Professional Documents
Culture Documents
508 Mansi
Chudasama
513 Gunjan Gada
524 Jay Mehta
533 Shraddha
Parekh
548 Dhruvi Shah
553 Heena Sharma
pg. 1
ACKNOWLEDGEMENT
Through this acknowledgement, we express our sincere
gratitude to all those people who have been associated
with this assignment and have helped us with it and made
it a worthwhile experience.
We owe a great many thanks to a great many people who
helped and supported us while making the project.
We extend our thanks to the various people who have
shared their opinions and experiences through which we
received the required information crucial for our report.
Our deepest thanks to our teacher, Prof. Poonam Popat ,
the Guide of the project for guiding and correcting various
documents with attention and care. She has taken pain to
go through the project and make necessary correction as
and when needed.
Thanks and appreciation to the library of Nagindas
Khandwala College, for their support. We would also thank
our Institution without whom this project would have been
a distant reality..
We also thank to our colleagues for helping us whenever
we needed their help. Finally, we express our thanks again
to our PROFFESSOR who gave us this opportunity to learn
the subject in a practical approach.
pg. 2
Special Audit.
Introduction:
Auditor besides for audit of corporate or tax audit, may be required to conduct
audit of accounts of entities like educational institutions, cinema halls etc. Audit of
these entities special skills and competence because nature of activities
undertaken by such entities is different from the activities normally undertaken by
trading or manufacturing units. Operation of this institutions have their special
features which have to be taken into account by the auditor in drawing up the audit
programme. Auditor should prepare a detailed audit programme, evaluate the
effectiveness of the internal controls and accordingly determine the nature, timings
& extent of audit required.
Audit of Educational Institutions Schools/ Colleges
Audit of books of educational institutions like school, college, universities etc. or
other such institutions which are engaged in the educational field is known as audit
of educational institutions. Auditor should check income and expenditure account
and balance sheet of such institutes in order to verify and report the true and
fairness of results presented by income statements and financial position presented
by the balance sheet. Generally, the methods and procedures for vouching and
auditing are same even though an auditor of educational institution should perform
following tasks:
Preliminaries:
Gain knowledge regarding applicable status like the societies registration
Act 1860 or relevant Trust Act, Governments rules/ regulations concerning
grants etc.
The auditor should go through the University Act. Trust deeds and should
note the rules and regulations relating to accounts. The governing body
may pass resolutions from time to time in respect to accounts.
Note important provisions of the applicable state education Act.
Examine minute books of meetings of board of trustee, government
bodies, management, committee & note important decisions affecting
accounts, e.g. delegation of financial powers, acquisition & disposal of fixed
assets and investment etc.
Auditor should obtain a copy of budget or financial statements to study of
different heads of income and expenditure.
pg. 3
Payments:
Educational institutions include schools, colleges, training centers and
universities. The main activities of these types of institutions are more or less
similar to each other. As a result, the types of problems the auditor usually face
pg. 5
in conducting audit of these types of institutions are also same.On the basis of
the nature of the institutions, the activities and mode of maintenance of books
of accounts and records may also differ and the auditor will take into
consideration these deviations at the time of his audit.
The auditor should see that:
1.
2.
3.
4.
5.
6.
7.
and fairness of information provided by balance sheet. The auditor should verify
the assets and liabilities as follows:
ASSETS
Fixed assets
Fixed assets of an educational institution are land, building, furniture,
equipments, etc.
The following points are important in audit of fixed assets:
1. He should see that purchase of fixed assets is proper.
2. Fixed assets should be checked with fixed asset register maintained.
3. The opening balances of fixed assets should be verified from relevant
records.
e.g. schedule of fixed assets, ledger or register balances.
4. Verify payments made on account of purchase of fixed assets.
5. If fixed assets are purchase out of grants the terms and conditions are to
be verified.
For e.g.: Whether such assets have been separately recorded.
6. He should verify that any expenses related to fixed assets should be
capitalized to that asset only.
7. Examine whether depreciation has been properly charged on fixed assets
including those acquired out of grants.
8. The rates of depreciation may be based on managements assessment
regarding the useful lives of relevant assets.
9. Many institutions adopt the rates of depreciation applicable in the case of
companies.
Investments
Investments constitute a significant portion of the assets of an
organization. The investment are held under statutory requirement such as
Section 11(5) of the Income Tax Act, 1961 and may also be required to be
maintained in case of restricted funds as per the directions of the donor. The
investments could be short term or long term in nature. Short term investments
are normally made to deploy temporary surplus funds in view of the peculiar
fund flow position of an educational institution. The short term investments
may be classified as current assets and normally valued at market value. Long
term investments are generally for specific purpose.
The auditor should verify investments as follows:
pg. 7
pg. 9
(2) The internal auditor should examine the relevant records to evaluate the
validity and accuracy of the loans. The examination of minute books would
constitute an important source of audit evidence for the same.
(3) The internal auditor should examine the reconciliation of the book
balances with the statements of the lenders. Balance confirmation procedures
should also be adopted.
(4) The internal auditor should examine the documents, if any, evidencing
any charge created in respect of loans and borrowings.
(5) The internal auditor should examine whether the loan is classified as
secured only when the same is secured against any asset belonging to the
institution.
INCOMES
1. Ticket sales.
Verify That the entrance to the cinema hall during show is only through the
printed tickets;
That they are serially numbered and bound into books;
That the number of tickets issued for each show and class, are
different through the numbers of the same class for the show on the
same day, each week run serially;
That for advance booking separate series of ticket is issued;
And that the stock of tickets is kept in the custody of a responsible
official
Confirm that at the end of show, a statement of tickets sod is
prepared and cash collected is agreed with it and the unsold tickets
on hand.
Verify that a record is kept of the free passes issued.
Verify that free passes are issued under proper authority.
Vouch the entries in the cash book in respect of cash collected on
sale of tickets for different show with daily statements.
pg. 12
Test check daily statements with record of tickets issued for the
different show held.
2. Entertainment tax
Reconcile the amount of entertainment tax collected with the total number
of tickets issued for each class.
3. Advertisement income
Verify the charges collected for advertisements slides and shorts by
reference to the Register of slides and shorts exhibited kept at the cinema
as well with the agreements, entered into with advertisers in this regard.
pg. 13
EXPENSES
1. Advertisement expenses
The Auditor must vouch the expenditure for the advertisement, repairs
and maintenance. No part of such expenditure should be capitalized
except the expenditure on extensive redecoration and should be adjusted
as deferred revenue expenditure.
2. Depreciation
Confirm that depreciation on machinery and furniture has been charged at
an appropriate rate which are higher, as compared to those admissible in
the case of other businesses, in respect of similar assets.
3. Film hire payments
Vouch payments on account of film hire with bills of distributors and in the
process, the agreements concerned should be referred to.
4. Advances paid on distributors
Examine unadjusted balance out of advance paid to the distributors
against film hire contracts to see that they are good and recoverable. If
any film in respect of which an advances paid has already run, it should be
enquired as to why the advance has not been adjusted. The management
should be asked to make a provision in respect of advances that are
considered irrecoverable.
5. Salaries to staf
Auditor must vouch the payment made to the staff and check the salary
register and the signature in front of the name of the employees and if the
payment is made through check then he may verify the bank statement
also.
pg. 14
6. Insurance
The auditor may verify the insurance premium paid through the receipt of
premium, insurance documents and can also verify from the respective
insurance company.
7. Operating expenses: Auditor will carry out a thorough vouching of the
operating expenses paid. He will see that they have been properly
allocated between capital and revenue.
8. Renewal of license
The auditor must check the renewal of license and it can be verify through
the Challan .
9. Rent paid: if the cinema is on rental basis then the auditor must verify
the rent paid from agreements or contracts
10. Security charges:
The auditor must verify from the security agency the services of security
provided and charges paid to them through the register.
LIABILITIES:
pg. 16
Bibliography
pg. 17
Google
o www.oag-bvg.ge.ca
o My.safari.booksonline.com
o www.jesas.cam.ac.uk
Wikipedia
Some reference book like:
o B.n.tondon
o Taxmanns auditing assurance and
standards by Aruna Jha
o Fundamentals of auditing by Kamal
Gupta & Ashok Arora
pg. 18