AUDIT PLAN 1ST & 2ND Quarter

Finance Ltd.

PREPARED BY:

CHARTERED ACCOUNTANT (It is a Private and confidential document to be used by only )

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Client: Type of Assignment: Fiscal Year:

Internal Audit 2068/69

S.No.

Plan and Program

Extent

Remarks

Entry session 1 Collect list of documents from management Opening balance verification Internal Control Review Study about internal control system

Opening trial with Last year F/S,

Study about internal control system in major operational areas like deposits, loans, cash and vault system, capital expenses, major revenue expenses etc. Note the authorities given to the officer. Note for sufficiency of the internal Draw a diagram of internal control system control system and comment whether the system commensurate with the volume of transactions. Internal Audit Study about the effectiveness and promptness in reporting of the external audit conducted by outside auditor. Note the major defective areas of operation as pointed out by external auditor. Make a note of material observations of the external auditor where the management has not responded properly. Review the internal audit report previously given. Observation of Physical Verification of Cash and equivalents and other Physical verification of cash Verification of cash at opening of the operation of a day without information to them. Prepare a report of the cash verification. State whether the cash in hand exceeds the limits imposed by NRB. Physical verification of fixed and Observe the physical verification work other assets conducted by the management. The system of observations and statements to be required shall be as stated in physical verification standard procedure
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implemented by this firm. Any material observation shall be reported immediately to management and the audit manager. Insurance coverage Check whether all the assets, cash in hand, cash in transit, and other assets to be required to be insured by regulations are properly insured. Check whether all relevant risks are covered by the policies. Study about the system of decision to be taken and approval for investment and disinvestment made by the bank. Whether the treasury is maintaining the required cash reserve ratio at any given time. Critically examine the investments made considering the following measures: - safety; - maximum return; - period of investment; etc Physically verify the certificates Critically examine whether any kind of investment exceeds the limits prescribed. Check actual capital expenditure against capital budget prepared and approved. Check whether there is unapproved transfer of budget heads. Study the purchase procedure and comment whether the procedure is adequate for the bank. Whether purchase procedure is duly approved by BOD or authorized by it. Whether purchase procedure is being implementing in practice. Check whether the Bank has formal procedure and practice for checking the quality of the assets purchased. Check whether all the capital items purchased are duly and timely being entered in the store register and also in the fixed assets register. Check whether the FAR is being maintained
.. CHARTERED ACCOUNTANT

Observations Relating to Treasury Internal control system of treasury

Observations Relating to Property, plant and equipments Capital budget

Purchase procedures

Quality check

Store and register entry

Fixed assets register

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Useless or discarded assets

properly and it is informative in all respect. Check whether there exists any damaged, useless, discarded asset in the stock. Go through the KYC of NRB, Check the interest bearing accounts of corporate clients. Check the disposal procedure of damaged cheques, Checking the Validity and Compliance of internal procedure Check the date, approval stag, Check the signature verification and paid / received stamp on cheque and deposit slip, Check the authority limit Go through the registers whether these are maintained up-to-date and properly.

Operation Department Accounts opening form (personal, corporate, institutional etc) Checking of Parameters in system.

Checking of Operation Vouchers: Cheque, Deposit voucher, Clearing cheque, withdrawal slip Remittance Voucher

Sample will be made

Fixed deposit register, cheque issue register, damaged cheque register, vault key register, vault area entry register etc.

Check the issuance system of withdrawal slip, register of withdrawal slip and custody of slip Accounts Department Vouching - Journal Voucher Ledger scrutiny

Salary sheet and bonus distribution sheet Gratuity and leave encashment Fixed Assets, stock,

Check the expenses like business promotion, guest entertainment, staff welfare, debtor, misc expenses, office expenses, cash short and excess, sundry debtor and creditor etc. Check the payroll, increment letters, bonus distribution list and TDS, transfer to welfare fund, fund utilization If payment made check the calculation Check the ownership of new assets, fixed assets register, insurance of assets, uses and location and stock of stationery items. Check the amount above Rs. 10 lakhs, ensure the bank statement regularly obtained by bank Check the daily, weekly, monthly and quarterly report sent from branch, Check the monthly reconciliation
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Bank Reconciliation Statement

Branch internal control system and reporting system Branch reconciliation statement

Credit Department Funded loan files

Non funded loan files

Check the approval system, risk mitigation, collateral, repayment capacity and schedule, offer letter, disbursement date, prepayment etc. Check the limit, collateral, recovery Check the limit and collateral recovery, interest rate and income Whether the FSs are prepared in the format prescribed by NRB. Check the various ratios mentioned in the FSs. Check the statement prepared for calculation of loan loss provision; Check the statement prepared for nonperforming assets and providing for it. Calculate the interest income based on accrued basis both for previous year and current year. Check whether the bank is receiving MIS from each branch timely. Check whether the MIS is so designed to light on overall activities and performance of the branches. Check the accounts balances with the branches tallies with the head office accounts. Check the overall performance of each branch with regard to its financial position and performance. Check the rate, date for payable, and check of TDS certificate on TDS receivable, check Advance and final TDS treatment, Check the all directives Ensure that the follow of section 76, 91, 96, 108 of companies act

Staff loan files Overall checking of Financial Statements Framework used

Branch Reconciliations MIS from each branches

Accounts

Performance of the branches

Compliances TDS deduction and deposit, account head wise, and TDS receivable on interest income, and dividend income NRB compliances Compliances of companies act, security act and other: board meeting minutes, audit committee minutes, petty cash holding
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mechanism, quarterly published of security board directives etc. Human resource department Check the personal files Information Technology Department (IT) Check the overall system of IT Report Discussion with management, Preliminary report writing and issue to management Documents demanded at the time of entry meeting:

Check the appointment letter, file update, leave record, etc Check the back of data, server security, users log, staging system etc.

Opening Trail Balance Closing Trial balance Organization Chart Name List of Board Members. Various Committees and Committee Members. Authority chart for approving expenses, transactions and Loan Sanctioning authority with limits and Statement defining clear delegation of authorities if any. Chart of accounts. Policies, products and internal guidelines. Published Annual report NRB Report Bank reconciliations statement Staff list, telephone/mobile list and users with expenses limit, vehicle list and users with expenses limit, Salary Sheet (Calculation with monthly TDS) Bonus Distribution Sheet and deposit slip in welfare fund Loan Master List with details of Loan type, Loan type Code, Main Code, Loanee, Disbursement Date, Approved limit, Outstanding Principle, Outstanding Interest, Over due Principle, Rate of Interest, Limit Expiry Date, Loan Class, Provision, Deposit list with details of Account Type, Account Type Code, Account number, Account Holder, Minimum Balance Required, Interest rate, TDS Rate. (soft Copy)

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