that

co

mm

unic

atio

n fro

m to

p m

anag

emen

t ge

ts

lost

in

tran

sitio

n

a.

Cap

ture

th

e pr

oces

s of

m

ovem

ent

of

mem

os/c

ircul

ars

and

eval

uate

if th

e pr

oces

s is

ad

equa

te

HR

Ris

ks

App

rais

al p

roce

sses

for

th

e em

ploy

ees

not

linke

d w

ith

the

com

pany

's o

bjec

tive

a. A

re

Key

P

erfo

rman

ce

Indi

cato

rs

desi

gned

fo

r ea

ch f

unct

ion

and

each

pe

rson

in

th

e or

gani

zatio

n b.

Are

th

e ex

pect

atio

ns

com

mun

icat

ed

to

the

empl

oyee

a.

K

ey

Per

form

ance

In

dica

tors

Inad

equa

te s

kill

set a

nd

know

ledg

e w

ith

firm

's

key

peop

le

a. C

heck

th

e pr

oces

s of

re

crui

tmen

t fo

r ke

y po

sitio

ns

b. A

re t

he r

equi

rem

ents

of

the

posi

tions

wel

l def

ined

Mar

ketin

g R

isks

Ris

k of

cu

stom

er

diss

atis

fact

ion

a. H

as

the

Man

agem

ent

take

n co

nsci

ous

effo

rts

for q

ualit

y im

prov

emen

t

a.

Qua

lity

docu

men

ts

40


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

41

Ris

k Li

stin

g (W

hat W

rong

Can

H

appe

n)

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

b. H

as

the

com

pany

im

plem

ente

d qu

ality

st

anda

rds

such

as

Si

x S

igm

a or

IS

O

for

mai

ntai

ning

qu

ality

an

d th

ereb

y cu

stom

er

satis

fact

ion

Pos

sibi

lity

of

prod

uct

getti

ng o

bsol

ete

or n

ot

mee

ting

the

budg

et

requ

irem

ents

a. D

oes

the

com

pany

inve

st

in

Res

earc

h an

d D

evel

opm

ent,

Pro

duct

de

sign

etc

b.

Are

ef

forts

ta

ken

for

expl

orat

ion

of

new

pr

oduc

ts

c.

Are

ne

w

mar

kets

ex

plor

ed

for

adeq

uate

pr

oduc

t an

d m

arke

t sp

read

Pos

sibi

lity

of

busi

ness

cy

cles

, w

heth

er i

n ow

n bu

sine

ss o

r in

eco

nom

y in

ge

nera

l, cr

eatin

g vo

latil

e gr

owth

/pro

fitab

ility

si

tuat

ion

a. H

as th

e co

mpa

ny d

one

a ris

k as

sess

men

t exe

rcis

e to

ide

ntify

key

are

as o

f ris

k b.

Doe

s th

e co

mpa

ny h

ave

a ad

equa

te

busi

ness

co

ntin

uity

an

d di

sast

er

reco

very

pla

ns

a.

B

usin

ess

Con

tinui

ty

and

Dis

aste

r R

ecov

ery

Pla

n

41


Man

ual o

n In

tern

al A

udit

42

Ris

k Li

stin

g (W

hat W

rong

Can

H

appe

n)

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Ris

k fro

m

choo

sing

w

rong

pa

rtner

s,

inad

equa

te

com

mitm

ent,

poor

ex

ecut

ion

a.

Is

adeq

uate

ev

alua

tion

done

pr

ior

to

ente

ring

into

co

ntra

cts,

jo

int

vent

ures

etc

b.

A

re

Ser

vice

Le

vel

Agr

eem

ent

draw

n fo

r en

gage

men

ts

and

revi

ewed

42


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

43

Form

at N

o: B

/4.1

.2.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

2 Fi

nanc

e an

d A

ccou

nts

Ris

ks R

evie

w C

heck

list

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Rec

eiva

bles

Acc

ount

ing

and

Man

agem

ent P

roce

ss

Inef

fect

ive

proc

ess

of

invo

ice

gene

ratio

n

Che

ck

the

follo

win

g in

in

voic

es:

a. A

re th

e in

voic

es s

eria

lly

cont

rolle

d an

d ve

rify

if th

ere

are

any

dupl

icat

e,

canc

elle

d in

voic

es

and

asce

rtain

the

rea

sons

for

th

e sa

me1

b. C

heck

if th

e ca

lcul

atio

n of

di

scou

nts,

re

bate

s,

pric

es e

tc a

re a

ccur

ate

by

verif

ying

it

agai

nst

the

term

s an

d co

nditi

ons

Invo

ices

no

t bo

oked

ac

cura

tely

an

d co

mpl

etel

y re

sulti

ng in

re

venu

e lo

ss

for

the

com

pany

. C

alcu

late

the

am

ount

to

be

invo

iced

aga

inst

th

e am

ount

in

voic

ed

and

chec

k w

ith

rece

ipts

to

iden

tify

the

quan

tum

of

re

venu

e lo

ss

1.

In

voic

es

Reg

iste

r/Lis

t 2.

S

uppo

rting

do

cum

ents

su

ch

as

term

s an

d co

nditi

ons

3.

Pay

men

t R

egis

ter

4.

Cre

dit N

otes

5.

D

ebto

r R

econ

-ci

liatio

n an

d co

nfirm

atio

n do

cum

ents

6.

B

ad

Deb

ts

writ

ten

off

1 A

naly

sis

of In

voic

e ca

n be

don

e us

ing

CA

AT

tool

s

43


Man

ual o

n In

tern

al A

udit

44

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Cal

cula

te

the

dela

ys

in

gene

ratio

n an

d po

stin

g /

disp

atch

ing

of

invo

ices

w

ith r

easo

ns a

s w

ell

as

agei

ng a

naly

sis

Del

ays

in

invo

icin

g re

sulti

ng i

n de

lays

in

rece

ipts

an

d fu

nds

bloc

kage

. C

alcu

late

the

ave

rage

nu

mbe

r of

da

ys

of

dela

y an

d th

e ca

sh

flow

los

s du

e to

non

re

ceip

t of

fu

nds

on

time

Che

ck i

f cr

edit

note

s ar

e po

sted

acc

urat

ely

and

are

auth

oriz

ed

by

the

desi

gnat

ed p

erso

nnel

Cre

dit

note

s no

t ac

cura

tely

po

sted

re

sulti

ng

in

reve

nue

leak

age

Cal

cula

te t

he r

even

ue

loss

due

to s

uch

cred

it no

tes

Inad

equa

te

rece

ivab

les

man

agem

ent

Gen

erat

e re

ceiv

able

s ag

eing

re

port

and

asce

rtain

reas

ons

for l

ong

pend

ing

outs

tand

ing

and

chec

k th

e pr

oced

ure

for

follo

w u

p of

out

stan

ding

s

Del

ays

in

mon

itorin

g re

ceip

ts

resu

lting

in

ca

sh

flow

lo

ss.

Cal

cula

te t

he a

vera

ge

num

ber

of

days

of

de

lay

and

the

cash

flo

w l

oss

due

to n

on

rece

ipt

of

fund

s on

tim

e.

44


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

45

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Obt

ain

the

docu

men

tatio

n re

latin

g to

de

btor

re

conc

iliat

ion

and

verif

y if

co

nfirm

atio

ns

for

the

bala

nces

ar

e ob

tain

ed

from

the

debt

ors

Mis

stat

emen

t of d

ebto

r ba

lanc

es

in

the

final

ac

coun

ts.

Rep

erfo

rm

the

reco

ncili

atio

n pr

oces

s to

ens

ure

accu

racy

of

calc

ulat

ions

.

Obt

ain

the

bad

debt

s lis

t an

d ch

eck

if au

thor

izat

ion

is o

btai

ned

for

writ

e of

f of

bad

debt

s.

Che

ck

the

proc

edur

e fo

r re

solu

tion

of u

nrec

onci

led

debt

s

Bad

deb

ts w

ritte

n of

f w

ithou

t su

ffici

ent

just

ifica

tion

resu

lting

in

finan

cial

loss

.

Paya

bles

Acc

ount

ing

and

Man

agem

ent P

roce

ss

Inad

equa

te

Pay

men

t P

roce

ss

Che

ck

the

paym

ents

to

en

sure

the

follo

win

g:

a.

Pay

men

ts

are

supp

orte

d by

rel

ated

P

urch

ase

Ord

ers,

G

oods

/Ser

vice

s R

ecei

pt

note

an

d ap

prov

al

from

th

e us

er

depa

rtmen

t fo

r re

ceip

t of

m

ater

ial/s

ervi

ce

Mis

mat

ch

betw

een

actu

al

paym

ent

and

paym

ent

to b

e m

ade

resu

lting

in

re

venu

e le

akag

es

a.

P

urch

ase

Ord

ers

b.

Pay

men

t V

ouch

ers

c.

Pay

men

t R

egis

ter

d.

Goo

ds/S

er-v

ice

deliv

ery

Not

es

45


Man

ual o

n In

tern

al A

udit

46

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

b.

Pay

men

t en

try

is

mad

e ac

cura

tely

and

co

mpl

etel

y fo

r al

l th

e G

RN

/Ser

vice

not

es

c.

Pay

men

t is

mad

e as

pe

r th

e te

rms

and

cond

ition

s en

tere

d in

to w

ith th

e ve

ndor

e.

A

gree

men

t w

ith

the

vend

or

Cal

cula

te

the

dela

ys

in

post

ing

of

paym

ent

entri

es

with

re

ason

s as

w

ell a

s ag

eing

ana

lysi

s

Del

ay

in

paym

ent

resu

lts

in

unne

ce-

ssar

y lia

bilit

y im

pose

d as

per

the

ter

ms

and

agre

emen

ts

with

th

e ve

ndor

C

alcu

late

th

e in

tere

st

char

ged

by th

e ve

ndor

fo

r lat

e pa

ymen

t

a.

Cre

dito

rs a

gein

g an

alys

is

Che

ck i

f de

bit

note

s ar

e po

sted

acc

urat

ely

and

are

auth

oriz

ed

by

the

desi

gnat

ed

pers

onne

l. E

nsur

e th

at th

e re

ject

ions

ar

e au

thor

ized

by

de

sign

ated

per

sonn

el

Deb

it no

tes

not

supp

orte

d by

P

urch

ase

retu

rns

docu

men

ts

and

repl

acem

ent/a

djus

tme

nt n

ot m

ade

accu

rate

ly

for t

he d

ebit

note

s

a.

Deb

it no

tes

46


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

47

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Ver

ify

the

proc

ess

of

reco

ncili

atio

n of

de

bit/c

redi

t no

tes

and

acco

unts

pay

able

Dup

licat

e pa

ymen

ts

mad

e w

ithou

t re

ceip

t of

goo

ds/s

ervi

ce

a.

V

endo

r re

conc

iliat

ion

docu

men

ts

Ens

ure

that

all

dues

are

se

ttled

at

the

time

of t

he

full

and

final

se

ttlem

ent

and

adeq

uate

follo

w u

p

Del

ay

in

paym

ent

resu

lts

in

unne

ce-

ssar

y lia

bilit

y im

pose

d as

per

the

ter

ms

and

agre

emen

ts

with

th

e ve

ndor

C

alcu

late

th

e in

tere

st

char

ged

by th

e ve

ndor

fo

r lat

e pa

ymen

t

Gen

eral

Fin

anci

al C

losu

re S

yste

m

Boo

ks

of

acco

unts

no

t cl

osed

on

a

timel

y ba

sis

Che

ck t

he p

roce

dure

for

cl

osur

e of

bo

oks

and

acco

unts

and

ens

ure

that

th

e cl

osur

es a

re d

one

on

a tim

ely

basi

s. C

heck

if

the

follo

win

g ar

e cl

osed

: a.

Le

dger

Acc

ount

s b.

P

&L

acco

unt

c.

Bal

ance

She

et

d.

Cas

h Fl

ow s

tate

men

t e.

D

ebto

rs a

gein

g

Del

ays

in

clos

ure

lead

ing

to

non

avai

labi

lity

of fi

nanc

ials

fo

r re

view

an

d de

cisi

on m

akin

g.

Asc

erta

in

dela

ys

in

clos

ure

of b

ooks

and

en

sure

the

reas

ons

for

the

dela

y

a.

B

ooks

of

A

ccou

nt

b.

Ledg

er

sum

mar

ies

c.

Age

ing

repo

rts

d.

Ban

k R

econ

cilia

t-ion

S

tate

m-e

nt

e.

Sta

tuto

ry

rem

ittan

ces

47


Man

ual o

n In

tern

al A

udit

48

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

f. C

redi

tors

age

ing

g.

Ban

k R

econ

cilia

tion

h.

Sta

tuto

ry re

mitt

ance

s

P

efor

m a

GL

scru

tiny

to

asce

rtain

an

y irr

egul

ariti

es

in

trans

actio

ns

post

ing

and

unde

rtake

a

deta

iled

revi

ew

whe

reve

r di

scre

panc

ies

are

iden

tifie

d E

nsur

e th

at t

here

are

no

unre

conc

iled

item

s on

op

enin

g ba

lanc

es

a.

Gen

eral

Led

ger

S

tudy

/

revi

ew

of

the

Not

es

to

acco

unts

ap

pend

ed fo

r ade

quac

y of

di

sclo

sure

an

d co

mpl

ianc

e w

ith s

tatu

tory

la

ws

C

ompa

re

bala

nces

with

pr

evio

us

perio

ds

and

prep

arat

ion

varia

nce

anal

ysis

repo

rt

Inac

cura

te u

pdat

ion

of

acco

unts

re

sulti

ng

in

mis

stat

emen

t in

fin

anci

als.

48


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

49

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Inad

equa

te

prov

isio

ning

C

heck

if

the

prov

isio

ns

mad

e ar

e ac

cura

te

and

subs

eque

nt

acco

untin

g en

tries

pa

ssed

ar

e co

rrec

t. C

heck

if

the

prov

isio

ns a

re a

utho

rized

as

per

the

Del

egat

ion

of

Aut

horit

y M

atrix

Fund

and

Cas

h M

anag

emen

t2

Inad

equa

te

budg

et s

yste

m

Rev

iew

th

e bu

dget

sy

stem

an

d ve

rify

the

follo

win

g:

a. B

udge

t is

prep

ared

and

au

thor

ized

on

an

an

nual

bas

is

b. E

xpen

ditu

re i

ncur

red

is

verif

ied

with

the

budg

et

and

corr

ectiv

e ac

tions

ar

e ta

ken

for

devi

atio

ns

from

the

budg

et

c. R

evis

ed b

udge

t if

any

is

auth

oriz

ed

as

per

Del

egat

ion

of A

utho

rity

Mat

rix

Inor

dina

te

devi

atio

ns

from

th

e bu

dget

re

sulti

ng

in

exce

ss/s

hort

spen

ding

a.

A

nnua

l Bud

get

b.

Var

ianc

e A

naly

sis

Rep

ort

2 F

unds

Man

agem

ent w

ould

als

o in

clud

e re

view

of F

orei

gn E

xcha

nge

gain

s/lo

ss, t

echn

ique

of h

edgi

ng e

tc d

epen

ding

upo

n th

e na

ture

of t

he c

ompa

ny.

49


Man

ual o

n In

tern

al A

udit

50

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Ens

ure

if re

view

of

in

vest

men

ts

/ ba

nk

bala

nces

, in

tere

st e

arne

d an

d id

entif

icat

ion

of

idle

ba

lanc

es is

bei

ng d

one

.

a.

In

vest

men

t de

tails

b.

B

ank

deta

ils

and

bank

st

atem

ents

c.

In

tere

st d

etai

ls

In

adeq

uate

fu

nd u

tiliz

atio

n

Com

pare

inte

rest

pai

d on

cr

edit

obta

ined

fro

m

bank

s vi

s-à-

vis

idle

ba

lanc

es if

any

; and

cre

dit

cycl

e (c

redi

t ob

tain

ed

from

sup

plie

rs).

Ens

ure

if P

hysi

cal

verif

icat

ion

of

cash

is

do

ne

– P

erio

dici

ty

/ tim

ings

and

rec

onci

liatio

n of

diff

eren

ces

in b

alan

ces

if an

y.

a.

C

ash

Reg

iste

r b.

P

hysi

cal C

ash

In

adeq

uate

co

ntro

l ov

er

phys

ical

ca

sh/c

hequ

es

Rev

iew

th

e sy

stem

of

In

tern

al

Con

trols

on

co

llect

ion

of

cheq

ues

/ ca

sh r

ecei

ved

– re

cord

ing

and

seria

l iss

ue o

f ca

sh /

ch

eque

re

ceiv

ed

vouc

hers

.

Inad

equa

te

fund

s m

anag

emen

t re

sulti

ng

in

idle

fu

nds

and

notio

nal

loss

on

id

le

fund

s

a.

C

hequ

e bo

oks

b.

PD

Cs

c.

Cas

h V

ouch

ers

50


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

51

Form

at N

o: B

/4.1

.3.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

3 H

uman

Res

ourc

es P

roce

ss R

evie

w C

heck

list

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

HR

Pla

nnin

g Pr

oces

s

a.

Und

erst

and

the

proc

ess

of H

R p

lann

ing

to

verif

y th

at

adeq

uate

st

eps

are

take

n to

en

sure

th

at

the

cand

idat

e re

quire

men

t pr

ojec

ted

is ju

stifi

able

Pos

ition

s re

crui

ted

not

adeq

uate

ly

just

ified

res

ultin

g in

in

crea

sing

H

R

Cos

ts.

Che

ck

for

requ

irem

ents

whi

ch

are

not

prop

erly

au

thor

ized

.

H

R

Pla

n no

t m

eetin

g th

e ob

ject

ives

of t

he

Com

pany

b. C

ompa

re a

ctua

l vis

-à-

vis

the

plan

and

che

ck

for

maj

or

devi

atio

ns

if an

y

Num

ber

of p

erso

ns

recr

uite

d in

ex

cess

/sho

rt th

ereb

y re

sulti

ng i

n in

adeq

uate

H

R

sizi

ng

a.

Ann

ual

HR

P

lan

51


Man

ual o

n In

tern

al A

udit

52

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

c.

V

erify

if

any

actio

n ta

ken,

whi

ch is

dev

iatin

g fro

m th

e pl

an h

as g

ot th

e ap

prov

al

of

the

conc

erne

d pe

rson

as

per

the

Del

egat

ion

of

Aut

horit

y de

fined

by

the

com

pany

App

rova

l no

t as

sign

ed

for

devi

atio

ns

resu

lting

in

no

n co

mpl

ianc

e w

ith

polic

y an

d in

adeq

uate

co

ntro

l ef

fect

iven

ess

Rec

ruitm

ent P

roce

ss

a.

Ver

ify

the

proc

ess

carr

ied

out

for

sele

ctio

n of

the

cand

idat

e. E

nsur

e if

it is

in

-hou

se

or

outs

ourc

ed

to

recr

uitm

ent a

genc

y

Sel

ectio

n of

C

andi

date

no

t as

pe

r th

e re

quire

men

ts

of

the

Com

pany

b. If

it is

out

sour

ced

to a

re

crui

tmen

t ag

ency

ve

rify

if th

e pr

oces

s ca

rrie

d ou

t fo

r se

lect

ion

of

the

agen

cy

is

done

af

ter p

rope

r eva

luat

ion

Impr

oper

se

lect

ion

of

recr

uitm

ent

agen

cy r

esul

ting

in

recr

uitm

ent f

law

s.

a.

Req

uisi

tion

form

whe

rein

the

re

quire

men

t of t

he

cand

idat

e an

d th

e ex

pect

atio

ns

are

fille

d in

b.

Iner

view

/Ass

essm

ent

form

c.

Can

dida

te's

re

sum

e d.

O

ffer

lette

r e.

R

ecru

itmen

t po

licy

and

Ope

ratin

g

52


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

53

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

c.

Che

ck

if th

e re

crui

tmen

t of

th

e ca

ndid

ate

is

supp

orte

d by

do

cum

ents

, vi

z.

resu

me,

in

terv

iew

re

sults

, te

rms

of

empl

oym

ent,

offe

r le

tter

etc.

Non

av

aila

bilit

y of

su

ppor

ting

docu

men

ts

for

sele

cted

ca

ndid

ate

resu

lting

in

in

adeq

uate

ju

stifi

catio

n fo

r ca

ndid

ate

sele

cted

d. E

nsur

e if

the

sele

ctio

n m

ade

is

as

per

the

requ

irem

ent

rais

ed

by

chec

king

the

ski

lls a

nd

qual

ifica

tions

re

quire

d ar

e m

et b

y th

e pe

rson

se

lect

ed

Can

dida

te

sele

cted

no

t m

eetin

g th

e re

quire

men

ts o

f th

e de

partm

ent

resu

lting

in

in

effic

ienc

y in

th

e fu

nctio

nal a

rea

e. E

nsur

e th

at t

he H

R

depa

rtmen

t ha

s ca

rrie

d ou

t th

e re

crui

tmen

t w

ithou

t an

y de

lay

by

com

parin

g th

e da

te

of

requ

est

and

date

of

re

crui

tmen

t

Del

ay in

rec

ruitm

ent

resu

lting

in

po

sitio

ns

not

fille

d up

w

ithin

th

e re

quire

d tim

e le

adin

g to

in

effic

ienc

y an

d ov

ertim

e co

sts

for

the

exis

ting

empl

oyee

s

Pro

cedu

re

if av

aila

ble

53


Man

ual o

n In

tern

al A

udit

54

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

f. C

heck

if

adeq

uate

ba

ckgr

ound

ve

rific

atio

n ha

s be

en d

one

for

the

cand

idat

e se

lect

ed.

If th

e se

lect

ion

is t

hrou

gh

the

recr

uitm

ent

agen

cy,

chec

k if

the

agen

cy h

as

carr

ied

out

adeq

uate

ba

ckgr

ound

ch

eck

for

the

cand

idat

e se

lect

ed

Inad

equa

te

back

-gr

ound

ve

rific

atio

n re

sulti

ng

in

sele

ct-

ion

of c

andi

date

not

su

itabl

e fo

r th

e re

late

d va

canc

y

g.

Che

ck

if th

e re

crui

tmen

t is

auth

oriz

ed

by

the

appr

opria

te

pers

onne

l

Sel

ectio

n no

t as

per

the

requ

irem

ents

of

the

com

pany

Indu

ctio

n

Indu

ctio

n fo

rmal

ities

no

t co

mpl

eted

as

pe

r re

quire

men

ts

a. C

heck

the

per

sonn

el

files

an

d en

sure

if

the

indu

ctio

n fo

rmal

ities

ch

eckl

ist

is s

igne

d an

d co

mpl

eted

on

time

Inad

equa

te

in

du-

ctio

n fo

rmal

ities

re

sulti

ng

in

adm

in-

istra

tive

inco

nv-

enie

nces

(e

g.

Sal

ary

paym

ent

to

be

proc

esse

d se

p-er

atel

y be

caus

e of

no

t op

enin

g ba

nk

acco

unt

of

the

empl

oyee

on

time)

a.

In

duct

ion

Che

cklis

t if

any

b.

Pol

icie

s/C

ode

of

cond

uct

docu

men

ts s

igne

d by

the

empl

oyee

s

54


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

55

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

b. C

heck

if th

e ne

w

join

ee h

as b

een

mad

e aw

are

of th

e ke

y pe

rson

nel p

olic

ies

of th

e co

mpa

ny

Inad

equa

te c

omm

-un

icat

ion

of

com

pany

's p

olic

ies

resu

lting

in d

ilutio

n of

Com

pany

's

obje

ctiv

es

Atte

ndan

ce M

anag

emen

t

a.

Sel

ect

sam

ple

of

atte

ndan

ce

regi

ster

(m

anua

l/sys

tem

ge

nera

ted)

for

a m

onth

an

d co

mpa

re i

t w

ith t

he

leav

e re

cord

s to

ens

ure

that

th

e at

tend

ance

ca

ptur

ed is

acc

urat

e

Inad

equa

te

atte

ndan

ce

capt

ured

resu

lting

in

inab

ility

to

com

pare

th

e sa

lary

pa

id

to

num

ber

of

days

w

orke

d

In

adeq

uate

pr

oced

ures

fo

r m

onito

ring

atte

ndan

ce

of

the

empl

oyee

s

b. I

n ca

se o

f le

ave

as

sele

cted

abo

ve,

chec

k if

the

leav

e ha

s be

en

sanc

tione

d by

th

e co

ncer

ned

pers

onne

l as

de

fined

in th

e D

eleg

atio

n of

Aut

horit

y.

Leav

e no

t sa

nctio

ned

by

the

desi

gnat

ed a

utho

rity

resu

lting

in

co

ntro

l la

pses

an

d in

accu

rate

pa

yrol

l pr

oces

sing

a.

Atte

ndan

ce

Reg

iste

rb.

Leav

e R

ecor

ds

55


Man

ual o

n In

tern

al A

udit

56

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

c.

Che

ck

if th

e le

ave

reco

rds

of t

he e

mpl

oye-

es

is

com

plet

e w

ith

resp

ect

of

upda

tion

of

vario

us

type

s of

le

ave

(CL/

SL/

PL)

and

ver

ify i

f th

e ba

lanc

e le

ave

calc

ulat

ion

is

done

ac

cura

tely

.

Inac

cura

te

calc

ulat

ion

of l

eave

re

sulti

ng

in

inac

cura

te

payr

oll

proc

essi

ng

and

sala

ry p

aym

ent

d. C

onfir

m t

hat

ther

e is

no

po

ssib

ility

fo

r m

odifi

catio

n of

at

tend

ance

/leav

e re

cord

s an

d in

cas

e of

m

odifi

catio

ns i

f an

y, a

re

auth

oriz

ed

by

the

rele

vant

per

son.

Pos

sibi

lity

for

mod

ifica

tions

in

re

cord

s re

sulti

ng i

n no

n re

liabi

lity

of

data

e.

If th

e at

tend

ance

is

ca

ptur

ed

usin

g el

ectro

nic

devi

ces,

ch

eck

the

accu

racy

and

au

then

ticity

by

re

perfo

rman

ce.

Inco

rrec

t log

ic in

the

syst

em r

esul

ting

in

inco

rrec

t pay

outs

56


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

57

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Payr

oll P

roce

ssin

g

a.

Inad

equa

te

Seg

rega

tion

of

Dut

y

a. C

heck

that

the

pers

on

capt

urin

g th

e at

tend

ance

an

d th

e pe

rson

pr

oces

sing

the

pay

roll

is

diffe

rent

, to

en

sure

ad

equa

te s

egre

gatio

n of

du

ty.

Inad

equa

te

Seg

rega

tion

of D

uty

resu

lting

in

un

auth

oriz

ed

acce

ss

to

reco

rds

incr

easi

ng

the

poss

ibili

ty

for

man

ipul

atio

n

b.

Com

pare

th

e em

ploy

ee d

etai

ls a

s pe

r th

e at

tend

ance

re

gist

er

and

empl

oyee

det

ails

as

per

Pay

roll

regi

ster

and

ch

eck

for

any

dum

my

nam

es

in

the

payr

oll

regi

ster

Fict

ituou

s em

ploy

ees

in

the

payr

oll

resu

lting

in

hi

gher

sal

ary

cost

s fo

r the

com

pany

b.

In

accu

rate

P

ayro

ll D

atab

ase

c.

Obt

ain

list

of

new

jo

inee

s fo

r th

e la

st t

hree

m

onth

s an

d ve

rify

that

in

case

of

new

joi

nees

the

da

te o

f up

datio

n of

the

en

try i

n em

ploy

ee l

ist

is

on

the

date

as

m

entio

ned

in

the

offe

r le

tter

Pay

men

t m

ade

in

exce

ss

to

new

jo

inee

s

a.

Pay

roll

Dat

abas

e b.

O

ffer

lette

r fo

r sa

lary

de

tails

c.

Li

st o

f ne

w

join

ees

d.

Li

st

of

resi

gnee

s e.

Li

st

of

empl

oyee

s tra

nsfe

rred

/pr

omot

ed

f. A

utho

rized

P

ayro

ll R

egis

ter

Man

ual o

n In

tern

al A

udit

58

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

d.

Obt

ain

list

of

resi

gnee

s fo

r th

e la

st

thre

e m

onth

s an

d ch

eck

if an

y na

mes

stil

l app

ear

in t

he p

ayro

ll em

ploy

ee

list

Sal

ary

paid

to

re

sign

ees

resu

lting

in

hi

gher

sa

lary

co

sts

e.

Obt

ain

the

sala

ry

deta

ils f

rom

the

pay

roll

regi

ster

an

d se

lect

a

sam

ple

of

empl

oyee

s an

d ch

eck

if th

e sa

lary

de

tails

up

date

d ar

e as

pe

r the

offe

r let

ter

Sal

ary

paid

not

as

per

the

term

s an

d co

nditi

ons

resu

lting

in

hig

her p

ayou

ts

f. O

btai

n lis

t of

em

ploy

ees

who

ha

ve

been

tra

nsfe

rred

/pro

mot

ed

in

the

last

th

ree

mon

ths

and

chec

k if

thei

r sa

lary

de

tails

ha

ve

been

m

odifi

ed

as

per

the

trans

fer

orde

r/pro

mot

ion

lette

r

Sal

ary

paid

not

as

per

the

term

s an

d co

nditi

ons

resu

lting

in

hig

her p

ayou

ts

58


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

59

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

g.

If th

e pa

yrol

l pr

oces

sing

is d

one

by a

so

ftwar

e,

repe

rform

th

e ca

lcul

atio

n to

en

sure

th

at t

he lo

gic

built

in t

he

softw

are

is c

orre

ct

Pro

gram

lo

gic

inac

cura

te r

esul

ting

in

wro

ng

sala

ry

proc

essi

ng

and

inac

cura

te p

ayou

ts

h. C

heck

if

the

payr

oll

calc

ulat

ions

ar

e au

thor

ized

by

th

e co

ncer

ned

pers

on

prio

r to

tra

nsfe

rrin

g it

for

paym

ent

Inad

equa

te

auth

oriz

atio

n fo

r do

cum

ent

auth

entic

ity

c. S

tatu

tory

Non

C

ompl

ianc

e i.

Ver

ify

PF/

ES

I/Pro

fess

iona

l Ta

x de

duct

ions

ar

e in

co

mpl

ianc

e w

ith

the

prev

ailin

g S

tatu

tory

N

orm

s.

Sta

tuto

ry

non

com

plia

nces

re

s-ul

ting

in

pena

lties

an

d of

fenc

es

as

defin

ed

unde

r th

e co

ncer

ned

Sta

tuto

ry

Reg

ulat

ion

Perf

orm

ance

App

rais

al

App

rais

al

not

alig

ned

to

perfo

rman

ce

a.

Obt

ain

the

Key

P

erfo

rman

ce

Indi

cato

rs

(KP

Is)

defin

ed f

or e

ach

role

if a

vaila

ble

Non

de

finiti

on

of

Key

R

esul

t A

reas

re

sulti

ng

in

inad

equa

te

com

mun

icat

ion

of

role

pro

file

and

non

alig

nmen

t of

rol

e to

th

e co

mpa

ny's

ob

ject

ives

a.

A

ppra

isal

R

ecor

dsb.

A

ppra

isal

Pol

icyc

. K

ey

Per

form

ance

In

dica

tors

(K

PIs

) if

avai

labl

e

59


Man

ual o

n In

tern

al A

udit

60

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

b. O

btai

n th

e ap

prai

sal

shee

ts a

nd c

heck

if

the

appr

aisa

l is

don

e ba

sed

on th

e K

PIs

def

ined

App

rais

al

not

alig

ned

to

perfo

rman

ce

resu

lting

in

m

ism

atch

be

twee

n th

e po

sitio

n an

d th

e pe

rson

c.

In

case

of

no

n av

aila

bilit

y of

st

anda

rd

KP

Is,

ensu

re

the

follo

win

g:

• A

ppra

isal

is

done

by

the

conc

erne

d fu

nctio

nal

head

to

w

hom

th

e em

ploy

ee

repo

rts•

The

scor

es g

iven

are

ad

equa

tely

just

ified

App

rais

al

not

alig

ned

to

perfo

rman

ce

resu

lting

in

m

ism

atch

be

twee

n th

e po

sitio

n an

d th

e pe

rson

d.

Ens

ure

that

th

e ap

prai

sal

reco

rds

are

kept

sa

fe

and

conf

iden

tial.

Che

ck w

ho

are

the

auth

oriz

ed

pers

ons

for

hand

ling

the

appr

aisa

l re

cord

s an

d en

sure

tha

t th

e re

cord

s ar

e no

t m

ade

avai

labl

e to

any

one

othe

r th

an th

e au

thor

ized

per

sons

Non

co

nfid

entia

lity

of a

ppra

isal

rec

ords

re

sulti

ng

in

empl

oyee

di

ssat

isfa

ctio

n an

d un

rest

60


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

61

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

e.

Che

ck

if th

e sa

lary

up

grad

atio

n fo

r pe

rson

s pr

omot

ed i

s as

per

the

co

mpa

ny's

pol

icy

Non

co

mpl

ianc

e w

ith

Com

pany

's

polic

y re

sulti

ng

in

inef

ficie

ncy

Trai

ning

and

Dev

elop

men

t

a.

Obt

ain

the

list

of

train

ing

prog

ram

s co

nduc

ted

durin

g th

e pa

st s

ix m

onth

s

b. V

erify

the

atte

ndan

ce

regi

ster

ca

ptur

ing

the

train

ing

info

rmat

ion

and

also

ch

eck

the

train

ing

feed

back

form

s

Trai

ning

pro

vide

d to

fic

titio

us e

mpl

oyee

s re

sulti

ng

in

high

er

train

ing

cost

s

Incr

easi

ng

Trai

ning

Cos

ts

c.

Enq

uire

on

th

e de

cisi

ons

take

n ba

sed

on

train

ing

feed

back

fo

rms

Trai

ning

fe

edba

ck

form

s no

t an

alyz

ed

adeq

uate

ly r

esul

ting

in

train

ing

inef

ficie

ncie

s an

d la

ck o

f ben

efit

to th

e tra

inee

s

a.

Trai

ning

P

rogr

amm

e de

tails

b.

Tr

aini

ng

atte

ndan

ce

shee

t an

d Fe

edba

ck

form

c.

S

uppo

rting

do

cum

ents

fo

r tra

inin

g co

std.

Tr

aini

ng

Bud

get

and

appr

oval

s

61


Man

ual o

n In

tern

al A

udit

62

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

d. C

heck

the

sup

porti

ng

docu

men

ts

for

the

rele

vant

tra

inin

g pr

ogra

m

(viz

. fo

od,

loca

tion,

tra

iner

's

cost

et

c) a

nd e

nsur

e th

at t

he

cost

in

curr

ed

is

supp

orte

d by

th

e un

derly

ing

docu

men

ts

Non

av

aila

bilit

y of

su

ppor

ting

docu

men

ts

for

just

ifyin

g th

e co

st

incu

rred

e. C

heck

if

the

cost

is

with

in

the

train

ing

budg

et

or

appr

oval

is

ob

tain

ed

in

case

of

de

viat

ions

if a

ny

Cos

t in

exce

ss/s

hort

of

the

budg

et

resu

lting

in

hi

gher

pa

yout

s or

in

effic

ienc

y

Sepa

ratio

n

a.Is

ex

it ha

ppen

ing

acco

rdin

g to

exi

t po

licy

of th

e co

mpa

ny

Non

co

mpl

ianc

e w

ith

Com

pany

's

polic

y re

sulti

ng

in

inef

ficie

ncy

In

adeq

uate

E

xit

Form

aliti

es

b.

Are

ex

it in

terv

iew

do

cum

ents

ava

ilabl

e fo

r al

l th

e em

ploy

ees

who

ha

ve r

esig

ned

(Che

ck in

ca

ses

of

resi

gned

em

ploy

ees)

Incr

easi

ng

attri

tion

due

to

diss

atis

fact

ion

a.

Exi

t P

olic

yb.

Fu

ll an

d fin

al

settl

emen

t fo

rms

of

resi

gned

em

ploy

ees

62


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

63

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

c. C

heck

if

the

full

and

final

set

tlem

ent

is d

one

only

afte

r th

e em

ploy

ee

has

obta

ined

a

Cle

aran

ce

from

al

l th

e co

ncer

ned

depa

rtmen

t. C

heck

the

ful

l an

d fin

al

settl

emen

t fo

rm

and

ensu

re

that

it

is

auth

oriz

ed

by

all

the

conc

erne

d de

partm

ents

Una

utho

rized

ac

cess

to

co

mpa

ny's

as

sets

re

sulti

ng i

n lo

ss o

f in

form

atio

n or

re

sour

ce

Stat

utor

y C

ompl

ianc

es

a.

List

ou

t th

e va

rious

La

bour

A

cts

appl

icab

le

to th

e C

ompa

ny

a.

R

ecor

ds

mai

ntai

ned

unde

r va

rious

act

s

b.

List

ou

t th

e va

rious

re

turn

s an

d re

cord

s to

be

file

d an

d m

aint

aine

d by

the

Com

pany

b.

C

opie

s of

re

turn

s fil

ed

Sta

tuto

ry

Non

C

ompl

ianc

e

c.

Che

ck

the

reco

rds

agai

nst t

he li

st to

ens

ure

that

al

l th

e re

leva

nt

reco

rds

are

bein

g m

aint

aine

d an

d up

date

d by

the

com

pany

Sta

tuto

ry

non

com

plia

nces

re

sulti

ng

in

pena

lties

an

d of

fenc

es a

s de

fined

un

der

the

conc

erne

d S

tatu

tory

R

egul

atio

n

Che

cklis

t to

be

prep

ared

fo

r the

pr

ovis

ions

of

var

ious

La

bour

Act

ap

plic

able

to

the

Com

pany

c.

Rem

ittan

ces

chal

lans

63


Man

ual o

n In

tern

al A

udit

64

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

d. C

heck

if

the

retu

rns

(PF/

ES

I) ar

e fil

ed w

ithin

th

e ap

plic

able

due

dat

e

Sta

tuto

ry

non

com

plia

nces

re

sulti

ng

in

pena

lties

an

d of

fenc

es a

s de

fined

un

der

the

conc

erne

d S

tatu

tory

R

egul

atio

n

e.

Che

ck

if th

e re

mitt

ance

s ar

e m

ade

with

in t

he r

elev

ant

due

date

Sta

tuto

ry

non

com

plia

nces

re

sulti

ng

in

pena

lties

an

d of

fenc

es a

s de

fined

un

der

the

conc

erne

d S

tatu

tory

R

egul

atio

n

64


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

65

Form

at N

o: B

/4.1

.4

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

4 In

vent

ory

Ris

ks R

evie

w C

heck

list

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Rec

eipt

Sys

tem

Che

ck

if th

ere

are

nece

ssar

y co

ntro

ls

impl

emen

ted

at t

he g

ate

to

ensu

re

that

al

l th

e m

en/m

ater

ials

(T

ruck

/mat

eria

l by

Cou

rier

, et

c.)

ente

ring

the

prem

ises

are

reco

rded

.

Inad

equa

te

cont

rol

over

m

en/m

ater

ial

ente

ring

the

prem

ises

Inad

equa

te

gate

en

try

cont

rols

fo

r m

ater

ial

rece

ipts

Is

ther

e a

proc

edur

e of

co

nfirm

ing/

cros

s ch

ecki

ng

the

mat

eria

l/men

rep

ortin

g at

th

e ga

te

with

th

e st

ores

/vis

itee

and

the

in

time/

out

time

of

the

truck

/men

ent

ered

in

the

regi

ster

Inad

equa

te

conf

irmat

ion

of

purp

ose

of

visi

t th

ereb

y re

sulti

ng

in

unau

thor

ized

acc

ess

to

the

info

rmat

ion

and

faci

litie

s at

th

e pr

emis

es

a. E

ntry

Reg

iste

r m

aint

aine

d by

th

e S

ecur

ity

Gua

rd

65


Man

ual o

n In

tern

al A

udit

66

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Doe

s th

e se

curit

y en

sure

th

at

befo

re

givi

ng

entry

th

ere

is

no

haza

rdou

s/

inju

rious

/ pr

ohib

ited

mat

eria

l in

the

vehi

cle

Thre

at

of

expl

osio

ns

resu

lting

in d

amag

e to

m

en a

nd m

ater

ial

Are

the

re c

lear

ly d

efin

ed

timin

gs d

urin

g w

hich

the

ve

hicl

es

can

ente

r/lea

ve

the

fact

ory.

If

yes,

wha

t ha

ppen

s if

the

vehi

cles

co

me

at s

ome

othe

r tim

e

Una

utho

rized

en

try

durin

g no

n of

fice

hour

s

Che

ck i

f th

e m

ater

ial

into

th

e w

areh

ouse

is

ac

cept

ed

only

af

ter

chec

king

the

gate

sea

l

Una

utho

rized

re

ceip

t of

mat

eria

l

Ens

ure

that

the

good

s ar

e un

load

ed

only

af

ter

chec

king

th

e su

ppor

ting

docu

men

ts

viz.

in

voic

e,

deliv

ery

chal

lan

Rec

eipt

of m

ater

ial n

ot

orde

red.

Als

o ch

eck

if pa

ymen

t ha

s be

en

mad

e fo

r the

sam

e

Inad

equa

te

proc

ess

for

mat

eria

l rec

eipt

at

th

e w

areh

ouse

Che

ck

wei

ghm

ent

proc

edur

es

whe

reve

r ap

plic

able

an

d w

eigh

br

idge

ce

rtific

ate

is

avai

labl

e fo

r the

rece

ipts

Wei

ght

diffe

renc

es

betw

een

the

quan

tity

orde

red

and

quan

tity

rece

ived

an

d ex

cess

/sho

rt pa

ymen

t

a.

Goo

ds

Inw

ard

note

an

d re

gist

er

b.

Sup

porti

ng

docu

men

ts

viz.

invo

ice

and

deliv

ery

chal

lan,

pu

rcha

se

orde

r c.

W

eigh

men

t C

ertif

icat

e

66


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

67

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Che

ck

if th

e ga

te

entry

an

d re

ceip

ts e

ntry

tally

. In

case

of

di

ffere

nces

, ex

amin

e th

e re

ason

s fo

r th

e sa

me

Mis

sing

rec

eipt

ent

ries

resu

lting

in

un

auth

oriz

ed

mov

emen

t of m

ater

ial

Rec

ord

the

mis

sing

en

tries

an

d tra

ce

the

mat

eria

l. A

lso

chec

k if

paym

ent

has

been

m

ade

for

mat

eria

l no

t re

ceiv

ed.

Che

ck if

ther

e is

any

del

ay

in p

ostin

g re

ceip

t not

es b

y ca

lcul

atin

g th

e nu

mbe

r of

da

ys o

f del

ay b

etw

een

the

gate

en

try

and

rece

ipts

en

try

Del

ay

in

rece

ipt

of

mat

eria

l th

ereb

y af

fect

ing

issu

es

and

resu

lting

in

prod

uctio

n de

lays

C

alcu

late

th

e nu

mbe

r of

da

ys

of

dela

y in

pr

oduc

tion

due

to

dela

yed

issu

e.

67


Man

ual o

n In

tern

al A

udit

68

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Che

ck fo

r ca

ses

whi

ch d

o no

t ad

here

to

th

e tim

elin

ess/

quan

tity/

qual

ity

para

met

ers

of

the

purc

hase

ord

er le

adin

g to

sh

orta

ges,

reje

ctio

ns, e

tc.,

to th

e pu

rcha

se, a

ccou

nts,

ve

ndor

de

velo

pmen

t, cl

aim

s de

partm

ents

Rec

eipt

of

su

b st

anda

rd

mat

eria

l th

ereb

y af

fect

ing

the

prod

uctio

n pr

oces

s C

ompi

le

case

s of

re

ject

ion

in

the

prod

uctio

n lin

e du

e to

su

bsta

ndar

d qu

ality

of

mat

eria

l

Mat

eria

l re

ceiv

ed

with

out

qual

ity

clea

ranc

es

Che

ck if

qua

lity

clea

ranc

e is

ob

tain

ed

for

the

mat

eria

l unl

oade

d

Rec

eipt

of

su

b st

anda

rd

mat

eria

l th

ereb

y af

fect

ing

the

prod

uctio

n pr

oces

s C

ompi

le

case

s of

re

ject

ion

in

the

prod

uctio

n lin

e du

e to

su

bsta

ndar

d qu

ality

of

mat

eria

l

A

naly

sis

of d

elay

s if

any

in

perfo

rmin

g qu

ality

ch

eck

by c

ompa

ring

the

date

of

rece

ipt

of

mat

eria

l an

d da

te o

f qua

lity

certi

ficat

e

Del

ays

in

qual

ity

verif

icat

ion

resu

lting

in

dela

ys in

pro

duct

ion

a. Q

ualit

y cl

eara

nce

certi

ficat

es

68


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

69

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Non

trac

king

of

good

s in

tran

sit

Ana

lyse

th

e go

ods

in

trans

it an

d re

cord

if

ther

e ar

e in

ordi

nate

de

lays

in

re

ceip

t of m

ater

ial

Cal

cula

te

the

num

ber

of

days

of

de

lay

betw

een

the

orde

r dat

e an

d re

ceip

t da

te.

Ana

lyse

th

e av

erag

e tim

e to

be

take

n an

d re

cord

tra

nsac

tions

w

here

th

ere

is

inor

dina

te d

elay

.

a.

Li

st o

f goo

ds

in tr

ansi

t b.

S

tock

R

egis

ter

Sta

tuto

ry

Non

co

mpl

ianc

e C

ompl

ianc

e w

ith

exci

se

law

s an

d en

surin

g co

mpl

eten

ess

of s

tatu

tory

re

cord

s re

quire

d to

be

m

aint

aine

d

Sta

tuto

ry

non

com

plia

nces

re

sulti

ng

in

pena

lties

an

d of

fenc

es

unde

r th

e re

leva

nt re

gula

tions

a.

S

tatu

tory

re

cord

s b.

S

tock

R

egis

ter

Mat

eria

l Sta

ckin

g Pr

oced

ure

Una

utho

rized

ac

cess

to

st

orag

e ar

ea

Che

ck if

the

stor

age

area

(w

areh

ouse

s at

m

ultip

le

plac

es a

lso

need

s to

be

cons

ider

ed)

is u

nder

the

co

ntro

l of

au

thor

ized

pe

rson

an

d en

try

for

othe

rs is

bar

red

Una

utho

rized

en

try

into

the

sto

rage

are

a re

sulti

ng

in

loss

or

da

mag

e of

m

ater

ial

stor

ed

Inad

equa

te

trans

fer o

f ris

k C

heck

th

e ad

equa

cy

of

insu

ranc

e co

ver

for

the

prem

ises

an

d th

e m

ater

ial

The

aver

age

amou

nt

held

in

st

ock

at

any

poin

t of

tim

e an

d th

e co

st f

or s

ettin

g up

the

w

areh

ouse

af

ter

a.

Insu

ranc

e P

olic

y fo

r w

areh

ouse

69


Man

ual o

n In

tern

al A

udit

70

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

dam

ages

re

sulti

ng

in

finan

cial

bur

den,

in th

e ev

ent

of

any

cata

stro

phe

D

oes

the

inve

ntor

y ha

ve

earm

arke

d pl

aces

fo

r st

orag

e m

ater

ial.

Are

da

mag

ed

mat

eria

l /m

ater

ial

that

ha

ve

not

clea

red

qual

ity/li

ne

defe

cts

are

plac

ed

sepa

rate

ly f

rom

the

goo

d qu

ality

mat

eria

l

Mix

ing

up

of

good

s re

sulti

ng i

n in

accu

rate

is

sues

an

d in

effic

ienc

ies

in

prod

uctio

n

A

re b

in c

ards

mai

ntai

ned

and

all

rece

ipts

an

d is

sues

ar

e ac

cura

tely

up

date

d

Non

m

aint

enan

ce

of

bin

card

s an

d st

ock

regi

ster

re

sults

in

in

accu

rate

kn

owle

dge

on m

ater

ial

avai

labi

lity

lead

ing

to

exce

ss

purc

hase

s.

Che

ck

if pu

rcha

ses

have

be

en

mad

e in

spite

of a

vaila

bilit

y of

m

ater

ial

and

asce

rtain

th

e am

ount

in

curr

ed

for t

he p

urch

ases

.

70


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

71

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Issu

es M

anag

emen

t

Inad

equa

te

syst

em

for

issu

e of

m

ater

ial

from

th

e w

areh

ouse

Sel

ect

the

issu

es

mad

e fro

m

the

stoc

k re

gist

er

and

chec

k if

the

issu

es

are

track

ed

to

requ

est

from

var

ious

dep

artm

ents

Issu

es

mad

e w

ithou

t th

e re

ques

ts r

esul

ting

in i

nacc

urat

e di

spat

ch

of

stoc

k le

adin

g to

m

isut

iliza

tion

a.

Is

sue

Req

uest

/BO

M

b.

Sto

ck

Reg

iste

r

C

heck

if

ther

e ar

e de

lays

in

is

sue

of

mat

eria

l by

ca

lcul

atin

g th

e nu

mbe

r of

da

ys

of

diffe

renc

e be

twee

n th

e is

sue

requ

est

and

the

actu

al is

sues

Del

ay

in

issu

es

resu

lting

in

prod

uctio

n de

lays

.

C

heck

for

mat

eria

l ret

urns

fro

m

the

line

duet

to

w

rong

issu

es.

Inac

cura

te

issu

es

resu

lting

in

prod

uctio

n de

lays

. C

alcu

late

th

e tim

e di

ffere

nce

betw

een

the

issu

e re

ques

t and

the

corr

ect

issu

e qu

antit

y fo

r th

e de

lays

a.

Lis

t of r

etur

ns

from

the

line

C

heck

if

the

issu

es

are

upda

ted

accu

rate

ly i

n th

e bi

n ca

rd a

nd i

n th

e st

ock

regi

ster

fo

r ea

ch

of

the

issu

e re

ques

ts

Inac

cura

te

upda

tion

resu

lting

in

in

corr

ect

stoc

k po

sitio

n.

Che

ck

the

stoc

k re

conc

iliat

ion

reco

rds

and

iden

tify

case

s w

here

th

e re

conc

iliatio

n w

as

a.

S

tock

R

egis

ter

b.

Bin

Car

d c.

S

tock

R

econ

cilia

tion

Rec

ords

71


Man

ual o

n In

tern

al A

udit

72

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

nece

ssita

ted

due

to

inac

cura

te u

pdat

ion

in

stoc

k re

cord

s.

Stoc

k R

econ

cilia

tion

Proc

ess

Inad

equa

te

proc

ess

for

reco

ncili

atio

n of

sto

ck

Che

ck

the

follo

win

g to

en

sure

th

e ad

equa

cy

of

the

stoc

k re

conc

iliat

ion

proc

ess:

a.

Fr

eque

ncy

of c

arry

ing

out

the

stoc

k re

conc

iliat

ion

and

the

last

dat

e w

hen

it w

as

carr

ied

out

b.

Cut

off

proc

edur

es a

t th

e tim

e of

st

ock

taki

ng

c.

Doc

umen

tatio

n fo

r st

ock

verif

icat

ion

and

ensu

re if

rea

sons

are

ca

ptur

es

for

the

diffe

renc

es

and

the

actio

n ta

ken

for

ensu

ring

non

recu

rren

ce

of

such

re

ason

s d.

If

any

writ

e of

f is

ne

cess

itate

d as

a

resu

lt of

su

ch

Diff

eren

ce

is

any

resu

lting

out

of

stoc

k re

conc

iliatio

n im

plie

s th

e fu

nds

lost

due

to

inad

equa

te

stoc

k ha

ndlin

g pr

oced

ures

a.

S

tock

R

egis

ter

b.

Phy

sica

l ve

rific

atio

n do

cum

ents

c.

A

ppro

vals

for

writ

e of

f

72


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

73

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

reco

ncili

atio

n ch

eck

if it

is a

utho

rized

as

per

the

dele

gatio

n of

au

thor

ity

mat

rix

and

such

writ

ten

off s

tock

s ar

e ph

ysic

ally

av

aila

ble

e.

Phy

sica

lly

verif

y ce

rtain

sam

ple

case

s to

en

sure

th

at

the

stoc

k ar

e ph

ysic

ally

av

aila

ble

Inad

equa

te

Mon

itorin

g of

no

n m

ovin

g,

dam

aged

sto

ck

Che

ck if

non

mov

ing

stoc

k is

kep

t se

para

tely

and

is

repo

rted

to

the

Man

agem

ent

from

tim

e to

tim

e E

nsur

e th

at d

amag

e st

ock

is k

ept

sepa

rate

ly a

nd i

s re

porte

d to

th

e M

anag

emen

t fro

m t

ime

to

time

Hol

ding

of

stoc

k fo

r a

long

pe

riod,

im

plie

s bl

ocka

ge o

f fun

ds.

Per

form

an

ag

eing

an

alys

is o

f non

mov

ing

stoc

k an

d as

certa

in th

e in

tere

st l

ost

on f

unds

bl

ocke

d.

a.

Lis

t of n

on

mov

ing/

dam

age

d st

ock

Inac

cura

te

fixin

g of

re

orde

r lev

els

Che

ck if

reor

der l

evel

s ar

e fix

ed a

dequ

atel

y to

ens

ure

that

ord

erin

g of

sto

ck i

s ac

cura

te

Che

ck fo

r cas

es w

here

or

ders

ar

e m

ade

befo

re

the

stoc

k re

achi

ng

the

reor

der

leve

l an

d th

e fin

anci

al

payo

uts

for

such

pr

ocur

emen

t

a.

Reo

rder

leve

l po

licy

73


Man

ual o

n In

tern

al A

udit

74

Form

at N

o: B

/4.1

.5

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

5 In

form

atio

n Se

curit

y R

evie

w C

heck

list

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Secu

rity

Polic

y R

evie

w

Non

de

finiti

on

of

Sec

urity

P

olic

y in

ac

cord

ance

w

ith

busi

ness

re

quire

men

ts

and

rele

vant

la

ws

and

regu

latio

ns

• E

nqui

re

abou

t In

form

atio

n se

curit

y po

licy

avai

labi

lity

• If

exis

ts a

sk fo

r its

last

re

new

al a

nd a

ppro

val

• E

nsur

e th

at t

he p

olic

y ha

s be

en

com

mun

icat

ed

to

all

empl

oyee

s an

d ot

her

third

pa

rties

in

volv

ed

in a

spec

ts r

elat

ing

to

info

rmat

ion

secu

rity

in

the

orga

niza

tion

Lack

of

de

finiti

on

of

info

rmat

ion

secu

rity

aspe

cts

resu

lts i

n ris

k of

co

mpr

omis

e of

av

aila

bilit

y,

conf

iden

tialit

y an

d in

tegr

ity

of

data

an

d in

form

atio

n pr

oces

sing

as

sets

a.

In

form

atio

n S

ecur

ity

Pol

icy

b.

Min

utes

of

M

eetin

gs

in

whi

ch

the

polic

y is

re

view

ed

74


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

75

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

•

Che

ck

if co

nfid

entia

lity

agre

emen

t ex

ists

with

em

ploy

ees

and

othe

r th

ird p

artie

s w

ho h

ave

acce

ss

to

criti

cal

info

rmat

ion

in

the

orga

niza

tion

• R

evie

w

the

agre

emen

t an

d no

te

the

clau

ses

of

secu

rity.

E

nsur

e th

at

clau

ses

for

lega

l re

cour

se,

in

case

of

co

mpr

omis

e of

co

nfid

entia

lity

is

incl

uded

in

th

e ag

reem

ent

Con

fiden

tialit

y A

gree

men

ts w

ith

empl

oyee

s an

d th

ird p

artie

s

IT A

sset

s M

anag

emen

t

Inad

equa

te

Mai

nten

ance

of

IT A

sset

s

• C

heck

if

inve

ntor

y of

as

sets

exi

st (

softw

are

and

hard

war

e)

• R

evie

w

the

colu

mns

an

d ad

equa

cy o

f hea

ds

• C

heck

if

licen

ses

are

live

for

all t

he s

oftw

are

in th

e lis

ting

Obs

erve

if n

o in

vent

ory

of IT

ass

ets

exis

ts.

a.

IT

as

set

Reg

iste

r b.

IT

as

sets

pr

ocur

emen

t de

tails

75


Man

ual o

n In

tern

al A

udit

76

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

• R

evie

w i

f th

e re

gist

er

is

mai

ntai

ned

adeq

uate

ly.

Ens

ure

that

th

e re

gist

er

is

com

plet

e an

d is

up

date

d fo

r ev

ery

purc

hase

, tra

nsfe

r an

d di

spos

al o

f ass

ets

• C

heck

if

any

guid

elin

es

exis

t fo

r cl

assi

ficat

ion

of

info

rmat

ion

as

sens

itive

, no

n se

nsiti

ve e

tc. I

dent

ify if

th

e as

set h

oldi

ng s

uch

sens

itive

info

rmat

ion

is

clas

sifie

d an

d pr

otec

ted

adeq

uate

ly

a.

Info

rmat

ion

Cla

ssifi

catio

n gu

idel

ines

if

any

Inad

equa

te

proc

edur

e fo

r di

spos

al

of

IT

asse

ts

• R

evie

w

the

IT

asse

ts/m

edia

dis

posa

l pr

oced

ures

in p

lace

•

List

out

the

cas

es o

f co

mpu

ter

sale

s in

the

la

st

1 ye

ar

and

anal

yze

how

the

har

d di

scs

wer

e re

mov

ed

from

th

e sy

stem

be

fore

sal

e

Acc

ess

to i

nfor

mat

ion

to

outs

ider

s du

e to

in

adeq

uate

di

spos

al

met

hods

a.

Li

st o

f as

sets

di

spos

ed

76


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

77

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Hum

an R

esou

rces

Sec

urity

Allo

win

g ac

cess

to

pe

rson

s w

ithou

t th

orou

gh

back

grou

nd

chec

k

• A

re

back

gr

ound

ch

ecks

don

e on

the

all

cand

idat

es,

third

pa

rty

user

s an

d co

ntra

ctor

s •

Ver

ify in

few

cas

es

• V

erify

w

ho

is

resp

onsi

ble

for

back

gr

ound

ver

ifica

tion

Una

utho

rized

ac

cess

to

in

form

atio

n to

pe

rson

s w

ho

may

m

isut

ilize

the

sam

e

Lack

of

aw

aren

ess

abou

t in

form

atio

n se

curit

y in

the

or

gani

zatio

n

• W

ere

ther

e an

y tra

inin

g pr

ogra

mm

es c

ondu

cted

on

IT s

ecur

ity

• W

hat

was

the

last

dat

e th

e tra

inin

g w

as

cond

ucte

d •

Rev

iew

th

e tra

inin

g do

cum

ents

an

d th

e pa

rtici

pant

s lis

t

Inad

equa

te

train

ing

resu

lting

in

la

ck

of

awar

enes

s an

d fin

anci

al p

ay o

uts

a.

Lis

t of t

rain

ing

prog

ram

mes

co

nduc

ted

and

thei

r det

ails

Inad

equa

te

sepa

ratio

n pr

oced

ures

• R

evie

w

the

proc

edur

e fo

r em

ploy

ee

resi

gnat

ion.

•

Rev

iew

the

chec

klis

t for

fu

ll an

d fin

al s

ettle

men

t to

re

view

IT

ac

cess

se

ttlem

ents

Acc

ess

to i

nfor

mat

ion

even

afte

r re

sign

atio

n of

th

e em

ploy

ee.

Obs

erve

cas

es w

here

th

e fu

ll an

d fin

al

settl

emen

t pr

oces

s is

no

t co

mpl

ete.

P

robe

in

to

list

of

item

s no

t re

turn

ed

by

the

empl

oyee

.

a.

Li

st

of

resi

gned

em

ploy

ees

b.

Full

and

final

se

ttlem

ent

77


Man

ual o

n In

tern

al A

udit

78

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Phys

ical

and

Env

ironm

enta

l Sec

urity

Pro

cess

Inad

equa

te

Sec

urity

at

the

serv

er ro

om

• R

evie

w

the

secu

rity

syst

em f

or I

T fa

cilit

y,

serv

er ro

om

• N

ote

dow

n al

l th

e ch

ecks

ava

ilabl

e

Com

prom

ise

of

secu

rity

at t

he s

erve

r ro

om

wou

ld

resu

lt in

co

mpr

omis

ing

the

entir

e IT

inf

rast

ruct

ure

of th

e co

mpa

ny.

Iden

tify

the

thre

ats

due

to c

ompr

omis

e in

the

se

rver

ro

om

phys

ical

se

curit

y an

d lis

t.

•

Rev

iew

th

e en

viro

nmen

t ha

zard

s an

d th

reat

s an

d re

late

d co

ntro

ls.

Eg.

Fi

re, w

ater

logg

ing

etc

• R

evie

w

the

list

of

supp

ort

utili

ties

and

iden

tify

prot

ectio

n in

case

of f

ailu

res

• R

evie

w

whe

ther

th

e te

leco

mm

unic

atio

n an

d po

wer

cab

les

are

prop

erly

pr

otec

ted

(test

bas

is)

Pro

duct

ion/

oper

atio

ns

stop

page

du

et

o oc

curr

ence

of

su

ch

even

ts

Dow

ntim

e an

d re

cove

ry

time

to

be

calc

ulat

ed

due

to

occu

rren

ce

of

such

fa

ilure

s.

a.

In

sura

nce

polic

ies

78


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

79

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Inad

equa

te

Mai

nten

ance

of

IT a

sset

s

• R

evie

w w

heth

er A

MC

ex

ists

for a

ll th

e as

sets

(S

erve

r, D

eskt

ops,

B

ack

up,

Net

wor

k,

UP

S, P

ower

, AC

etc

.,)

Dow

ntim

e du

e to

re

pairs

and

dam

ages

. C

heck

th

e av

erag

e do

wnt

ime

and

frequ

ent

reas

ons

for r

epai

rs.

a.

A

MC

det

ails

b.

R

epai

rs

regi

ster

Info

rmat

ion

Secu

rity

Dep

artm

ent R

espo

nsib

ilitie

s re

view

Inad

equa

te

cont

rol

agai

nst

mal

icio

us

code

s

• N

ote

the

anti

viru

s so

ftwar

e be

ing

used

•

Ver

ify

whe

ther

th

e an

ti-vi

rus

is

upda

ted

regu

larly

Sys

tem

bre

akdo

wn

or

inef

ficie

ncie

s du

e to

no

n up

datio

n of

an

ti vi

rus

Inad

equa

te

back

up

of

in

form

atio

n

• Is

th

ere

a ba

ck

up

syst

em

in

exis

tenc

e.

Rev

iew

th

e ba

ck

up

frequ

ency

, m

edia

, da

ta

cove

rage

, st

orag

e,

reco

very

pr

oced

ures

Loss

of

da

ta

due

to

inad

equa

te

back

up

pr

oced

ures

. C

heck

the

nu

mbe

r of d

ays

of d

ata

that

wou

ld b

e lo

st i

n ca

se

of

failu

re

of

back

up m

echa

nism

Inad

equa

te

netw

ork

man

agem

ent

• U

nder

stan

d th

e ne

twor

k so

ftwar

e be

ing

used

•

Obt

ain

the

deta

iled

netw

ork

diag

ram

an

d id

entif

y th

e po

ints

of

co

ntac

t w

ith

exte

rnal

en

viro

nmen

t

Com

prom

ise

on

secu

rity

due

to

inad

equa

te

netw

ork

desi

gn

and

netw

ork

mon

itorin

g

a.

N

etw

ork

diag

ram

b.

N

etw

ork

secu

rity

polic

y

79


Man

ual o

n In

tern

al A

udit

80

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

• R

evie

w

the

secu

rity

proc

edur

es

impl

emen

ted

in

the

exte

rnal

en

viro

nmen

t co

ntac

t poi

nts

• R

evie

w

the

netw

ork

secu

rity

polic

y an

d pr

oced

ures

in p

lace

•

Run

th

e ne

twor

k se

curit

y an

alyz

er

on

the

netw

ork

(if in

cas

e ne

cess

ary)

•

Ana

lyze

th

e ne

twor

k lo

g re

ports

to

ve

rify

thre

ats

Non

ava

ilabi

lity

of a

udit

logs

•

Rev

iew

the

set o

f log

s ge

nera

ted,

prin

ted

by

the

serv

er /

IT o

pera

tor

and

chec

k th

e pr

oced

ure

of a

naly

sis

• R

evie

w

the

rete

ntio

n pr

oced

ure

of t

he a

udit

logs

gen

erat

ed

Non

tra

ceab

ility

of

ac

tions

du

e to

no

n av

aila

bilit

y of

aud

it lo

gs

a.

A

udit

logs

de

tails

‘

80


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

81

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

Acc

ess

Con

trol

s R

evie

w

Inad

equa

te

acce

ss

defin

ition

s

• Is

th

ere

an

acce

ss

cont

rol p

olic

y in

pla

ce

• R

evie

w t

he p

roce

dure

fo

r gi

ving

lo

gin

/ ac

cess

for

new

use

rs

(for

dom

ain

/ se

rver

/

netw

ork,

ap

plic

atio

n sy

stem

s,

emai

l sy

stem

s, in

tern

et e

tc.,)

•

Rev

iew

th

e pr

oced

ures

fo

r de

letin

g th

e lo

gin

/ ac

cess

for

use

rs w

ho

have

resi

gned

. •

Rev

iew

w

heth

er

the

para

met

ers

are

upda

ted

for

regu

lar

pass

wor

d ch

ange

s,

pass

wor

d re

stric

tions

(a

lpha

num

eric

, sy

mbo

ls

etc.

), au

tom

atic

lock

ing

• Is

ther

e a

proc

edur

e in

pl

ace

for

regu

lar

man

agem

ent r

evie

w o

f ac

cess

rol

es g

iven

to

vario

us u

sers

.

Una

utho

rized

ac

cess

to

da

ta

resu

lting

in

co

mpr

omis

e of

co

nfid

entia

lity,

av

aila

bilit

y an

d in

tegr

ity

a.

A

cces

s co

ntro

l pol

icy

81


Man

ual o

n In

tern

al A

udit

82

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erv-

atio

ns

• W

hen

was

th

e la

st

man

agem

ent

mee

ting

cond

ucte

d

•

Is

ther

e lo

gin

and

pass

wor

d sy

stem

be

fore

lo

ggin

g on

to

th

e op

erat

ing

syst

em

Info

rmat

ion

Secu

rity

Even

ts M

anag

emen

t

Inef

ficie

nt

Sec

urity

in

cide

nts

man

agem

ent

• W

ere

ther

e an

y se

curit

y br

each

es t

hat

have

ta

ken

plac

e in

th

e la

st

one

year

(h

acki

ng,

data

th

eft,

web

atta

ck e

tc.)

• R

evie

w t

he p

roce

dure

ho

w

they

ar

e m

anag

ed

Man

agin

g se

curit

y br

each

es

avoi

d re

curr

ence

of

su

ch

even

ts

a.

S

ecur

ity

Inci

dent

det

ails

82


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

83

Form

at N

o: B

/4.1

.6.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

6 M

arke

ting

Ris

ks R

evie

w C

heck

list

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Targ

et F

ixat

ion

a. C

heck

if

targ

ets

are

fixed

for

the

mar

ketin

g de

partm

ent

is

base

d on

th

e an

nual

sa

les

plan

Inac

cura

te

fixat

ion

of

targ

ets

b. R

evie

w i

f ta

rget

s ar

e br

oken

into

sho

rt te

rm

targ

ets

and

are

com

mun

icat

ed

to

the

mar

ketin

g te

am

Inac

cura

te

targ

ets

resu

lt in

in

adeq

uate

pl

an fo

r the

mar

ketin

g te

am.

Iden

tify

if th

e m

arke

ting

team

is

al

igne

d to

ac

hiev

e th

e ta

rget

s.

a.

Ann

ual S

ales

P

lan

b.

Sho

rt te

rms

sale

s pl

an

with

targ

ets

83


Man

ual o

n In

tern

al A

udit

84

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

c. Is

th

e ta

rget

re

vise

d ba

sed

on a

naly

sis

of

actu

al p

erfo

rman

ce.

If th

ere

is a

revi

sion

, is

it ap

prov

ed

by

the

conc

erne

d au

thor

ity

Mar

ketin

g st

rate

gies

eva

luat

ion

Inap

prop

riate

m

arke

ting

stra

tegi

es

a.

Is

a m

arke

ting

plan

de

velo

ped

for

mee

ting

the

targ

ets.

• E

valu

ate

the

mar

ketin

g st

rate

gies

w

ith

resp

ect

to

Bra

ndin

g,

Adv

ertis

emen

t an

d ot

her

mar

ketin

g st

rate

gies

.

• Is

se

lect

ion

of

agen

cies

fo

r ad

verti

sem

ent

and

bran

ding

, fo

r m

edia

an

d pu

blis

hing

is d

one

base

d on

eva

luat

ion

of

qual

ity p

aram

eter

s

• Is

eva

luat

ion

done

for

in

crea

sing

cu

stom

er

base

, in

crea

sed

sale

s

Inad

equa

te m

arke

ting

plan

s re

sulti

ng

in

insu

ffici

ent

mar

ket

cove

rage

and

tar

gets

ac

hiev

emen

ts.

Ana

lyse

the

tre

nd o

f m

arke

ting

cost

s,

unde

r ea

ch s

trate

gy.

Ana

lyse

de

viat

ions

fro

m b

udge

t

a.

Adv

ertis

emen

t sp

end

deta

ils

84


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

85

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

etc

from

th

e m

arke

t sp

ends

c.

E

valu

ate

the

follo

win

g fo

r ens

urin

g th

e ad

equa

cy

of

mar

ketin

g st

rate

gies

:

• Is

th

ere

a de

pend

ence

on

si

ngle

cu

stom

er.

Cal

cula

te

the

prop

ortio

n of

sal

es

vis

– a-

vi

s th

e cu

stom

er

• Is

th

ere

depe

nden

ce

on

sing

le

prod

uct.

Ana

lyse

th

e pr

oduc

t wis

e sa

les

• Is

th

ere

depe

nden

ce

on

sing

le m

arke

t

Lack

of d

iver

sific

atio

n of

sa

les

resu

lts

in

sing

le p

oint

failu

re.

Cus

tom

er R

elat

ions

hip

Man

agem

ent

Inad

equa

te

Cus

tom

er

Info

rmat

ion

a.

Doe

s th

e co

mpa

ny

mai

ntai

n a

cust

omer

da

taba

se.

Is

it m

anua

l/sof

twar

e ba

sed.

C

heck

for

the

fol

low

ing

Inad

equa

te

info

rmat

ion

on

cust

omer

re

sults

in

in

accu

rate

dec

isio

ns.

a.

C

usto

mer

da

taba

se

85


Man

ual o

n In

tern

al A

udit

86

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

in th

e da

taba

se:

• Is

the

upd

atio

n in

the

da

taba

se m

ade

on a

tim

ely

basi

s.

• A

re

all

the

requ

ired

field

s in

the

cus

tom

er

data

base

co

mpl

eted

by

the

sale

s te

am

• D

oes

it th

row

en

tire

info

rmat

ion

abou

t th

e cu

stom

er,

ie.

prod

ucts

or

dere

d,

no.

of

calls

m

ade

to th

e cu

stom

er,

deliv

ery

deta

ils e

tc

Iden

tify

case

s of

in

accu

rate

, in

com

plet

e an

d un

relia

ble

data

.

Inad

equa

te

actio

n on

C

usto

mer

Fe

edba

ck

Are

Cus

tom

er r

ejec

tions

ca

ptur

ed s

epar

atel

y an

d ac

tions

ar

e ef

fect

ivel

y ta

ken

on

the

sam

e.

Ens

ure

if re

ason

w

ise

anal

ysis

is

m

ade

and

corr

ectiv

e ac

tions

ar

e ta

ken

Freq

uent

C

usto

mer

re

ject

ion

resu

lts

in

poor

rep

utat

ion

of th

e co

mpa

ny.

Ana

lyse

the

rej

ectio

n ca

ses

and

perfo

rm

root

ca

use

anal

ysis

on

cas

es o

f fre

quen

t re

ject

ions

a.

C

usto

mer

re

ject

ions

su

mm

ary

Is

cu

stom

er

feed

back

ob

tain

ed

on

com

pany

’s

proj

ects

/per

form

ance

on

Cus

tom

er

feed

back

co

llect

ions

he

lps

in

desi

gnin

g th

e m

arke

t

86


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

87

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

a fre

quen

t ba

sis

and

step

s ta

ken

for

impr

ovem

ent

stra

tegy

an

d he

nce

need

s to

be

take

n on

a

frequ

ent b

asis

Mon

itorin

g

Inad

equa

te

ince

ntiv

e sy

stem

Che

ck t

he f

ollo

win

g fo

r ev

alua

ting

the

perfo

rman

ce

mea

sure

-m

ent

syst

em

of

the

mar

ketin

g te

am:

a. A

re

targ

ets

set

for

ever

y pe

rson

in

th

e m

arke

ting

team

b.

Are

the

tar

gets

bei

ng

revi

ewed

on

a m

onth

ly

basi

s c.

Is a

n in

cent

ive

syst

em

desi

gned

fo

r re

war

ding

ac

hiev

emen

t of

ta

rget

s d.

Are

su

itabl

e ac

tions

ta

ken

for

non

perfo

rman

ce

Inad

equa

te

mon

itor-

ing

of

perfo

rman

ce

resu

lting

in

po

or

sale

s an

d em

ploy

ee

mot

ivat

ion.

a.

Ta

rget

vi

s-a

vis

actu

als

com

paris

on

b.

Ince

ntiv

e sy

stem

an

d pa

ymen

t

87


Man

ual o

n In

tern

al A

udit

88

Form

at N

o: B

/4.1

.7.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

7 Pr

oces

s R

isks

Rev

iew

Che

cklis

t

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Inde

nt R

aisi

ng P

roce

ss

Inad

equa

te

inde

ntin

g sy

stem

a. O

btai

n in

dent

s ra

ised

for

the

last

on

e m

onth

an

d ch

eck

the

adeq

uacy

, au

then

ticity

an

d co

mpl

eten

ess

of

inde

nts

with

res

pect

to

sanc

tioni

ng

auth

oriti

es,

desi

red

info

rmat

ion,

co

st

bene

fit

anal

ysis

, ba

ck-p

aper

s

etc.

,

Inde

nt r

aise

d w

ithou

t su

ffici

ent

just

ifica

tions

res

ultin

g in

pur

chas

e of

ite

ms

not

requ

ired

and

ther

eby

finan

cial

pa

yout

s

a.

In

dent

s ra

ised

fo

r a m

onth

b.

D

eleg

atio

n of

A

utho

rity

mat

rix

for

sanc

tioni

ng t

he

inde

nts

c.

Sup

porti

ng

docu

men

ts

for

inde

nts

88


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

89

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

b.

Stu

dy

cycl

e tim

e be

twee

n re

ceiv

ing

of

an

inde

nt a

nd r

aisi

ng o

f P

O

and

eval

uate

re

ason

s in

ca

se o

f exc

eptio

nal d

elay

s3

Del

ay in

pro

cure

men

t of

re

quire

d ite

ms

resu

lting

in

pr

oduc

tion

dela

ys

c. C

heck

if

the

requ

este

d ite

m i

s as

per

the

bud

get

or e

lse

auth

oriz

ed b

y th

e de

sign

ated

aut

horit

y

Pro

cure

men

t w

ithou

t su

ffici

ent

auth

oriz

atio

n re

sulti

ng

in

purc

hase

s m

ade

with

out j

ustif

icat

ion

a. P

urch

ase

Ord

ers

rais

ed

for

the

requ

isiti

ons

b. P

rocu

rem

ent

budg

et

d. G

ener

ate

an e

xcep

tion

repo

rt on

ope

n in

dent

s fo

r a

long

tim

e w

ith r

easo

ns

and

anal

yze

the

root

cau

se

for s

uch

dela

ys

Del

ay in

pro

cure

men

t of

re

quire

d ite

ms

resu

lting

in

pr

oduc

tion

dela

ys

a.

Lis

t of o

pen

inde

nts

e.

Che

ck

if an

y in

dent

s ha

ve

been

ra

ised

on

an

em

erge

ncy

basi

s an

d en

sure

th

at

they

ha

ve

been

au

thor

ized

ad

equa

tely

Pro

cure

men

t w

ithou

t su

ffici

ent

auth

oriz

atio

n re

sulti

ng

in

purc

hase

s m

ade

with

out j

ustif

icat

ion

3 1

. The

pro

cess

for c

alcu

latin

g th

e de

lays

can

be

done

usi

ng C

AAT

tool

s

89


Man

ual o

n In

tern

al A

udit

90

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Purc

hase

Ord

er P

roce

ss

Inad

equa

te

sele

ctio

n of

ve

ndor

s

Che

ck i

f th

e pr

ocur

emen

t ha

s be

en m

ade

as p

er th

e P

urch

ases

po

licy

of

the

orga

niza

tion.

In

ca

se

of

non

avai

labi

lity

of p

urch

ase

polic

y,

for

the

sele

cted

pu

rcha

se o

rder

s ve

rify

the

follo

win

g:

a.

At

leas

t qu

otat

ions

fro

m

thre

e ve

ndor

s ha

ve

been

ob

ta-in

ed

for f

inal

izin

g

b.

Che

ck

if th

e ve

ndor

se

lect

ed

has

offe

red

the

best

rate

c.

V

erify

the

par

a-m

eter

s co

nsid

ered

fo

r ev

alua

tion

of q

ualit

y of

th

e pr

oduc

t/ser

vice

d.

C

heck

if

adeq

uate

ju

stifi

catio

ns

and

auth

oriz

atio

n ex

ist

in

case

of

purc

hase

fro

m

sole

su

pplie

r or

at

hi

gher

rate

s

Inad

equa

te

vend

or

sele

ctio

n re

sulti

ng i

n th

e fo

llow

ing:

4 a.

Pro

cure

men

t at

hi

gher

cos

t5 b.

Pro

cure

men

t of

su

b st

anda

rd

qual

ity m

ater

ial

c. V

endo

r no

t co

mpe

tent

to

de

liver

th

e se

rvic

e/m

ater

ial

d. P

ossi

bilit

y of

co

llusi

on

with

ve

ndor

s an

d th

ereb

y no

t ad

herin

g to

th

e ve

ndor

se

lect

ion

polic

y

a.

Pro

cure

men

t P

olic

y b.

Ven

dor s

elec

tion

docu

men

ts

c. D

eleg

atio

n of

A

utho

rity

Mat

rix

4 U

se o

f CA

AT

tool

s is

reco

mm

ende

d fo

r gen

erat

ing

exce

ptio

ns

5 Exc

eptio

nally

hig

h co

st o

f pro

cure

men

t nee

ds to

be

reco

rded

in th

e Fi

nal g

ener

atio

n of

Exc

eptio

ns re

port

90


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

91

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

e.

Che

ck

if ne

gotia

tions

ha

ve

been

m

ade

for

bette

r te

rms

of

purc

hase

f.

Che

ck i

f au

thor

izat

ion

for

the

purc

hase

s as

pe

r th

e D

eleg

atio

n of

A

utho

rity

defin

ed

by

the

orga

niza

tion

Rev

iew

the

agre

emen

t with

th

e ve

ndor

and

che

ck if

the

term

s an

d co

nditi

ons

are

met

for t

he m

ater

ial/s

ervi

ce

deliv

ered

Rec

eipt

of

m

ater

ial/s

ervi

ce

not

as p

er t

he t

erm

s an

d co

nditi

ons

agre

ed

upon

a.

Agr

eem

ent

betw

een

the

com

pany

and

the

vend

or

Che

ck

if th

ere

is

any

proc

ess

for

annu

al v

endo

r ev

alua

tion

and

the

perfo

rman

ce o

f th

e ve

ndor

ba

sed

on

qual

ity,

timel

y de

liver

y,

com

plia

nce

with

te

rms

and

cond

ition

s et

c ar

e ev

alua

ted

Inad

equa

te

Ord

erin

g pr

oces

s

Gen

erat

e lis

t of

Pur

chas

e O

rder

not

ser

vice

d on

tim

e an

d as

certa

in t

he r

easo

ns

for

the

sam

e. C

ompa

re th

e P

O

date

an

d G

R/s

ervi

ce

rece

ipt

note

da

te

and

asce

rtain

the

dela

ys

Del

ay in

pro

cure

men

t le

adin

g to

pro

duct

ion

dela

ys

a.

Goo

ds

deliv

ery/

serv

ice

rece

ipt n

ote

91


Man

ual o

n In

tern

al A

udit

92

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Sta

tuto

ry

non

com

plia

nce

In c

ase

of im

ports

che

ck if

th

e st

atut

ory

regu

latio

ns

viz.

cu

stom

s re

gula

tions

, FE

MA

reg

ulat

ions

etc

are

co

mpl

ied

with

Sta

tuto

ry

Non

co

mpl

ianc

es re

sulti

ng

in

pena

lties

an

d of

fenc

es

unde

r va

rious

regu

latio

ns

S

tatu

tory

C

ompl

ianc

es

Che

cklis

t

a.

Cop

ies

of

paym

ent c

halla

ns

and

retu

rns

filed

Vend

or D

atab

ase

Man

agem

ent

Inac

cura

te

vend

or

data

base

Obt

ain

the

dum

p of

ven

dor

data

base

and

ana

lyze

for

th

e fo

llow

ing:

a.

Dup

licat

e ve

ndor

cod

esb.

Dup

licat

e ve

ndor

na

mes

c.

Ina

ccur

ate

upda

tion

of

vend

or d

etai

ls v

iz.

item

/s

ervi

ce s

uppl

ied,

rat

e,

term

s of

del

iver

y et

c by

co

mpa

ring

it w

ith

the

agre

emen

t d.

Acc

ess

to

the

vend

or

data

base

to

un

auth

oriz

ed

pers

on

(per

sons

in

de

partm

ents

oth

er th

an

proc

urem

ent

depa

rtmen

t)

Pur

chas

es

mad

e fro

m

fictit

ious

ve

ndor

s no

t su

ppor

ted

by

phys

ical

del

iver

y an

d re

sulti

ng in

pay

out

to

the

com

pany

a.

V

endo

r da

taba

se d

ump

b.

Agr

eem

ents

w

ith v

endo

rs

c.

Pur

chas

e or

ders

to th

e ve

ndor

d.

G

oods

rece

ipt

note

/ser

vice

de

liver

y no

te

92


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

93

Form

at N

o: B

/4.1

.8.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

8 P

rodu

ctio

n R

isks

Rev

iew

Che

cklis

t

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Prod

uctio

n Pl

anni

ng P

roce

ss

Inad

equa

te

Pro

duct

ion

Pla

n

a.

Is

ther

e a

Bill

of

M

ater

ial

(BO

M)

avai

labl

e fo

r th

e pr

oduc

tion

b.

Che

ck

the

proc

ess

for

evol

ving

the

Bill

of

Mat

eria

l c.

A

re

the

purc

hase

s m

ade

acco

rdin

g to

th

e B

OM

. C

heck

for

an

or

der,

of

the

purc

hase

s ar

e m

ade

as p

er B

OM

d.

Is

B

OM

co

mpr

ehen

sive

,

Inac

cura

te

estim

atio

n of

re

quire

men

ts

resu

lts in

un

nece

ssar

y pu

rcha

ses.

O

btai

n lis

t of v

ery

old

item

s in

the

inve

ntor

y an

d as

certa

in th

e re

ason

for n

ot u

sing

th

e ite

ms

and

agai

nst w

hich

BO

M

the

purc

hase

s w

ere

a.

Bill

of M

ater

ial

93


Man

ual o

n In

tern

al A

udit

94

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

relia

ble

and

accu

rate

. C

heck

for

m

odifi

catio

ns i

f an

y in

B

OM

fo

r si

mila

r or

ders

an

d ob

tain

th

e ju

stifi

catio

n fo

r th

e sa

me

mad

e.

Che

ck th

e ov

ertim

e pa

ymen

ts m

ade

and

anal

yze

the

reas

ons

for w

orki

ng

over

time.

Che

ck if

th

e ov

ertim

e w

as

pre

plan

ned

or w

as

it in

the

proc

ess

of

prod

uctio

n.

a.

Is

pr

oduc

tion

plan

re

view

ed

on

a fre

quen

t ba

sis

for

mak

ing

nece

ssar

y ad

just

men

ts

b.

Is

the

cycl

e tim

e fro

m

Raw

m

ater

ial

char

ging

to

finis

hed

good

s ca

lcul

ated

an

d ev

alua

ted

Inad

equa

te re

view

of

the

prod

uctio

n pl

an re

sulti

ng in

pr

oduc

tion

inef

ficie

ncie

s.

Rev

iew

the

min

utes

of

the

mee

ting

rela

ting

to

prod

uctio

n re

view

s an

d ch

eck

if de

cisi

ons

mad

e in

th

e m

eetin

g ar

e im

plem

ente

d.

a.

Min

utes

of

mee

ting

for

prod

uctio

n re

view

94


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

95

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Raw

Mat

eria

l Cha

rgin

g

Inad

equa

te

cont

rols

on

raw

m

ater

ial

char

ging

pr

oces

s

a.

Are

th

e ra

w

mat

eria

ls

char

ged

as

per

the

prod

uctio

n pl

an

b.

Doe

s a

revi

ew

happ

ens

to

ensu

re

that

th

e co

rrec

t qu

ality

and

qua

ntity

of

ra

w

mat

eria

l fo

r th

e ba

tch

is

ch

arge

d c.

A

re

safe

ty

proc

edur

es

com

plie

d w

ith

in

case

of r

aw m

ater

ial

whi

ch

are

of

haza

rdou

s na

ture

Inac

cura

te c

harg

ing

of ra

w m

ater

ial

resu

lting

in q

ualit

y m

ism

atch

es.

a.

P

rodu

ctio

n P

lan

b.

Raw

M

ater

ial

char

ging

ch

ecks

heet

if

any

Inad

equa

te

qual

ity c

heck

a.

Is

the

raw

mat

eria

l ce

rtifie

d fo

r qu

ality

pr

ior t

o ch

argi

ng

b.

Che

ck

for

qual

ity

clea

ranc

e fo

r th

e ite

ms

intro

duce

d in

to

the

prod

uctio

n pr

oces

s c.

C

heck

th

e pr

oces

s

Inad

equa

te q

ualit

y ch

eck

resu

lts in

in

adeq

uate

qua

lity

of th

e fin

al p

rodu

ct

lead

ing

to c

usto

mer

re

ject

ions

. C

alcu

late

the

perc

enta

ge o

f

a.

Q

ualit

y cl

eara

nce

certi

ficat

es

b.

Qua

lity

chec

klis

t c.

C

usto

mer

re

ject

ions

d.

P

endi

ng c

laim

s

95


Man

ual o

n In

tern

al A

udit

96

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

chec

klis

t us

ed

by

the

qual

ity

depa

rtmen

t fo

r ch

ecki

ng t

he q

ualit

y pa

ram

eter

s at

th

is

stag

e.

d.

Ver

ify if

the

chec

klis

t is

be

ing

fille

d up

ac

cura

tely

an

d co

mpl

etel

y fo

r ev

ery

inpu

t of m

ater

ial

reje

ctio

n at

the

raw

m

ater

ial s

tage

and

en

sure

if th

e pr

ocur

emen

t de

partm

ent h

as

take

n it

up w

ith th

e su

pplie

r for

cla

ims

if an

y.

Iden

tify

the

case

s of

cu

stom

er re

ject

ion

and

ensu

re if

it is

du

e to

raw

mat

eria

l qu

ality

. C

ompa

re th

e pr

oduc

tion

quan

tity

devi

atio

ns d

ue to

lo

w q

ualit

y of

raw

m

ater

ial.

Line

Pro

cess

es

Inad

equa

te

revi

ew o

f lin

e ac

tiviti

es

Doe

s th

e pr

oduc

tion

happ

en

as

per

the

defin

ed

proc

edur

e.

Ens

ure

the

follo

win

g fo

r ev

alua

ting

the

effic

ienc

y of

line

pro

cess

es:

a.

Are

lin

e ac

tiviti

es

Pro

duct

ion

not

carr

ied

out a

s pe

r th

e pr

oced

ure.

C

heck

on

qual

ity

reje

ctio

n in

line

and

ca

lcul

ate

the

a.

Doc

umen

ts

show

ing

outp

ut o

f lin

e ac

tiviti

es

96


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

97

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

supe

rvis

ed a

t ea

ch

stag

e b.

Is

th

e ou

tput

at

ea

ch

proc

ess

reco

rded

an

d si

gned

off

c.

Are

tra

nsfe

rs w

ithin

in

tern

al

proc

esse

s ad

equa

tely

do

cum

ente

d an

d re

view

ed

perc

enta

ge o

f suc

h re

ject

ions

and

fre

quen

t rea

sons

fo

r the

sam

e.

Inad

equa

te

reje

ctio

ns/re

wo

rk

Man

agem

ent

a. A

re

the

reje

ctio

ns/d

amag

es

and

was

tage

s ad

equa

tely

reco

rded

b.

Is

the

phys

ical

sto

ck

sent

to

raw

mat

eria

l w

areh

ouse

c.

Is

over

an

d un

der

cons

umpt

ion

calc

ulat

ions

m

ade

and

revi

ewed

by

the

prod

uctio

n de

partm

ent

Non

mon

itorin

g of

re

ject

ion

and

dam

ages

resu

lting

in

mat

eria

l le

akag

es.

Phy

sica

lly v

erify

if

the

mat

eria

l is

avai

labl

e

a.

Rej

ectio

ns/

dam

ages

re

cord

s

Inad

equa

te

Mac

hine

ry

Che

ck if

the

equi

pmen

ts

and

mac

hine

ry u

sed

in

Pro

duct

ion

dow

n tim

e du

e to

a. P

reve

ntiv

e M

aint

enan

ce

97


Man

ual o

n In

tern

al A

udit

98

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Mai

nten

ance

th

e lin

es a

re m

aint

aine

d ad

equa

tely

. Is

th

ere

a pr

even

tive

mai

nten

ance

sc

hedu

le

evol

ved

and

adhe

red

to

by th

e co

mpa

ny

mac

hine

ry

brea

kdow

n R

evie

w th

e in

stan

ces

of

mac

hine

ry

brea

kdow

n an

d tim

e ta

ken

to re

ctify

th

e sa

me

and

the

num

ber o

f tim

es th

e in

stan

ce h

as

recu

rred

Sch

edul

e b.

Equ

ipm

ent

failu

re d

etai

ls

Non

ava

ilabi

lity

of u

tiliti

es

Iden

tify

the

key

utili

ties

requ

ired

for

the

prod

uctio

n pr

oces

s an

d en

sure

if

the

com

pany

ha

s ad

equa

te b

ack

up

for s

horta

ge in

sup

ply

of

utili

ties.

A

lso

ensu

re i

f re

cord

s ar

e m

aint

aine

d sh

owin

g ut

iliza

tion

deta

ils o

f ke

y ut

ilite

s

Non

ava

ilabi

lity

or

inef

ficie

nt u

sage

of

utili

ties

resu

lting

in

dow

n tim

e Id

entif

y in

stan

ces

of

dow

n tim

e du

e to

no

n av

aila

bilit

y of

ke

y ut

ilitie

s an

d th

e ac

tions

take

n fo

r en

surin

g co

ntin

uous

sup

ply

of th

e sa

me

a.

Pro

duct

ion

dow

n tim

e de

tails

Inad

equa

te

qual

ity c

heck

in

a.

Is t

he o

utpu

t in

the

lin

e ce

rtifie

d fo

r In

adeq

uate

qua

lity

chec

k re

sults

in

a.

Q

ualit

y cl

eara

nce

98


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

99

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

the

lines

qu

ality

pr

ior

to

pass

ing

it to

the

next

pr

oces

s or

to

th

e fin

ishe

d go

ods

war

ehou

se

b.

Che

ck

for

qual

ity

clea

ranc

e fo

r th

e ou

tput

c.

C

heck

th

e pr

oces

s ch

eckl

ist

used

by

th

e qu

ality

de

partm

ent

for

chec

king

the

qua

lity

para

met

ers

at

this

st

age.

d.

V

erify

if th

e ch

eckl

ist

is

bein

g fil

led

up

accu

rate

ly

and

com

plet

ely

for

ever

y in

put o

f mat

eria

l

inad

equa

te q

ualit

y of

the

final

pro

duct

le

adin

g to

cus

tom

er

reje

ctio

ns.

Cal

cula

te th

e pe

rcen

tage

of

reje

ctio

n an

d qu

antif

y th

e fin

anci

al b

urde

n Id

entif

y th

e ca

ses

of

cust

omer

reje

ctio

n an

d en

sure

if it

is

due

to p

roce

ssin

g qu

ality

. C

ompa

re th

e pr

oduc

tion

quan

tity

devi

atio

ns d

ue to

lo

w q

ualit

y of

out

put

certi

ficat

es

b.

Qua

lity

chec

klis

t c.

C

usto

mer

re

ject

ions

d.

P

endi

ng c

laim

s

Fini

shed

Goo

ds M

anag

emen

t Pro

cess

Inad

equa

te

stor

age

of

finis

hed

good

s

a. A

re

the

finis

hed

good

s st

ored

in

a

safe

loca

tion

prio

r to

tra

nsfe

rrin

g it

to t

he

war

ehou

se

Qua

lity

reje

ctio

ns

due

to im

prop

er

stor

age

a.

Qua

lity

reje

ctio

ns

99


Man

ual o

n In

tern

al A

udit

10

0

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Che

ck fo

r ins

tanc

es

of q

ualit

y re

ject

ions

du

e to

dam

age

to

mat

eria

l afte

r pr

oduc

tion

and

prio

r to

tran

sfer

to

pack

ing

sect

ion

Inad

equa

te

proc

edur

e fo

r pa

ckin

g an

d la

belin

g of

m

ater

ial

Che

ck

for

cont

rols

ad

opte

d du

ring

the

pack

ing

and

labe

ling

proc

ess

to

ensu

re

the

follo

win

g:

• C

onta

iner

s us

ed f

or

pack

ing

are

corr

ect

• Th

e qu

antit

y of

m

ater

ial

pack

ed

is

accu

rate

• Ta

ggin

g of

the

fin

al

prod

uct

to t

he b

atch

is

mad

e ac

cura

tely

• La

belli

ng i

s do

ne a

s pe

r th

e st

anda

rds

defin

ed

• P

rices

are

prin

ted

as

per

the

appr

oved

pr

ice

list

Qua

lity

reje

ctio

ns –

in

tern

al a

nd

exte

rnal

due

to

inad

equa

te p

acki

ng

and

labe

ling.

Id

entif

y th

e re

ason

s fo

r rej

ectio

ns a

nd

eval

uate

the

actio

n ta

ken

for a

void

ing

recu

rren

ce o

f the

sa

me.

100


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

10

1

Form

at N

o: B

/4.1

.9.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

9 S

ales

and

dis

patc

h R

isks

Rev

iew

Che

cklis

t

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Sale

s Pl

an

Inac

cura

te

fixat

ion

of

targ

ets

a.

Eva

luat

e th

e pr

oces

s ad

opte

d fo

r m

akin

g an

nual

sa

les

plan

. C

heck

the

follo

win

g:

• Is

the

annu

al s

ales

pla

n pr

epar

ed

afte

r co

nsid

erat

ion

of

perfo

rman

ce

in

the

prev

ious

per

iod

• W

hat

are

the

aspe

cts

anal

yzed

fo

r pr

epar

atio

n of

pla

n an

d ar

e th

ey a

dequ

ate

Inac

cura

te

targ

ets

resu

lt in

in

adeq

uate

pl

an

for

the

mar

ketin

g te

am.

Iden

tify

if th

e m

arke

ting

team

is

al

igne

d to

ac

hiev

e th

e ta

rget

s.

a.

A

nnua

l Sal

es

Pla

n b.

S

hort

term

s sa

les

plan

w

ith ta

rget

s

101


Man

ual o

n In

tern

al A

udit

10

2

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

• Is

the

annu

al s

ales

pla

n ap

prov

ed

by

the

conc

erne

d au

thor

ity

• Is

the

sal

es p

lan

mad

e fo

r al

l the

pro

duct

s an

d lo

catio

ns

of

the

com

pany

• H

as

it be

en

com

mun

icat

ed to

all

the

depa

rtmen

ts

Ord

er B

ooki

ng a

nd D

eliv

ery

Inco

mpl

ete/

ina

ccur

ate

orde

rs

book

ed

Rev

iew

th

e pr

oces

s of

or

der

book

ing

and

verif

y th

e fo

llow

ing:

a.

A

re

the

orde

rs

book

ed

com

plet

ely.

C

heck

if

all

the

calls

as

up

date

d in

th

e cu

stom

er

call

data

base

is b

ooke

d. If

no

t as

certa

in

the

reas

ons

for

non

conv

ersi

on

of

the

orde

r b.

C

ompa

re t

he d

ate

of

call

and

date

of

orde

r an

d id

entif

y re

ason

s fo

r del

ays

if an

y

Ris

k of

de

liver

y w

ithou

t bo

okin

g of

or

ders

. E

valu

ate

the

mon

itorin

g sy

stem

for

cust

omer

cal

ls, f

ollo

w

up a

nd c

losu

re a

nd

iden

tify

poin

ts

of

cont

rol

laps

es

lead

ing

to

non

book

ing

of o

rder

s.

a.

S

ales

O

rder

co

pies

b.

C

usto

mer

ca

ll in

form

atio

n

102


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

10

3

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

Mis

mat

ch

betw

een

orde

rs

and

deliv

ery

a. V

erify

if

the

deliv

ery

is

supp

orte

d by

sa

les

orde

r b.

Ens

ure

that

the

deliv

ery

is

mon

itore

d an

d au

thor

ized

c.

Ver

ify

the

cont

rols

fo

r as

certa

inin

g th

at

the

mat

eria

l ha

s ac

tual

ly

reac

hed

the

cust

omer

. D

oes

the

pers

on

deliv

erin

g th

e go

ods

carr

y th

e ac

know

ledg

emen

t co

py

from

the

cus

tom

er a

nd

is it

che

cked

. d.

Ver

ify i

f th

ere

are

any

dela

ys

in

deliv

ery

by

com

parin

g th

e ca

ll cl

osur

e,

orde

r an

d de

liver

y

e. If

th

e de

liver

y is

ou

tsou

rced

to

an

ag

ency

, an

alyz

e th

e su

ppor

ting

docu

men

ts

for

mak

ing

paym

ents

to

the

agen

cy a

nd a

lso

the

syst

ems

for

mon

itorin

g th

e ag

ency

’s

perfo

rman

ce

Cus

tom

er

reje

ctio

ns

due

to

inad

equa

te

deliv

ery.

C

heck

fo

r in

stan

ces

of r

ejec

tions

from

the

cust

omer

s an

d an

alyz

e th

e re

ason

s fo

r th

e sa

me.

C

alcu

late

th

e m

onet

ary

impa

ct,

due

to

repe

ated

di

spat

ches

or

wro

ng

disp

atch

es,

dam

ages

du

ring

trans

porta

tion

etc.

a.

D

eliv

ery

Ord

ers

b.

Cus

tom

er

ackn

owle

dge

men

ts

c.

Cus

tom

er

reje

ctio

ns

103


Man

ual o

n In

tern

al A

udit

10

4

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

f. A

naly

ze

the

logi

stic

s ar

rang

emen

ts

and

iden

tify

area

s of

du

plic

atio

n,

inef

ficie

ncie

s et

c

Invo

icin

g In

accu

rate

in

voic

ing

a.

Che

ck i

f th

e in

voic

es

are

seria

lly c

ontro

lled

and

iden

tify

dupl

icat

e,

canc

elle

d or

m

issi

ng

invo

ices

if a

ny

b.

Che

ck i

f th

e in

voic

es

are

prep

ared

at

th

e rig

ht p

rice

for t

he ri

ght

mat

eria

l. If

the

invo

ices

ar

e sy

stem

ge

nera

ted,

che

ck t

he

appl

icat

ion

logi

c fo

r ra

te

and

mat

eria

l/ser

vice

s se

lect

ion

c.

Che

ck

if th

ere

has

been

an

y de

lays

in

voic

ing

by

com

parin

g th

e or

der

date

and

invo

ice

date

an

d as

certa

in

reas

ons

for t

he s

ame

d.

Che

ck if

all

the

orde

rs

and

deliv

erie

s ar

e

Inad

equa

te

invo

icin

g re

sults

in

di

rect

re

venu

e lo

ss f

or t

he

com

pany

. Id

entif

y ca

ses

of

inac

cura

cies

an

d de

lays

and

cal

cula

te

the

reve

nue

lost

due

to

the

sam

e.

a.

In

voic

e R

egis

ter

b.

Sal

es

orde

rs

and

deliv

ery

note

s

104


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

10

5

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

-tio

ns

invo

iced

e.

A

re

the

invo

ices

au

thor

ized

by

th

e de

sign

ated

per

son

Col

lect

ion

Proc

ess

Inad

equa

te

cont

rols

in

co

llect

ion

proc

ess

Che

ck i

f th

e co

llect

ion

is

mad

e by

th

e m

arke

ting

team

. If

yes

eval

uate

the

fo

llow

ing:

a.

A

re a

dequ

ate

cont

rols

de

sign

ed

in

the

colle

ctio

n pr

oces

s to

en

sure

th

at

ther

e is

no

le

akag

e at

th

e po

int o

f col

lect

ion

and

rem

ittin

g it

to

the

com

pany

b.

A

re

cash

co

llect

ions

di

sallo

wed

, if

allo

wed

is

it

supp

orte

d by

su

itabl

e do

cum

ents

c.

Is

the

re a

pos

sibi

lity

for

collu

sion

bet

wee

n th

e m

arke

ting

team

an

d cu

stom

er

d.

Is

agei

ng

anal

ysis

do

ne

on

rece

ivab

les

and

follo

w

up

take

n pe

riodi

cally

Inad

equa

te

cont

rols

re

sult

in

reve

nue

leak

age.

A

sses

s th

e tre

nd o

f co

llect

ions

, ch

eck

if th

ey a

re a

s pe

r th

e te

rms

and

cond

ition

s an

d is

th

ere

any

poss

ibili

ty

for

rela

xatio

n in

th

e cy

cle

a.

A

gein

g re

port

b.

Col

lect

ion

sum

mar

y

105


Man

ual o

n In

tern

al A

udit

10

6

Form

at N

o: B

/4.1

.10.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

10

Stat

utor

y C

ompl

ianc

es R

evie

w C

heck

list6

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

Cen

tral

Exc

ise

Act

• D

oes

the

exci

se

regi

stra

tion

certi

ficat

e co

ver

all

chap

ters

/sub

head

ings

/pro

duct

s

• Is

th

e st

orag

e gr

ound

pl

an

appr

oved

by

th

e E

xcis

e R

ange

su

perin

tend

ent

• H

as n

otic

e of

the

last

cha

nge

in th

e un

it he

ad

been

gi

ven

to

Exc

ise

auth

oriti

es

• A

re t

he E

xcis

e au

thor

ities

info

rmed

ab

out

the

pre-

auth

entic

ated

ser

ial

nos.

of i

nvoi

ces

a.

Exc

ise

Reg

istra

tion

Cer

tific

ate

b.

RG

23D

Reg

iste

r c.

E

xcis

e R

etur

ns

6 T

he C

heck

list i

s in

clus

ive

and

is s

ubje

ct to

cha

nge

as p

er th

e ch

ange

s to

the

Sta

tute

s. T

he c

heck

list c

an b

e us

ed a

s an

indi

cativ

e ch

eckl

ist a

nd is

not

fina

l.

106


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

10

7

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• A

re d

uplic

ate

for

trans

porte

r co

pies

of

exc

ise

invo

ices

ava

ilabl

e fo

r al

l co

nsig

nmen

ts

ente

red

in

RG

23D

re

gist

er (

for

rece

ipt

of g

oods

fro

m

plan

ts o

r oth

er lo

catio

ns)

• Is

the

RG

23D

reg

iste

r m

aint

aine

d pr

oper

ly

(con

sign

men

t-wis

e)

and

alw

ays

kept

upt

o da

te

• D

o ph

ysic

al s

tock

s re

conc

ile w

ith

book

sto

cks

as s

how

n in

RG

23D

re

gist

er a

s on

the

date

of r

epor

t

• A

re e

xcis

e re

turn

s fil

ed b

y th

e 10

th

of th

e su

bseq

uent

mon

th

Inco

me

Tax

Act

• H

as

the

unit

mad

e an

y ca

sh

paym

ents

for

exp

ense

s ab

ove

Rs

2000

0

• H

as th

e un

it pa

id lo

ans

/ adv

ance

s /

depo

sits

in c

ash

abov

e R

s 20

000

• H

as

the

unit

rece

ived

lo

ans

/ ad

vanc

es /

dep

osits

in c

ash

abov

e R

s 20

000

• if

yes,

the

n ha

s th

e un

it ob

tain

ed

the

PA

N n

umbe

r and

add

ress

of t

he

party

a.

TDS

Cha

llans

b.

TD

S re

turn

s

107


Man

ual o

n In

tern

al A

udit

10

8

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• Is

tax

bei

ng d

educ

ted

at s

ourc

e at

co

rrec

t ra

tes

on a

ll pa

ymen

ts li

able

fo

r ded

uctio

n of

tax

at s

ourc

e

• H

as T

DS

rem

ittan

ces

and

retu

rns

mad

e as

per

the

due

date

Serv

ices

Tax

• V

erify

th

e R

egis

tratio

n of

th

e as

sess

ee

with

th

e S

ervi

ce

Tax

Com

mis

sion

erat

e

• W

heth

er s

epar

ate

regn

. ta

ken

for

each

ser

vice

pro

vide

d

• C

heck

th

e op

enin

g cr

edit

of

the

curr

ent

year

and

clo

sing

ent

ries

of

the

prev

ious

yea

r

• C

heck

whe

ther

the

tax

inv

oice

is

prop

er a

nd m

entio

ns th

e R

egn.

No.

of

th

e as

sess

ee,

Sep

arat

ely

men

tions

the

rate

of t

ax a

nd a

mou

nt

of t

ax.

(Fro

m s

ampl

es o

f th

e bi

lls

rais

ed fo

r col

lect

ing

the

serv

ice

tax.

)

• C

heck

whe

ther

the

tax

inv

oice

is

prop

er a

nd m

entio

ns th

e R

egn.

No.

of

th

e se

rvic

e pr

ovid

er

and

Sep

arat

ely

men

tions

the

rat

e of

tax

an

d am

ount

of t

ax. (

Fro

m s

ampl

es

of

the

bills

re

ceiv

ed

by

the

asse

ssee

from

ser

vice

pro

vide

rs)

108


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

10

9

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• If

the

rate

s ap

plie

d ar

e di

ffere

nt,

take

a

copy

of

th

e au

thor

ity/n

otifi

catio

n un

der

whi

ch

such

ch

ange

is

ap

prov

ed.

Ex.

C

ompo

sitio

n, N

otifi

catio

n, e

tc.

• C

heck

w

heth

er

mon

th

wis

e st

atem

ent

of

serv

ice

tax

rece

ivab

le/p

ayab

le

acco

unt

mat

chin

g w

ith

the

mon

thly

pa

ymen

ts o

f ser

vice

tax.

• C

heck

whe

ther

the

ser

vice

tax

has

be

en

depo

site

d w

ith

in

the

due

date

s

• C

heck

H

alf

Yea

rly

retu

rns

filed

. Ta

lly

it w

ith

both

th

e m

onth

ly

paym

ents

and

as

wel

l as

the

ledg

er

entri

es a

s th

e re

leva

nt d

ates

.

• R

evie

w t

he r

etur

n an

d se

e w

heth

er

the

retu

rn i

s ac

cura

te a

s to

, in

put

cred

it, o

utpu

t tax

pay

able

, val

uatio

n of

ser

vice

s, c

arry

for

war

d of

cre

dit,

etc.

• C

heck

the

Cor

resp

onde

nce

if an

y w

ith

the

Dep

artm

ent

and

its

com

plia

nce

and

impa

ct.

109


Man

ual o

n In

tern

al A

udit

11

0

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

Sale

s Ta

x A

ct/ V

alue

Add

ed T

ax/ C

entr

al S

ales

Tax

Act

• D

oes

the

esta

blis

hmen

t ha

ve

regi

stra

tion

certi

ficat

es f

or L

ST

and

CS

T

• H

as

the

unit

incl

uded

ad

ditio

nal

godo

wn

/ se

ason

al

godo

wns

as

ad

ditio

nal p

lace

s of

bus

ines

s in

the

sa

les

tax

regi

stra

tion

certi

ficat

e

• H

ave

all t

he p

rodu

cts

hand

led

been

de

clar

ed in

the

sale

s ta

x re

gist

ratio

n ce

rtific

ates

• Is

th

e LS

T an

d C

ST

certi

ficat

e pr

omin

ently

di

spla

yed

at

the

unit

and

addi

tiona

l god

owns

• H

as s

ales

tax

been

cha

rged

on

sale

of

ass

ets

at c

orre

ct ra

tes

• A

re

the

reco

rds,

re

quire

d to

be

m

aint

aine

d fo

r S

ales

Tax

/ In

com

e Ta

x pu

rpos

es

avai

labl

e at

th

e lo

catio

n

• H

as th

e un

it re

conc

iled

the

varia

nce

betw

een

the

sale

s ta

x pa

yabl

e as

sh

own

in b

ooks

of a

ccou

nts

( E

RP

) an

d th

e am

ount

act

ually

pai

d

Reg

istra

tion

Cer

tific

ate

Sal

es T

ax C

halla

n S

ales

Tax

Ret

urns

110


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

11

1

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• D

oes

the

unit

mai

ntai

n ac

know

ledg

ed S

ales

Tax

cha

llans

• D

oes

the

unit

depo

sit

sale

s ta

x du

es d

uly

with

in d

ue d

ates

• D

oes

the

unit

file

the

sale

s ta

x re

turn

s du

ly w

ithin

due

dat

es

ESIC

Act

Is

the

uni

t re

gist

ered

und

er E

SIC

1

Em

ploy

ees

draw

ing

wag

es

(exc

ludi

ng

over

time)

le

ss

than

or

eq

ual

to

Rs

7500

/- ar

e co

vere

d un

der t

he A

ct.

2.

If no

t co

vere

d un

der

ES

IC,

Wor

kmen

C

ompe

nsat

ion

Act

w

ill

appl

y.

• If

secu

rity

cont

ract

ors

have

be

en

regi

ster

ed s

epar

atel

y, t

hen

are

the

copi

es o

btai

ned

from

them

and

kep

t in

saf

e cu

stod

y

• H

ave

decl

arat

ion

form

s (F

orm

1)

an

d re

turn

of

de

clar

atio

n fo

rm

(For

m 3

) fo

r ne

w e

mpl

oyee

s be

en

subm

itted

imm

edia

tely

on

thei

r da

y of

join

ing

ES

I C

halla

ns

of

bo

th

com

pany

/ co

ntra

ctor

E

SI

Ret

urns

of

bo

th

com

pany

/ con

tract

ors

ES

I C

ompl

ianc

es

File

s (V

ario

us f

orm

s fil

ed w

ith

ES

I aut

horit

ies)

111


Man

ual o

n In

tern

al A

udit

11

2

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• H

as

the

unit

pres

erve

d al

l E

SIC

pa

ymen

t cha

llans

and

retu

rns

• H

as th

e un

it m

aint

aine

d an

Acc

iden

t re

gist

er (F

orm

15)

• H

as t

he u

nit

repo

rted

all r

epor

tabl

e ac

cide

nts

(i.e.

w

hich

pr

even

t an

em

ploy

ee t

o re

port

from

dut

y fo

r a

perio

d gr

eate

r th

an 4

8 ho

urs)

to th

e E

SIC

au

thor

ities

vi

de

Acc

iden

t R

epor

t (F

orm

16

- a

vaila

ble

in t

he

Act

)

• H

as

the

unit

mai

ntai

ned

Form

-7

regi

ster

sh

owin

g m

onth

ly

ES

IC

cont

ribut

ions

and

all

the

deta

ils o

f em

ploy

ees

cove

red

unde

r th

e E

SIC

A

ct

(The

Com

pany

or

the

cont

ract

or,

in

case

he

has

his

own

code

, nee

ds to

m

aint

ain

Form

7)

• H

as

the

unit

mai

ntai

ned

ES

IC

Rec

ords

fo

r pr

evio

us

year

s (n

o m

axim

um l

imit)

as

insp

ectio

n ca

n be

car

ried

out

by a

utho

ritie

s at

any

tim

e.

• H

as

the

unit

depo

site

d E

SIC

m

onth

ly

cont

ribut

ions

(b

oth

empl

oyer

an

d em

ploy

ee)

befo

re

21st

of t

he n

ext m

onth

112


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

11

3

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• H

as t

he u

nit

filed

ES

IC h

alf-y

early

re

turn

in

Form

-6 w

ithin

42

days

of

the

half-

year

end

ed S

epte

mbe

r 30

or

Mar

ch 3

1, a

s th

e ca

se m

ay b

e

Wor

kmen

’s C

ompe

nsat

ion

Act

• H

as t

he u

nit

filed

the

ann

ual r

etur

n un

der W

orkm

en's

com

pens

atio

n A

ct

with

in

the

due

date

s? (T

his

act

is n

ot a

pplic

able

to

thos

e co

vere

d un

der t

he E

SIC

Act

)

Min

imum

Wag

es A

ct

• H

as th

e un

it di

spla

yed

a co

py o

f the

A

bstra

ct o

f the

Min

imum

Wag

es A

ct

• H

as t

he u

nit

disp

laye

d th

e no

tice

cont

aini

ng

the

min

imum

ra

tes

of

wag

es a

pplic

able

• Is

min

imum

wag

es p

aid

to c

ontra

ct

labo

ur

/sec

urity

pe

rson

nel,

in

the

pres

ence

of c

ompa

ny e

mpl

oyee

s

• H

as th

e un

it fil

ed th

e A

nnua

l ret

urns

un

der M

inim

um W

ages

act

113


Man

ual o

n In

tern

al A

udit

11

4

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

Paym

ent o

f Wag

es A

ct

• D

oes

the

unit

appr

opria

tely

mai

ntai

n re

cord

s sp

ecify

ing

nam

es

of

empl

oyee

s an

d w

ages

pai

d to

them

• D

oes

the

unit

prom

inen

tly d

ispl

ay

the

abst

ract

of

paym

ent

of w

ages

ac

t and

rule

s

• H

as t

he u

nit

filed

Ann

ual

retu

rns

unde

r P

aym

ent

of

Wag

es

Act

NO

T A

PPLI

CA

BLE

FO

R U

NIT

S IN

M

AH

AR

ASH

TRA

Prof

essi

onal

Tax

• D

oes

the

unit

mai

ntai

n ac

know

ledg

ed

Pro

fess

ion

tax

chal

lans

• H

as t

he u

nit

depo

site

d th

e m

onth

ly

prof

essi

on T

ax w

ithin

the

due

date

s(T

ime

perio

d fo

r th

e pa

ymen

t of t

ax

is S

tate

spe

cific

)

• H

as t

he u

nit

filed

Pro

fess

ion

Tax

retu

rns

with

in d

ue d

ates

• H

as

the

unit

paid

co

mpa

ny

prof

essi

on ta

x w

ithin

due

dat

e

114


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

11

5

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

Shop

and

Est

ablis

hmen

t Act

• Is

th

e S

hop

and

Est

ablis

hmen

t R

egis

tratio

n ce

rtific

ate

valid

as

on

date

• Is

th

e S

hop

and

Est

ablis

hmen

t re

gist

ratio

n ce

rtific

ate

prom

inen

tly

disp

laye

d

• H

as n

otic

e of

the

last

cha

nge

in th

e un

it he

ad b

een

give

n to

Sho

p an

d E

stab

lishm

ent a

utho

ritie

s

• H

as

the

unit

subm

itted

no

tice

of

wee

kly

holid

ays

and

notic

e of

dai

ly

wor

king

ho

urs

to

the

Insp

ecto

r un

der S

hop

and

Est

b A

ct

• H

as th

e un

it di

spla

yed

a co

py o

f the

no

tice

of

daily

w

orki

ng

hour

s su

bmitt

ed

to

the

Insp

ecto

r un

der

Sho

ps a

nd E

stb

Act

• Is

the

nam

e an

d ad

dres

s of

the

lo

cal

labo

ur i

nspe

ctor

dis

play

ed a

s pe

r Sho

p an

d E

stb

Act

• D

oes

the

unit

mai

ntai

n an

in

spec

tion

book

for

vis

it re

mar

ks o

f th

e In

spec

tor

115


Man

ual o

n In

tern

al A

udit

11

6

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• D

oes

the

unit

mai

ntai

n a

mus

ter

regi

ster

as

per

Sho

p an

d E

stb

Act

fo

r al

l co

mpa

ny

and

cont

ract

ed

empl

oyee

s

• A

re

the

empl

oyee

le

ave

card

s m

aint

aine

d an

d up

date

d as

on

date

Paym

ent o

f Bon

us A

ct

• D

oes

the

unit

mai

ntai

n pa

ymen

t of

B

onus

regi

ster

Paym

ent o

f Gra

tuity

Act

• H

as

the

unit

subm

itted

no

tice

of

open

ing

of e

stab

lishm

ent

(For

m A

) un

der

the

Gra

tuity

A

ct

to

the

Con

trolli

ng A

utho

rity

with

in 3

0 da

ys

of

star

ting

of

the

unit

(Not

e: T

his

poin

t is

app

licab

le o

nly

for n

ew u

nits

)

• H

as t

he u

nit

prom

inen

tly d

ispl

ayed

th

e ab

stra

ct o

f P

aym

ent

of G

ratu

ity

Act

• H

as t

he u

nit

intim

ated

any

cha

nge

in th

e un

it he

ad o

r add

ress

of u

nit t

o th

e C

ontro

lling

Aut

horit

y in

For

m B

• H

as t

he u

nit d

ispl

ayed

the

nam

e of

C

ompa

ny’s

of

ficer

au

thor

ized

to

re

ceiv

e no

tices

und

er th

e A

ct

116


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

11

7

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

Con

trac

t Lab

our [

Reg

ulat

ion

and

Abo

litio

n] A

ct

• Is

this

Act

app

licab

le to

the

unit?

• H

as t

he u

nit

obta

ined

Reg

istra

tion

Cer

tific

ate

unde

r th

e A

ct

for

enga

ging

Con

tract

Lab

our?

• D

oes

the

unit

mai

ntai

n R

egis

ters

of

Con

tract

ors

cont

aini

ng

all

the

nam

es

of

Con

tract

La

bour

st

aff

(from

va

rious

co

ntra

ctor

s),

the

natu

re o

f w

ork

perfo

rmed

by

the

cont

ract

la

bour

an

d th

e ra

tes

of

wag

es p

aid

to c

ontra

ct la

bour

?

• A

re t

he w

ages

to

cont

ract

lab

our

staf

f pa

id

in

pres

ence

of

m

anag

emen

t re

pres

enta

tive

Com

pany

?

• H

as t

he u

nit

disp

laye

d th

e ab

stra

ct

of th

e C

ontra

ct L

abou

r Act

/Rul

es?

• H

as th

e co

mpa

ny e

nter

ed in

to le

gal

agre

emen

t with

the

Con

tract

ors?

• H

as

the

unit

(prin

cipa

l em

ploy

er)

filed

ann

ual r

etur

ns u

nder

the

Act

?

• H

ave

the

Con

tract

ors

obta

ined

Li

cens

e un

der t

he A

ct?

117


Man

ual o

n In

tern

al A

udit

11

8

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• D

o th

e C

ontra

ctor

s re

new

th

eir

Lice

nse

ever

y ye

ar?

• H

ave

the

Con

tract

ors

take

n a

sepa

rate

cod

e nu

mbe

r fo

r P

F an

d E

SI

cove

rage

and

con

tribu

tions

are

re

mitt

ed a

ccor

ding

ly?

• D

o th

e co

ntra

ctor

s m

aint

ain

the

fo

llow

ing:

M

uste

r Rol

l

R

egis

ter o

f Wag

es

R

egis

ter o

f Ded

uctio

ns

R

egis

ter o

f Ove

rtim

e

R

egis

ter o

f Fin

es

R

egis

ter o

f Adv

ance

• A

re

the

Con

tract

ors

keep

ing

the

regi

ster

s/re

cord

s re

leva

nt

to

the

empl

oym

ent

with

in 3

km

s ne

arer

to

the

wor

k pl

ace?

• H

ave

the

Uni

t di

spla

yed

notic

e sh

owin

g ra

tes

of

wag

es/h

ours

of

w

ork/

wag

e pe

riod/

date

of

paym

ent

of w

ages

/dat

e of

pay

men

t of u

npai

d w

ages

and

the

nam

e an

d ad

dres

s of

the

Ins

pect

or h

avin

g ju

risdi

ctio

n ov

er th

e U

nit?

118


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

11

9

Aud

it St

eps

to V

erify

A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

In

form

atio

n R

equi

red

from

Aud

itee

Obs

erva

tions

• H

as

the

Con

tract

ors

issu

ed

Em

ploy

men

t C

ard/

Wag

e sl

ips

to

thei

r wor

kers

?

• H

ave

the

Con

tract

ors

filed

H

alf

year

ly re

turn

s un

der t

he A

ct?

• D

o th

e C

ontra

ctor

s is

sue

Ser

vice

C

ertif

icat

e to

th

eir

wor

kers

on

te

rmin

atio

n?

119


Man

ual o

n In

tern

al A

udit

12

0

Form

at N

o: B

/4.1

.11.

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

4.1.

11 A

dmin

istr

atio

n R

isks

Rev

iew

Che

cklis

t

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Faci

litie

s Pl

an

Non

ava

ilabi

lity

of

adm

inis

tratio

n pl

an

• C

heck

if

faci

litie

s pl

an

is

mad

e ba

sed

on

Ann

ual O

pera

ting

Pla

n

• C

heck

if

it is

co

mm

unic

ated

ad

equa

tely

• C

heck

if

the

adm

inis

tratio

n de

partm

ent

has

an

inte

rnal

pr

ocur

emen

t pl

an g

ener

ated

for

the

ap

prov

ed fa

cilit

ies

and

plac

ed

it w

ith

the

proc

urem

ent

depa

rtmen

t

Inad

equa

te

plan

re

sulti

ng

in

inad

equa

te

purc

hase

s an

d no

n av

aila

bilit

y of

th

e re

leva

nt

faci

litie

s on

tim

e

A

nnua

l pe

ratin

g P

lan

Faci

ltiie

s P

lan

120


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

12

1

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Secu

rity

Func

tions

Inad

equa

te

sele

ctio

n an

d m

onito

ring

of

secu

rity

func

tions

Rev

iew

if

the

Sec

urity

fu

nctio

ns a

re m

anag

ed i

n ho

use

or

outs

ourc

ed.

If ou

tsou

rced

, ch

eck

the

adeq

uacy

of

ev

alua

tion

done

fo

r se

lect

ion

of

secu

rity

pers

ons7

Com

prom

ise

to

phys

ical

se

curit

y as

pect

s du

e to

w

rong

sel

ectio

n of

gu

ards

R

evie

w

the

secu

rity

proc

ess

and

ensu

re

the

follo

win

g:

a. D

oes

the

Sec

urity

G

uard

no

te

dow

n de

tails

of

al

l pe

rson

s (e

mpl

oyee

s/vi

sito

rs)

mov

ing

in

and

out

of

the

com

pany

pre

mis

es

b. D

oes

the

Sec

urity

sto

p an

d ch

eck

the

visi

tors

an

d un

ders

tand

th

e pu

rpos

e of

vis

it be

fore

le

tting

them

in

c. A

re v

ehic

les

adeq

uate

ly

chec

ked

and

regi

ster

ed

prio

r to

givi

ng e

ntry

Una

utho

rized

ent

ry

and

exit

resu

lting

in

un

auth

oriz

ed

acce

ss

to

the

com

pany

an

d co

mpa

ny’s

re

sour

ces.

a.

V

isito

rs

Reg

iste

r b.

In

war

d G

ate

Pas

s c.

O

utw

ard

Gat

e P

ass

d.

Vis

itors

pa

sses

e.

In

war

d an

d O

utw

ard

Reg

iste

rs

7 T

he ri

sk in

volv

ed in

out

sour

cing

act

ivity

is n

ot in

clud

ed a

s a

part

of th

is c

heck

list.

121


Man

ual o

n In

tern

al A

udit

12

2

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

d. Is

th

e m

ovem

ent

of

mat

eria

l m

onito

red

by

Inw

ard

Gat

e P

ass

and

Out

war

d G

ate

pass

Hou

se K

eepi

ng

Inad

equa

te

hous

e ke

epin

g R

evie

w

if th

e ho

use

keep

ing

func

tions

ar

e m

anag

ed

in

hous

e or

ou

tsou

rced

. If o

utso

urce

d,

chec

k th

e ad

equa

cy

of

eval

uatio

n do

ne

for

sele

ctio

n of

pe

rson

s un

derta

king

hou

seke

epin

g ac

tivity

C

heck

the

follo

win

g:

a.

Doe

s th

e ho

usek

eepi

ng

func

tion

have

a

chec

klis

t fo

r th

eir

activ

ity

b.

Is

thei

r ac

tiviti

es

mon

itore

d c.

Is

the

cos

t of

hou

se

keep

ing

high

d.

Is

the

hou

se k

eepi

ng

mat

eria

l ke

pt

unde

r sa

fe c

usto

dy

Hig

h sp

endi

ng o

n ho

use

keep

ing

with

out

a bu

dget

re

sulti

ng

in

inef

ficie

nt

utili

zatio

n of

fund

s.

Ana

lyze

the

tre

nd

in

hous

e ke

epin

g co

st.

Com

pare

the

co

st

as

a pe

rcen

tage

of t

otal

co

st a

nd s

ales

and

co

mm

ent i

f it

is o

n a

high

er s

ide

a.

H

ouse

keep

ing

Che

ckls

it b.

H

ouse

keep

ing

cost

s br

eaku

p c.

H

ouse

ke

epin

g st

aff

atte

ndan

ce

122


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

12

3

Ris

k Li

stin

g (W

hat W

rong

C

an H

appe

n)

Aud

it St

eps

to V

erify

Im

pact

Ana

lysi

s A

udito

r C

heck

list

Tim

e fo

r A

udit

Step

Info

rmat

ion

Req

uire

d fr

om

Aud

itee

Obs

erva

t-io

ns

Mai

nten

ance

Inad

equa

te

Mai

nten

ance

of

faci

lites

a.

Che

ck

if th

ere

is

a m

aint

enan

ce

sche

dule

an

d it

is

bein

g ad

here

d to

b.

In

cas

e of

AM

Cs

or

war

rant

ies,

is

th

e fo

llow

up

do

ne

with

th

e ve

ndor

fo

r se

rvic

es

c.

Is

the

mai

nten

ance

co

st to

o hi

gh

d.

Doe

s th

e co

mpa

ny

have

any

ser

vice

leve

l ag

reem

ent

for

mai

nten

ance

ac

tivity

an

d is

it

bein

g ad

here

d to

an

d m

onito

red

e.

Is a

ll th

e co

mpl

aint

s re

gist

ered

and

act

ions

ar

e ta

ken

on ti

me

Inad

equa

te

mai

nten

ance

re

sults

in

frequ

ent

mac

hine

ry

brea

kdow

ns.

Cal

cuat

e th

e nu

mbe

r of

br

eakd

owns

an

d th

e tim

e ta

ken

for

rect

ifyin

g. A

naly

se

the

trend

in

m

aint

enan

ce

cost

to

see

if it

is r

isin

g du

e to

ina

dequ

ate

prev

entiv

e m

aint

enan

ce.

a.

M

aint

enan

ce

Reg

iste

r b.

A

MC

s c.

M

aint

enan

ce

Cos

t det

ails

123


Man

ual o

n In

tern

al A

udit

12

4

4.2

Plan

ning

and

Exe

cutio

n of

Aud

it Pr

ogra

mm

e

Form

at N

o: B

/4.2

Ass

ignm

ent N

o A

ssig

nmen

t Nam

e

Eng

agem

ent M

anag

er

Com

pany

Nam

e

Sl

No

Proc

ess

/ Are

a A

udito

r Pr

oces

s O

wne

r Pl

anne

d D

ate

Act

ual

Dat

e St

atus

W

ork

Pape

r R

emar

ks

A

Cor

pora

te

1 Le

ader

ship

2 O

pera

tiona

l

3 C

omm

unic

atio

n

4 M

arke

ting

B

Fina

nce

and

Acc

ount

s

1 R

ecei

vabl

es

2 P

ayab

les

3 Fi

nanc

ial C

losu

res

4 C

ash

Man

agem

ent

124


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

12

5

Sl

No

Proc

ess

/ Are

a A

udito

r Pr

oces

s O

wne

r Pl

anne

d D

ate

Act

ual

Dat

e St

atus

W

ork

Pape

r R

emar

ks

C

HR

1 P

lann

ing

2 R

ecru

itmen

t

3 In

duct

ion

4 A

ttend

ance

5 P

ayro

ll

6 P

erfo

rman

ce A

ppra

isal

7 Tr

aini

ng

8 S

epar

atio

n

9 S

tatu

tory

D

Inve

ntor

y

1 R

ecei

pts

2 S

tack

ing

3 Is

sue

4 R

econ

cilia

tions

E IT

1 S

ecur

ity P

olic

y

2 IT

Ass

ets

125


Man

ual o

n In

tern

al A

udit

12

6

Sl

No

Proc

ess

/ Are

a A

udito

r Pr

oces

s O

wne

r Pl

anne

d D

ate

Act

ual

Dat

e St

atus

W

ork

Pape

r R

emar

ks

3 H

R S

ecur

ity

4 P

hysi

cal S

ecur

ity

5 IT

Dep

t

6 A

cces

s C

ontro

ls

7 E

vent

s

F M

arke

ting

1 Ta

rget

ing

2 S

trate

gic

Eva

luat

ion

3 C

RM

4 M

onito

ring

G

Proc

urem

ent

1 R

equi

sitio

ns

2 P

O R

elea

ses

3 V

D M

anag

emen

t

H

Prod

uctio

n

1 P

rodu

ctio

n P

lann

ing

2 R

aw M

ater

ial C

harg

ing

3 P

rodu

ctio

n Li

ne

126


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

12

7

Sl

No

Proc

ess

/ Are

a A

udito

r Pr

oces

s O

wne

r Pl

anne

d D

ate

Act

ual

Dat

e St

atus

W

ork

Pape

r R

emar

ks

Fi

nish

ed G

oods

I Sa

les

and

Des

patc

h

1 S

ales

Pla

nnin

g

2 O

rder

Man

agem

ent

3 In

voic

ing

4 C

olle

ctio

n

J St

atut

ory

1 C

entra

l Exc

ise

2 In

com

e Ta

x

3 S

ervi

ce T

ax

4 S

ales

Tax

/ V

AT

5 E

SI

6 W

orkm

en’s

C

ompe

nsat

ion

7 M

inim

um W

ages

8 P

aym

ent o

f Wag

es

9 P

rofe

ssio

nal T

ax

10

Sho

p &

Est

ablis

hmen

ts

127


Man

ual o

n In

tern

al A

udit

12

8

Sl

No

Proc

ess

/ Are

a A

udito

r Pr

oces

s O

wne

r Pl

anne

d D

ate

Act

ual

Dat

e St

atus

W

ork

Pape

r R

emar

ks

1 P

aym

ent o

f Bon

us

2 P

aym

ent o

f Gra

tuity

3 C

ontra

ct L

abou

r

K

Adm

inis

trat

ion

1 Fa

cilit

ies

Pla

nnin

g

2 S

ecur

ity

3 H

ouse

Kee

ping

4 M

aint

enan

ce a

nd F

ixed

A

sset

s

L O

ther

s

128


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

12

9

4.3

Com

pila

tion

of O

bser

vatio

ns a

nd D

raft

Rep

ortin

g

Form

at N

o: B

/4.3

. Ex

ecut

ive

Sum

mar

y <O

verv

iew

abo

ut th

e as

sign

men

t may

be

expl

aine

d in

itial

ly>

<Upd

ate

on th

e sc

hedu

le o

f aud

it co

mpl

etio

n>

<Im

porta

nt S

trate

gic

Obs

erva

tions

to b

e gi

ven

here

>

Sl N

o O

bser

vatio

ns a

nd Im

pact

R

isk

Leve

l A

rea

Obs

erva

tion

No

Ref

eren

ce

Nee

d fo

r Man

agem

ent

Inte

rven

tion

Onl

y H

igh

Scop

e an

d O

bjec

tive

of th

e A

ssig

nmen

t <R

epea

t as

give

n in

the

Eng

agem

ent L

ette

r. If

ther

e is

any

cha

nge

in th

e S

cope

ple

ase

give

det

ails

whe

n th

e sc

ope

was

am

ende

d>

<Giv

e a

list o

f mee

tings

, int

ervi

ews

cond

ucte

d du

ring

the

assi

gnm

ent a

long

with

the

date

s>

Det

aile

d R

epor

t <G

ive

the

Det

aile

d R

epor

t Pro

cess

-wis

e or

Are

a-w

ise>

129


Man

ual o

n In

tern

al A

udit

13

0

Proc

ess

/ Are

a N

ame:

O

bser

vatio

n N

o. X

1: <

Def

ine

the

Obs

erva

tion

as a

Hea

ding

>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

<Wha

t sho

uld

be>

<Wha

t is

curr

ently

pra

ctic

ed>

<The

pro

blem

def

initi

on>

<Roo

t cau

se o

f the

pro

blem

>

Ris

k Le

vel:

Hig

h /

Med

ium

/

Low

<V

alue

of t

he R

isk>

<G

ive

Ann

exur

e fo

r bre

ak u

p of

evi

denc

es /

Cal

cula

tions

et

c.>

<How

to

re

ctify

th

e ex

istin

g co

nditi

on, t

rans

actio

n>

<How

to

rect

ify t

he s

yste

m s

o as

to

avoi

d re

peat

of a

sim

ilar s

ituat

ion>

<D

etai

ls o

f ho

w c

hang

e sh

ould

be

brou

ght i

n>

<Com

men

ts f

rom

the

Aud

itee

– as

it is

> <D

ate

by

whi

ch

the

impl

emen

tatio

n sh

all

be

com

plet

ed>

<Nam

e of

th

e P

erso

n R

espo

nsib

le>

Ann

exur

e to

the

Obs

erva

tion:

<G

ive

the

anne

xure

rele

vant

to th

e ob

serv

atio

n. E

nsur

e th

at th

e ev

iden

ce s

atis

fies

the

thre

e co

nditi

ons

as u

nder

: a.

A

ccur

ate

– C

alcu

latio

ns e

tc.,

shou

ld m

atch

to th

e ob

serv

atio

n b.

R

elev

ant –

The

evi

denc

e sh

ould

be

rele

vant

to th

e ob

serv

atio

n c.

C

ompl

ete

– Th

e ev

iden

ce s

houl

d be

com

plet

e, th

ere

shou

ld n

ot b

e an

y am

bigu

ity>

Obs

erva

tion

No.

X2:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

Ann

exur

e to

the

Obs

erva

tion:

130


R

isks

, Che

cklis

ts, A

udit

Pro

gram

me

13

1

Obs

erva

tion

No.

X3:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

Ann

exur

e to

the

Obs

erva

tion:

Pr

oces

s / A

rea

Nam

e:

Obs

erva

tion

No.

Y1:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

Ann

exur

e to

the

Obs

erva

tion:

131



132

4.4 Quality Checklist of Evidence Collection

Format No: B/4.4.


Company Name

Obs No

Observation Brief

Work Papers

Collected Accurate8 Relevant9 Complete10 Annexure

Area:

Area:

Area:

Prepared by Check by

8 Accuracy – Evidence accurately confirms the observation without ambiguity. 9 Relevant – Evidence is relevant and relates to the observation. Irrelevant evidence may result in the observation being disputed. 10 Complete – All the supporting, calculations necessary to confirm the observation are provided. The evidence should not be incomplete. Incomplete evidence is sometimes as good as no evidence.

Report Compilation

5.1 Draft Audit Report

Format No: B/5.1.

Title and Date of the Audit Report

Addressed to: <Name and Designation of the Person Addressed to >

Report Distribution List:

a.

b.

c.

d.

e.

<Mention that the report is not intended to anyone other than included in the distribution list>

Introduction:

<Give a brief overview about the functions / processes audited>

<Give a statement of responsibility of the management of the organization and Internal Audit in the organization>

Man

ual o

n In

tern

al A

udit

13

4

Exec

utiv

e Su

mm

ary

<Ove

rvie

w a

bout

the

assi

gnm

ent m

ay b

e ex

plai

ned

initi

ally

>

<Upd

ate

on th

e sc

hedu

le o

f aud

it co

mpl

etio

n>

<Im

porta

nt S

trate

gic

Obs

erva

tions

to b

e gi

ven

here

>

Sl N

o O

bser

vatio

ns a

nd Im

pact

R

isk

Leve

l A

rea

Obs

erva

tion

No

Ref

eren

ce

Nee

d fo

r Man

agem

ent

Inte

rven

tion

Onl

y H

igh

Scop

e an

d O

bjec

tive

of th

e A

ssig

nmen

t <R

epea

t as

give

n in

the

Eng

agem

ent L

ette

r. If

ther

e is

any

cha

nge

in th

e S

cope

ple

ase

give

det

ails

whe

n th

e sc

ope

was

am

ende

d>

<Ens

ure

that

the

perio

d of

cov

erag

e is

giv

en in

the

Sco

pe>

<Ple

ase

men

tion

scop

e lim

itatio

ns>

<Giv

e a

list o

f mee

tings

, int

ervi

ews

cond

ucte

d du

ring

the

assi

gnm

ent a

long

with

the

date

s>

<Giv

e re

fere

nce

to th

e ad

optio

n of

Gen

eral

ly A

ccep

ted

Aud

it P

roce

dure

s of

Indi

a>

<Giv

e a

brie

f met

hodo

logy

(do

not g

ive

it in

det

aile

d. G

ive

it as

nec

essa

ry fo

r the

read

er to

und

erst

and

the

exte

nt a

nd w

ay o

f stu

dy)>

134


Rep

ort

Com

pila

tion

135

Det

aile

d R

epor

t <G

ive

the

Det

aile

d R

epor

t Pro

cess

-wis

e or

Are

a-w

ise>

Proc

ess

/ Are

a N

ame:

Obs

erva

tion

No.

X1:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

<Wha

t sho

uld

be>

<Wha

t is

curr

ently

pra

ctic

ed>

<The

pro

blem

def

initi

on>

<Roo

t cau

se o

f the

pro

blem

>

Ris

k Le

vel:

Hig

h /

Med

ium

/

Low

<Val

ue o

f the

Ris

k>

<Giv

e A

nnex

ure

for b

reak

up

of e

vide

nces

/ C

alcu

latio

ns

etc.

>

<How

to

re

ctify

th

e ex

istin

g co

nditi

on, t

rans

actio

n>

<How

to

rect

ify t

he s

yste

m s

o as

to

avoi

d re

peat

of a

sim

ilar s

ituat

ion>

<Det

ails

of

how

cha

nge

shou

ld b

e br

ough

t in>

<Com

men

ts f

rom

the

Aud

itee

– as

it is

>

<Dat

e by

w

hich

th

e im

plem

enta

tion

shal

l be

co

mpl

eted

>

<Nam

e of

th

e P

erso

n R

espo

nsib

le>

Ann

exur

e to

the

Obs

erva

tion:

<Giv

e th

e an

nexu

re re

leva

nt to

the

obse

rvat

ion.

Ens

ure

that

the

evid

ence

sat

isfie

s th

e th

ree

cond

ition

s as

und

er:

a.

Acc

urat

e –

Cal

cula

tions

etc

., sh

ould

mat

ch to

the

obse

rvat

ion

b.

Rel

evan

t – T

he e

vide

nce

shou

ld b

e re

leva

nt to

the

obse

rvat

ion

c.

Com

plet

e –

The

evid

ence

sho

uld

be c

ompl

ete,

ther

e sh

ould

not

be

any

ambi

guity

>

Obs

erva

tion

No.

X2:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

135

Report Compilation

Man

ual o

n In

tern

al A

udit

13

6

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

Ann

exur

e to

the

Obs

erva

tion:

Obs

erva

tion

No.

X3:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

Ann

exur

e to

the

Obs

erva

tion:

Proc

ess

/ Are

a N

ame:

Obs

erva

tion

No.

Y1:

<D

efin

e th

e O

bser

vatio

n as

a H

eadi

ng>

Obs

erva

tion

Ris

k Le

vel a

nd Im

pact

R

ecom

men

datio

n M

anag

emen

t Com

men

ts

Ann

exur

e to

the

Obs

erva

tion:

C

losu

re:

Sig

natu

re o

f the

Mem

ber

Mem

bers

hip

No:

136


Report Compilation

137

5.2 Covering Letter for Draft Report – By email / letter head

Format No: B/5.2. Date: <DD MMM YYYY>,

<City>.

To

Mr./Mrs. <Name of the Process Owner>,

<Designation>, <Department>

Dear Sir,

Sub: Circulation of Draft Report for Management Comments

With regard to the Internal Audit Engagement captioned – “<Name of the Engagement>” assigned to us, we have completed the field work of the engagement and have firmed up the “Draft Report” and is being circulated to you for your comments. The process from now onwards shall be as under:

a. The process owners shall go through the observations and give their comments in the designated zone provided against each observation.

b. A copy of email is also sent to your official id.

c. The documents shall be returned to us by DD/MMM/YYYY either by an email or printed copy.

d. Incase you need our team member to explain you the observation, you can contact Mr. XYZ, (Mob No: XXXXXXX) for the same.

We look forward for your dates availability for holding Exit Meeting for this engagement. We look forward for your response in this regards.

Warm Regards,

For XYZ & Co.,

YZ,

Manager / Partner 5.3 Collection of Management Comments

(Refer to Format No – B/5.1)

Exit Meeting

6.1 Fixing of the Meeting Time (Refer to Format No – B/5.2)

6.2 Presentation and Action Plan Preparation

Format No: B/6.2A.


Company Name

Observation-wise Discussion Obs No. Observation Details Status Management Comments

Dropped / Retained

Action Plan Statement

Sl No Action Plan Statement Ref of

Observation Responsibility Dead Line Remarks

Signature of the Process Owner1 Signature of the Auditor 1 It is important to take the signature of the Process Owner as it shall act as an evidence and the Process owner does not disclaim

Exit Meeting

139

Format No: B/6.2B.

XYZ & Co., <Client Logo>

Internal Audit Report

Presentation

<Name of the Company>

<Location>

<Date of Presentation>

Format:B/6.2

XYZ & Co., <Client Logo>Contents of the Presentation

1. Overview …………………………………………………………………<Page No>

2. Detailed Observations ……………………………….……...……………<Page No>

3. Action Plan for Implementation ………………………………..…….….<Page No>


140


Overview

XYZ & Co., <Client Logo>Overview

<Give engagement details>

<Give detailed Scope & Objective of the Engagement>

<Timelines & Delivery Dates>

Exit Meeting

141

XYZ & Co., <Client Logo>Most Important Observations

1. Observation 1: (Reference)

Impact: Value:


Impact: Value:


Impact: Value:


Impact: Value:


Impact: Value:


Detailed Audit Observations

Area 1 Area 2 Area 3 Area 4 Area 5


142




XYZ & Co., <Client Logo>Detailed Audit Observations

<Comments from the Auditee– as it is><Date by which the implementation shall be completed><Name of the Person Responsible>

<How to rectify the existing condition, transaction><How to rectify the system so as to avoid repeat of a similar situation><Details of how change should be brought in>

Risk Level: High / Medium / Low<Value of the Risk><Give Annexure for break up of evidences / Calculations etc.>

<What should be><What is currently practiced><The problem definition><Root cause of the problem>

Management CommentsRecommendationRisk Level & ImpactObservation

1.1. Observation Heading

Annexure

Exit Meeting

143




XYZ & Co., <Client Logo>Detailed Audit Observations

<Comments from the Auditee– as it is><Date by which the implementation shall be completed><Name of the Person Responsible>

<How to rectify the existing condition, transaction><How to rectify the system so as to avoid repeat of a similar situation><Details of how change should be brought in>

Risk Level: High / Medium / Low<Value of the Risk><Give Annexure for break up of evidences / Calculations etc.>

<What should be><What is currently practiced><The problem definition><Root cause of the problem>

Management CommentsRecommendationRisk Level & ImpactObservation

2.1. Observation Heading

Annexure


144


Action Plan

XYZ & Co., <Client Logo>Action Plan Statement

RemarksDead LineResponsibilityRef of ObservationAction Plan StatementSl No

6.2 Updation of the Action Plan into the Draft Report (Refer to Format No – B/5.1)

Report Issue

7.1 Final Report Release Checklist

Format No: B/7.1


Company Name

Sl. No Checklist Status Remarks

1 Whether there is an Executive Summary written with summary of high risk observations for a top management view

2 Whether Objective and Scope Document is given and relates to the Engagement Letter

3 Whether the Language used in the Reports are positive, affirmative and objective

4 Whether the language is easily understandable to a general person and jargon free

5

Whether there are no comments which are in an attacking tone and adequate care is taken to keep them free of abuses

6

Whether there is adequate numbering system followed and there is a table of contents referring to the report and observations

7 Whether all the observations are supported by evidences and are not ambiguous

8

Are there any trend, performance information which may be represented using Graphs


146

Sl. No Checklist Status Remarks

9 Is caution taken in usage of logos of the clients with adequate written permissions

10

Is the formatting of the report done using your standardized formats signed of with the client. Please give extra check on headers, footers, first page, annexure etc.,

11 Check the valuation of Risk levels is as per the methodology / score matrix signed off with the client

12 All the observations are linked / mapped to the evidences

13

Ensure that the Audit Report adheres to the Standard of Internal Audit (SIA) 4 for Reporting issued by Institute of Chartered Accountants of India. (ICAI)

14

15

Team Leader Engagement Manager Partner

Report Issue

147

7.2 Audit Committee Presentation (Where Applicable)

Format No: B/7.2


Quarterly Report

Audit Committee Presentation

<Name of the Company>

<Location>

<Quarter No / Date>

Format:B/6.2

XYZ & Co., <Client Logo>Contents of the Presentation

1. Plan vis-à-vis Actual………………………………………………………<Page No>

2. Quarterly Critical Audit Observations……………….……...……………<Page No>

3. Old Pending Audit Observations ………………………………..…….….<Page No>


148


Plan vis-à-vis Actual

XYZ & Co., <Client Logo>Plan vis-à-vis Actual

Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4

Area 1Audit 1

Audit 2

Audit 3Area 2Audit 1

Audit 2


Audit 2


Audit 2


Audit 2

Audit 3

Month 1 Month 2 Month 3Details

Status of Plan vis-à-vis Actual Report of various projects planned during the quarter

Report Issue

149

XYZ & Co., <Client Logo>Plan vis-à-vis Actual

Not Started

Delayed

RemarksReasonStatusAudit NameAudit No


Quarterly Audits –Critical Observations

Presentation


150


Low Risk

Medium Risk

High Risk

No of Observations

Name of AuditAudit No

Statistics of Audit Observations

XYZ & Co., <Client Logo>High Risk / High Critical Observations

Audit No Audit Name

Observation Management CommentsRisk / Impact

Audit No Audit Name


Report Issue

151

XYZ & Co., <Client Logo>High Risk / High Critical Observations

Audit No Audit Name


Audit No Audit Name



Status of Closures of Old Observations


152


StatusStatus of

Implementation & Remarks

ImpactObservationQuarterAudit No

Status of Old Pending Observations


StatusSupporting DocumentResponseAreaQueryQuarter

No

Queries Raised by Audit Committee

Report Issue

153


Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4

Area 1Audit 1

Audit 2


Audit 2


Audit 2


Audit 2


Audit 2

Audit 3

Details Month 1 Month 2 Month 3

Plan for Next Quarter

XYZ & Co., <Client Logo>Important Performance Measures of Internal Audit

Last QuarterAchievementStandardMeasureSlNo


154

7.3 Audit Feedback Collection

Format No: B/7.3

Assignment No Assignment Name Engagement In-charge

Company Name

a. How do you find the methodology adopted by us in delivering the assignment

Excellent Very Good Good Average Poor

Additional Comments:

b. How do you rate the knowledge levels of out team members in delivering the assignment



c. How do you find the report content and presentation and the general visuals



Report Issue

155

d. How do you rate the overall team performance



e. How do you rate the time schedules adherence and general project management of the our Team



f. How do you rate the client communication levels



Overall rating about us




156

Additional Comments (Any other):

Client Coordinator

Man

ual o

n In

tern

al A

udit

15

8

Sl.

No

Part

icul

ars

Scor

e A

chie

ved*

Wor

k Pa

per f

or

Det

ails

(to

list o

ut

obse

rvat

ions

and

R

ecom

men

datio

n)

Rec

omm

enda

tions

R

emar

ks

2 Fi

ling

dist

ribut

ion:

• A

re th

e fil

es b

roke

n ph

ase

wis

e of

the

assi

gnm

ent

• Is

ther

e a

mas

ter f

ile

• A

re th

ere

divi

ders

in th

e fil

es to

id

entif

y se

ts o

f wor

k pa

pers

3 A

ssig

nmen

t Pha

se F

iles:

• D

oes

it co

ntai

n th

e fin

al re

port

rele

ased

• D

oes

it co

ntai

n th

e lis

t of

inte

rvie

ws

cond

ucte

d an

d th

eir

rele

vant

min

utes

and

sup

porti

ng

docu

men

ts c

olle

cted

• A

re a

ll th

e w

orki

ng p

aper

s re

ferr

ed in

the

conc

lusi

ons

draw

n fo

r fin

al re

ports

• A

re th

ere

any

phas

es w

hich

are

co

mpl

ete

with

out r

epor

ts

4 M

aint

enan

ce o

f Wor

k P

aper

s in

Sof

t fo

rm: •

Are

the

files

in th

e fo

lder

pr

oper

ly a

rran

ged,

nam

ed a

nd

reta

ined

158


Wor

k Pa

per C

losu

res

15

9

Sl.

No

Part

icul

ars

Scor

e A

chie

ved*

Wor

k Pa

per f

or

Det

ails

(to

list o

ut

obse

rvat

ions

and

R

ecom

men

datio

n)

Rec

omm

enda

tions

R

emar

ks

• A

re th

ere

irrel

evan

t file

s in

the

fold

er

• Is

ther

e ad

equa

te v

ersi

on

cont

rol r

etai

ned

on th

e fil

es

5 C

losi

ng o

f the

ass

ignm

ent:

• Is

ther

e a

cost

ing

stat

emen

t av

aila

ble

• Is

ther

e a

know

ledg

e de

rived

fro

m th

e as

sign

men

t sta

tem

ent

prep

ared

• Is

ther

e cl

ient

feed

back

not

e av

aila

ble

159

Work Paper Closures

Man

ual o

n In

tern

al A

udit

16

0

A.1

Fi

nal S

core

Car

d Sl

No

Part

icul

ars

Tota

l Sco

re A

chie

ved

Max

imum

Sco

re P

ossi

ble

V

isua

l Pre

sent

atio

n of

Wor

k P

aper

s

Fi

ling

Dis

tribu

tion

A

ssig

nmen

t Pha

se F

iles

▪

Pla

nnin

g

▪

Fiel

d W

ork

▪

Exi

t Mee

ting

▪

Fina

l Rep

ortin

g

▪

Impl

emen

tatio

n

M

aint

enan

ce o

f Wor

k P

aper

s in

sof

t for

m

C

losi

ng o

f the

ass

ignm

ent

To

tal

Sl.

No

Part

icul

ars

/ Rem

arks

D

eadl

ine

for I

mpl

emen

tatio

n

Sig

natu

re o

f the

Aud

itor

Sig

natu

re o

f the

Eng

agem

ent M

anag

er

160


Work Paper Closures

161

B. Quality Audit Action Plan Statement

Format No: B/8.1B


Engagement In-charge

Company Name

Name of the Quality Auditor

Sl. No

Non Conformities Identified

Improvements Responsibility Future Action Plan

1

2

3

4


162

8.2 Knowledge Bank Updation

Format No: B/8.2


Engagement In-charge

Company Name

Sl.no Particulars Updation Status

Work Paper

Reference

Acted on and By

1 Please make a separate statement listing the major industry segment value adds learnt during the assignment delivery

2 Key Performance Indicators / Best Practices identified during the assignment attached as a separate statement

3 Updation of the credentials statement with brief description of the assignment

4 Updation of team level credentials with brief description of the assignment

5 Updation of website incase of any innovation

6

7

8

163

PART – C

Clouse Outs


165

Close Outs

C.1 Invoice Format

Format No: C/1 <On Your Letter Head / Pre Printed Form> Date: <DD MMM YYYY>, <City>. To Mr./Mrs. <Name of the Client Representative>, <Designation>, <Name of the Company>, <City>. Invoice No: Service Tax Registration No: PAN: TAN:

Invoice

S. No. Particulars Amount (Rs.)

1.

Add: Service Tax @ 10% Excluding OPEs as per the annexure

Total

(Rupees …………………………………………………………………… only)

For XYZ & Co.,,

Authorized Signatory

Man

ual o

n In

tern

al A

udit

16

6

C.2

Out

of P

ocke

t Exp

ense

s Tr

acki

ng

Fo

rmat

No:

C/2

Tr

avel

Exp

ense

/ Gen

eral

Exp

ense

Re-

imbu

rsem

ent S

tate

men

t Tr

avel

Det

ails

St

art

Des

tinat

ion

Dat

e C

lient

C

ode

Part

icul

ars

Tick

etLo

dg-

ing

Boa

rd-

ing

Con

ve-

yanc

eC

ourie

rXe

rox

Oth

ers

Tota

l

TOTA

L

Trai

n Ti

cket

Sum

mar

y

To

tal E

xpen

ses

incu

rred

Cos

t of t

he ti

cket

Less

: Adv

ance

Tak

en

Le

ss: S

pent

by

Com

pany

Due

Fro

m/T

o

B

alan

ce fr

om A

dvan

ce

166


Close Outs

167

C.3 Overall Closure Checklist

Format No: C/3


Company Name

Sl. No Form Name Planned

Date Complete

Date Signature

1 Opening Meeting

2 Scope and Objective of the Assignment

3 Assignment Scheduling

4 Planning


4.2 Data Analysis

4.3 Walk Through

4.4 Documentation of Walk Through

4.6 Risks and Audit Programme Generation

4.7 Field Work Scheduling

5 Field Work

5.1 Field Work Execution

5.2 Draft Report Generation and Circulation

6 Exit Meeting

6.1 Draft Report with management comments

7 Final Report Issue

7.1 Structured Reporting

7.2 Presentation of Finding

8 Follow up and Implementation

8.1 Follow Up Check list

9 General Administrative Closures

9.1 Invoice Generation

9.2 Out of Pocket Expenses Collection

9.4 Client Feedback


168

Sl. No Form Name Planned

Date Complete

Date Signature

9.5 Opportunity for future Businesses

9.6 Knowledge Base Updation

10 Quality Audit

10.1 Quality Review Report and Action Statement

10.2 File Closure Any Comments:

Major Learning from Assignment:

Partner’s Comments:

169

PART – D

General Annexures

171

General Annexures

D.1 Confirmation of Meeting Format

Format No: D/1

Dear Sir,

With regards to the Engagement “___________________________________”, we have been appointed, we would like to have a meeting with you to discuss the following:

a.

b.

c.

d.

We shall be needing ________ hours to complete the discussion. Please provide us suitable time for the same.

Regards,

XYZ

Team, XYZ & Co.,


172

D.2 Minutes of Meeting Formats

Format No: D/2

Meeting No Details of the Meeting

Date of Meeting

Company Name

Participants

From Client From Auditor

Important Issues Discussed: a. b. c. d.

General Annexures

173

D.3 Agenda for the Meeting

Format No: D/3

Meeting No

Details of the Meeting

Date of Meeting

Company Name

Participants From Client From Auditor

Sl No

Agenda of the Meeting

Supporting Information Time Status Remarks

Man

ual o

n In

tern

al A

udit

174

Min

utes

of t

he a

bove

Mee

ting

Com

plet

ion

Stat

us

In

tern

al A

udit

Obs

erva

tion

Dat

abas

e an

d St

atus

Com

pila

tion

Nam

e of

the

Clie

nt :

Nam

e of

the

Part

ner

Aud

it N

o an

d N

ame

Obs

erva

- tio

n N

o O

bser

- va

tion

Impa

ct

Ris

k Le

vel

Rec

omm

e-nd

atio

n

Man

age-

men

t C

omm

ents

Dat

eof

R

epor

tA

udito

r D

epar

t-m

ent

Div

isio

n Lo

ca-

tion

Res

pons

i-bi

lity

Dea

d Li

ne

Act

ion

Pla

n C

losu

reS

tatu

s D

ate

ofC

losu

re

Wor

k P

aper

R

efer

ence

174


General Annexures

175

D.4 Standards on Internal Audit Issued by the Institute of Chartered Accountants of India

Internal audit is an independent appraisal involving specialized application of techniques of auditing in accordance with the specific needs of an enterprise. The nature and scope of internal audit depends upon the requirements of an enterprise. It is a systematic evaluation of risk management, control and governance processes particularly with reference to:

• Safeguarding of assets

• Compliance with laws, regulations and contracts as well as policies laid down by the management

• Reliability and integrity of financial and operational information

• Effectiveness and efficiency of operations

• Accomplishment of objectives and goals of the organization through ethical and effective governance

The Institute of Chartered Accountants of India constituted the “Committee on Internal Audit” on 5th February 2004. The Council, at its 282nd meeting held in November 2008, had renamed the Committee on Internal Audit as “Internal Audit Standards Board”. The primary mission of the Board is to enable its members to provide more effective and efficient value added services relating to internal audit to the industry and others by issuing Standards on Internal Audit, Guidance Notes and Industry Specific Technical Guides.

The following definition of internal audit, as contained in the Preface to the Standards on Internal Audit, issued by the Institute of Chartered Accountants of India, amply reflects the current thinking as to what is an internal audit:

“3. Internal audit is an independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity’s strategic risk management and internal control system.”

It is, however, pertinent to note that variations in propositions do not change the basic philosophy of collecting and evaluating evidence and formulating an opinion; what undergoes a change is the approach, the tools and the techniques used. Internal audit is, therefore, an important tool in the hands of the management to help improve its decision making process. The growing importance of internal audit to good governance can be appreciated from the spate of legal and regulatory requirements world over, directly or indirectly necessitating the need for internal help management to rope in the services of internal audit to help in improving the former’s efficiency in running an enterprise. However, before discussing how internal audit can help management in that respect and the drivers of an efficient and effective internal audit, it is essential to understand the various stages of evolution of internal audit over time.

5.4.1 Preface to Standards on Internal Audit The Preface to Standards on Internal Audit is an important document, which gives an insight into Committee on Internal Audit (presently known as Internal Audit Standards Board). It deals


176

with aspects like scope and functions of the Committee on Internal Audit, scope of Standards on Internal Audit and Guidance Notes on Internal Audit and their status being mandatory or recommendatory in nature, as also the implications in case of departures from the Standards on Internal Audit, the basic procedures for issuing the Standards and Guidance Note on Internal Audit and the date of coming into force of the particular Standard on Internal Audit.

Preface to Standards on Internal Audit issued by the Institute of Chartered Accountants of India.

5.4.2 Framework for Standards on Internal Audit Internal Audit Standards Board has issued the Framework for Standards on Internal Audit which provides a frame of reference for the internal audit standards being issued by the Institute. The objective of the Framework is to promote the professionalism in the internal audit activity. The Framework comprises of four components viz the Code of Conduct, the Competence Framework, the Body of Standards and the Technical Guidance.

Framework for Standards on Internal Audit issued by the Institute of Chartered Accountants of India.

5.4.3 Basic Principles Governing an Internal Audit Like any other profession, the profession of internal audit also is based on a certain fundamental principles, which constitute the life and blood of this profession. Standard on Internal Audit (SIA) 2, Basic Principles Governing Internal Audit, had also been issued by the Institute of Chartered Accountants of India. The purpose of this Standard on Internal Audit (SIA) is to establish standards and provide guidance on the general principles governing internal audit. This Standard explains the principles, namely, integrity, objectivity and independence, confidentiality, due professional care, skills and competence, work performed by others, documentation, planning, Evidence and reporting which governs the internal auditor’s professional responsibilities. These principles have been discussed in the following paragraphs:

Integrity, Objectivity and Independence The internal auditor should be straight forward, honest and sincere in his approaching to the assignment, keeping free of any bias that may override/compromise his integrity and objectivity. The internal auditor should also be impartial and free of any interest that may be regarded as incompatible to integrity and objectivity and inform his supervisors of any personal or external factors that actually do or are likely to impede his independence and objectivity so that necessary remedial action may be taken.

Confidentiality The internal auditor, in the course of his work, invariably comes across information that is confidential and/ or critical to the working of the entity. The internal auditor should respect the confidentiality of such information and should not disclose the same to a third party without the specific authority or unless there is a legal or professional duty to do so. The internal auditor should, therefore, ensure that there are adequate policies and mechanisms to protect the confidentiality of the information.

Standards on Internal Audit

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Due Professional Care, Skills and Competence Performance of the audit and preparation of the report require due professional care by persons who have adequate training, experience and competence in auditing. Development of audit skills may be achieved through training courses. Much of staff development results from on the job training where experienced auditors assist in the training of new, less experienced internal staff. Each internal auditor is responsible for continuing his education in order to maintain his proficiency.

Internal auditors should also take reasonable professional care in specifying evidence required, in gathering and evaluating that evidence and in reporting the findings. They need to remain alert to the instances that could indicate errors, fraud, etc.

Planning Adequate planning for every audit should cover all material areas. The audit working papers should incorporate documentary evidence of audit planning in the form of an audit plan, setting out the objectives and scope of an audit and the techniques and resources to be used by an internal auditor. Plans may be revised as required in the course of the audit.

Delegation and Supervision Internal auditor would invariably require delegating work to assistants. At times, services of an expert might also be sought. The internal auditor would, however, continue to be responsible for his opinion on the activities being subject to internal audit or his findings. The internal auditor should carefully direct, supervise and review the work delegated to assistants. The amount of supervision required depends on the skill and experience of the assistant on the job. The supervisory role of the internal auditor includes:

• Providing suitable instructions for the audit.

• Approving or recommending the approval of the audit plan.

• Ensuring that the audit program is completed.

• Ensuring that working papers adequately support the audit findings, conclusions and reports.

• Ensuring that the reports are unambiguous, accurate and concise.

• Ensuring that the audit objectives have been met.

Evaluation of Internal Control Internal auditors should systematically evaluate the nature of operations and system of internal controls in the departments being audited to determine the nature, extent and timing of audit procedures. Internal controls of an organization comprise the plan of organization and methods adopted to safeguard assets, comply with laws, ensure the completeness and correctness of data, promote efficiency and encourage adherence to management policies. It is important that a review of an internal control system be directed primarily towards those controls that have an important bearing on the reliability of the system (i.e., key controls).


178

Evidence The internal auditor should obtain all the evidence considered necessary for the expression of an informed opinion. Professional judgment is needed to determine the nature and amount of evidence required. In this regard, the internal auditor should consider:

• The item under consideration;

• Materiality of possible errors;

• Degree of risk of error; and

• Probability of the error occurring.

Work Papers The internal auditor should document matters that are important in providing evidence to his opinion or the findings. Advantages of having sufficient and properly maintained work papers include the following:

• Assistance in the performance of the audit.

• Providing record of work done.

• Forming basis of the auditor’s observations/ findings in his report.

• Providing information for the report.

• Aiding the review and evaluation of the work done.

• Aiding cross referencing between audit evidence and decision taken by the internal auditor.

• Providing evidence that the internal audit was carried out in accordance with the requirements of the relevant pronouncements of the Institute of Chartered Accountants of India.

Standard on Internal Audit (SIA) 2, Basic Principles Governing Internal Audit issued by the Institute of Chartered Accountants of India.

5.4.4 Planning an Internal Audit Planning is one of the basic principles governing internal audit. Adequate planning ensures that appropriate attention is devoted to significant areas of audit, potential problems are identified, and that the skills and time of the staff are appropriately utilised. Planning also ensures that the work is carried out in accordance with the applicable pronouncements of the Institute of Chartered Accountants of India. Planning should also be based on the knowledge of the entity’s business. Standard on Internal Audit (SIA) 1, Planning an Internal Audit was also issued by the Institute of Chartered Accountants of India. The basic objective of the SIA is to establish standards and provide guidance in respect of planning an Internal and helping in achieving the objectives of an Internal Audit function. This SIA gives an insight into the objectives of the planning. It provides knowledge about the factors affecting the planning process. It deals with the scope of the planning and planning process.

Standards on Internal Audit

179

5.4.5 Documentation Adequate documents act as basis for the planning and performing the internal audit. Documents provide the evidence of the work of the internal auditor. The Institute of Chartered Accountants of India had also issued the Standard on Internal Audit (SIA) 3, Documentation. The purpose of this Standard on Internal Audit is to establish Standards and provide guidance on the documentation requirements in an internal audit. This Standard provides guidance regarding the form and content of the internal audit documentation, detention and retention of the same and identification of the preparer and reviewer.

5.4.6 Reporting Reporting is a formal opinion or disclaimer thereof, issued by the internal auditor as a result of evaluations made by him as per the terms of the engagement. The Institute of Chartered Accountants of India has also issued the Standard on Internal Audit (SIA) 4, Reporting. The purpose of the Standard on Internal Audit (SIA) 4, Reporting is to establish standards on the form and content of the internal auditor’s report issued as a result of the internal audit performed by an internal auditor of the systems, processes, controls including the items of financial statements of an entity. This SIA describes the basic elements of an internal audit report such as opening, objectives, scope paragraphs, and executive summary. This SIA also deals with the different stages of communication and discussion of the report and describes the reporting responsibilities of the internal auditor when there is a limitation on the scope. The Standard also lays down the reporting responsibilities of the internal auditor when there is restriction on usage and circulation of the report.

5.4.7 Sampling Sampling is that part of statistical practice concerned with the selection of individual observations intended to yield some knowledge about the audit population, especially for the purpose of statistical inference. The Institute of Chartered Accountants of India had also issued the Standard on Internal Audit (SIA) 5, Sampling. The Standard on Internal Audit (SIA) 5, Sampling provides the guidance regarding the design and selection of an audit sample and also on the use of the audit sampling in the internal audit engagements. This SIA also deals with the evaluation of the sample results. This Standard also provide guidance on the use of sampling in risk assessment procedures and tests of controls performed by the internal auditor to obtain an understanding of the entity, business and its environment, including mechanism of its internal control. The areas covered by the SIA include design of sample, tolerable and expected error, selection of sample, evaluation of sample results, analysis of errors in the sample, projection of errors, reassessing sampling risk. This also describes the internal auditor’s documentation requirements in the context of the sampling.

5.4.8 Analytical Procedures Analytical Procedures is the skill which help an auditor understanding the client business and changes in the business, to identify potential risk arrears. The Institute of Chartered Accountants of India had also issued the Standard on Internal Audit (SIA) 6, Analytical Procedures. The Standard on Internal Audit (SIA) 6, Analytical Procedures provides the guidance regarding the application of analytical procedures during internal audit. The SIA deals with the aspects such as, the nature and purpose of analytical procedures, analytical procedures as risk assessment procedures and in planning the internal audit, analytical procedures as substantive procedures, analytical procedures in the overall review at the end


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of the internal audit, extent of reliance on analytical procedures and investigating unusual items or trends.

5.4.9 Quality Assurance in the Internal Audit Quality assurance is a standard for meeting the client requirements. It documents how an Internal Auditor will meet the requirements of a client or customer in a systematic, reliable fashion. It shows an Internal Auditor commitment to delivering quality products and services to the client. The Institute of Chartered Accountants of India had also issued the Standard on Internal Audit 7, Quality Assurance in Internal Audit. The Standard on Internal Audit (SIA) 7, Quality Assurance in Internal Audit establishes standards and provide guidance regarding quality assurance in internal audit. A system for assuring the quality in internal audit should provide reasonable assurance that the internal auditors comply with professional standards, regulatory and legal requirements so that the reports issued by them are appropriate in the circumstances. This Standard provide the guidance to the person entrusted with the responsibility for the quality of the internal audit whether in-house internal audit or a firm carrying out internal audit. This Standard also provides the extensive knowledge about the internal quality reviews, external quality reviews and communicating the results thereof.

5.4.10 Terms of Internal Audit Engagement The Terms of engagement defines the scope, authority, responsibilities, confidentiality, limitation and compensation of the internal auditors. Terms of Internal Audit Engagement lay down clarity between the internal auditors and the users of their services for inculcating professionalism and avoiding misunderstanding as to any aspect of the engagement. This Standard on Internal Audit (SIA) 8, Terms of Internal Audit Engagement provides guidance in respect of terms of engagement of the internal audit activity whether carried out in house or by an external agency. This SIA describes the elements of the terms of engagement viz, scope, responsibility, authority, confidential, limitations, reporting, compensation and compliance with Standards.

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