Audit of Hospital Index Sr. No.
Particulars
Page No.
1.
Introduction
2-4
2.
Types of Audit
5-7
3.
Internal Audit Checklist Checklist for Audit of Hospital
8-23
4.
Ten points to be in the audit of Income and Expenditure
24
of a hospital 5.
Special audit points to be considered by the auditor
25-26
during the audit of a Hospital 6.
Bibliography
27
Introduction: An audit is the examination of the financial report of an organisation - as presented in the annual report - by someone independent of that organisation. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes. The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organisation at a given date, for example:
Are details of what is owned and what the organisation owes properly recorded in the balance sheet?
Are profits or losses properly assessed?
When examining the financial report, auditors must follow auditing standards which are set by a government body. Once auditors have completed their work, they write an audit report, explaining what they have done and giving an opinion drawn from their work. Generally, all listed companies and limited liability companies are subject to an audit each year. Other organisations may require or request an audit depending on their structure and ownership.
Audit other information provided to the members of the organisation, for example, the directors' report.
Check every figure in the financial report – audits are based on selective testing only.
Judge the appropriateness of the organisation's business activities or strategies or decisions made by the directors.
Look at every transaction carried out by the organisation.
Test the adequacy of all of the organisation's internal internal controls.
Comment to shareholders on the quality of directors and management, the quality of corporate governance or the quality of the organisation's risk management procedures and controls.
Predict the future – The audit relates to a specific past accounting period. It does not judge what may happen happen in the future, and so cannot provide assurance assurance that that the organisation will continue in business indefinitely.
Be there all the time – The audit is carried out during a defined timeframe, and auditors are not at the organisation all the time. The prime purpose of the audit is to form an opinion on the information in the financial report taken as a whole, and not to identify all possible irregularities. This means that although auditors are on the look-out f or signs of potential material fraud, it is not possible to be certain that frauds will be identified.
The organisation's management prepares the financial report. It must be prepared in accordance with legal requirements and financial reporting standards.
The organisation's directors approve the financial report.
Auditors start their examination by gaining an understanding of the organisation's activities, and considering the economic and industry issues that might have affected the business during the reporting period.
For each major activity listed in the financial report, auditors identify and assess any risks which could have a significant impact on the financial position or financial performance, and also some of the measures (called internal controls) that the organisation has put in place to mitigate those risks.
Based on the risks and controls identified, auditors consider what management does has done to ensure the financial report is accurate, and examine supporting evidence.
Auditors then make a judgement as to whether the financial report taken as a whole presents a true and fair view of the financial results and position of the organisation and its cash flows, and is in compliance with financial reporting standards and, if applicable, the Corporations Act.
Finally, auditors prepare an audit report setting out their opinion, for the organisation's shareholders or members.
Auditors discuss the scope of the audit work with the organisation – the directors or management may request that additional procedures be performed. Auditors maintain independence from management and directors so that tests and judgments are made objectively. Auditors determine the type and extent of the audit procedures they will perform, depending on the risks and controls they have identified. The procedures may include:
asking a range of questions - from formal written questions, to informal oral questions of a range of individuals at the organization.
Examining financial and accounting records, other documents, and tangible items such as plant and equipment
making judgments on significant estimates or assumptions that management made when they prepared the financial report
obtaining written confirmations of certain matters, for eg, asking a debtor to confirm the amount of their debt with the organization.
testing some of the organisation's internal controls
watching certain processes or procedures being performed
Type of Audits: Internal Audit Audit - Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditing is a catalyst for improving an organization's governance, risk management and management controls by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. The scope of internal auditing within an organization is broad and may involve topics such as an organization's governance, risk management and management controls over: efficiency/effectiveness of operations (including safeguarding of assets), the reliability of financial and management reporting,and compliance with laws and regulations. Internal auditing may also involve conducting proactive fraud audits to identify potentially fraudulent acts; participating in fraud investigations under the direction of fraud investigation professionals, and conducting post investigation fraud audits to identify control breakdowns and establish financial loss. Internal auditors are not responsible for the execution of company activities; they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities. As a result of their broad scope of involvement, internal auditors may have a variety of higher educational and professional backgrounds. backgrounds. The Institute of Internal Auditors (IIA) is the recognized international standard setting body for the internal audit profession and awards the Certified Internal Auditor designation internationally through rigorous written examination. Other designations are available in certain countries. countries.[5] In the United States the professional standards of the Institute of Internal Auditors have been codified in several states' statutes pertaining to the practice of internal
auditing in government (New York State, Texas, and Florida being three examples). There are also a number of other international standard setting bodies. Internal auditors work for government agencies (federal, state and local); for publicly traded companies; and for non-profit companies across all industries. Internal auditing departments are led by a Chief Audit Executive ("CAE") who generally reports to the Audit Committee of the Board of Directors, with administrative reporting to the Chief Executive Officer (In the United States this reporting relationship is required by law for publicly traded companies).
Statutory Audit Audit - A statutory audit is a legally required review of the accuracy of a company's or government's financial records. The purpose of a statutory audit is the same as the purpose of any other type of audit: to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions. The term statutory is used to denote the audit is required by statute. A statute is a law or regulation enacted by the legislative branch of the organization’s associated government.
Statutes can be enacted at multiple levels, including f ederal, state or another municipality. In business, statute can also refer to any rule set forth by the organization’s leadership team.
An audit is an examination of records held by an organization, business, government entity or individual. Generally, this involves the analysis of various f inancial records but can also be applied to other areas. During a financial audit, an organization’s records regarding income or
profit, investment returns, expenses and other items may all be included as part of the audit process. The purpose of a financial audit is often to determine if funds were handled properly and that all required records and filings are accurate. At the beginning of an audit, the auditing entity makes known what records will be required as part of the examination. The information is gathered and supplied as requested, allowing the auditing entity to perform its analysis. If inaccuracies are found, appropriate consequences may be levied.
Internal Audit Checklist of a Hospital Checklist for Accounts Department: Checklist for Fixed Asset: Check that a Fixed Assets Register is maintained and updated at all times (Manual /
Computerized) Check that the Fixed Assets Register gives details of the f ixed assets - Quantity / No /
Location / Identification Number / Depreciation / Rate / accumulated depreciation depreciation / original cost / additions /deletions/ written down value. Check that the identification number given on the fixed asset tallies with the number
given in the FA Register. Check that for purchases as well as sale of fixed assets proper authorization has been
taken from the appropriate authorities Check that the discrepancies observed on physical verification of fixed assets have been
correctly adjusted in the books of account after taking approval from the appropriate authority. Check the method and the procedure adopted for carrying out the physical verification verif ication
of fixed assets and ensure that verification was carried out as per the generally accepted accounting practices and procedures. Check that the physical verification sheets in respect of fixed assets are properly
prepared and duly signed by the persons responsible for carrying out the physical verification. The name, designation of employees and the date of carrying out the physical verification should also be clearly mentioned in the physical verification sheets. Check that the physical verification of Fixed Assets is carried out by the Management at
least once in 3 years.
Checklist for Accounts Department: Cash Vouchers \ Bank Vouchers Check authorization of Cash Vouchers \ Bank Vouchers by a responsible person. Check supporting Bills / Invoices Check the correctness of the accounting head – expense / income Check for cash receipts signature /acknowledgement of cash recd. Check that all the relevant columns of the Cash/ bank vouchers have been properly
filled in. Check that all the supporting to the Vouchers are crossed as cancelled after the
payment. Check that payments are made only against original supporting.
Purchase Vouchers Check authorization of Purchase Vouchers by a responsible person. Check the Purchase Voucher with the supporting documents like Bill / Invoice and
the Goods Received Received Note(GRN). Note(GRN). Check whether the rates given in the purchase invoices are as per the purchase Orders
raised/amendments to the Purchase Orders/ approved by an appropriate authority. Check whether payment has been made/Bill passed for rejected quantity of material as
per the GRR. Check whether a proper accounting head - expense has been debited. Check that all the relevant columns of the Purchase Vouchers have been properly filled
in. Check that the PV is passed as per the terms given in the Purchase Orders. Check that the purchase voucher is prepared only in respect of original Bills / Invoices. Photocopies of invoices \ duplicate invoices should not be passed. Check that the Bills / invoices are passed strictly as per the PO terms.
Journal Vouchers Check authorization of Journal Vouchers by a responsible person. Check the Journal vouchers with supporting Bills / Invoices /documents. / documents. Check that supporting documents are duly approved by an appropriate authority. Check the correctness of the accounting head - debit / credit. Check that all the relevant columns of the journal vouchers have been properly filled in. In case of contractor’s bills check that bills submitted by the contractors are supported
by the Work Orders issued in advance to the contractors. contractors. No bill should be passed unless supported by a/ WO and the value of the Bill should be in agreement with the WO prepared. Check that the Work Orders are prepared in advance before the start of the work. Check that the bills of the contractors are duly approved and certified for payment by
the person responsible for getting the work done i.e the user. All the bills must have “Approval” for payment in writing by the user on the face of the bill. Check that all the supporting bills / invoices to a journal voucher are approved / certified
for payment by the User Department. The user Department should specifically specifically put a remark on the bill for approval\ payment. In case of contract jobs relating to labour supply the bills are to be supported by
attendance sheets duly certified by the Time Office. In case of transporters bills - check the bills with the agreed rates and receipted copies
of consignment notes. Check the measurement books in case of bills for civil work and ensure that the
Measurement books are signed and checked by the Engineer in charge of the Work. In case of running and final bills bil ls for civil work check that the civil engineer has checked
and verified the measurements and entries of all running and final bills are made in the Measurement Books.
Advance to Employees Check the Trial balance in respect of Advance to employees to ascertain the amount
outstanding in the name of each employee. Find out the date since when the advance is outstanding to be settled and make a list if employees advances that have not been settled for a long period. Ensure that no further advance is given to an employee u nless the previous
outstanding advance is cleared by him. Advance to an employee may be towards - Travel T ravel / Official work\ loan or a salary
advance. Ensure that the recovery is made from the salary of the employee when the advance taken by the employee is not settled by him within a reasonable period. Further check that the recovery of installments in respect of loan / salary advance is
made correctly on monthly basis from the salary of the employees. Check and make a list of employees who have h ave left the company and their full and final
settlements have not been made but debit balances are still appearing in their names in the Advance to employees account. Confirmation of Balances Confirmation of balances with the banks \ Lending institutions should be obtained on a
monthly basis for the purpose of preparation of bank reconciliation statements. Confirmation of balances with the Creditors / Debtors should be obtained on a
six monthly basis. The balances in the Creditors\ Debtors Ledger Ledger account should also be reconciled with the balances as per the party’s books on a six monthly basis. Debtors Ledger Trial Balance \ Debtors Ledger account Check that the balance shown by the Debtors Ledger Trial balance agrees with the
balance shown by the Debtors control account in the General Ledger Trial balance. Check the Age wise analysis of Sundry Debtors and comment upon it. Check the Debtors Accounts that are stuck up for long and are doubtful of recovery. Check the debtors accounts where legal cases have been filed / are to be filed and
ascertain the progress in the legal cases.
Carry out a scrutiny of various Debtors Account in the debtors ledger and check for the
following :I.
Match the Debit and Credit entries individually.
II.
Give the breakup of the closing balance - Invoice wise.
III.
Ensure that there are no such cases where the payments have been received for later bills and the earlier invoiced are unpaid.
IV.
Give a breakup of the closing balance as above i n (b) including the details of any debits on account of debit notes raised on the parties.
V.
Prepare a list of Debtors account showing closing credit balances.
VI.
Tally each debit with a corresponding credit to locate any under payment / over payment for any invoices.
Creditors Ledger Trial Balance/Creditors Ledger Account Check that the balance shown by the Creditors Ledger Trial Balance agrees with the
balance shown by the Creditors control account in the General ledger trial balance. Check the creditors account that are outstanding outstanding to be paid since long (unclaimed
Creditors) and that can be considered for a write back in the books of account. Carry out a scrutiny of various Creditors account in the creditors ledger and check for
the following. Match the Credit and Debit entries correspondingly. Give the breakup of the closing balance – Invoice wise. Ensure that there are no such cases when the payments have been made for later
invoices and the earlier bills are unpaid. Give a break up of the closing balance as above in i (b) including the details of any
credits on account of credit notes raised on the party. Prepare a list of creditors account showing closing debit balances alongwith the reasons
for debit balances. Comments or details should be taken from the auditee in respect of every single debit balance. Tally each credit with a corresponding debit to locate any over payment /under
payment for any invoice.
Check all the Creditors Ledger Trial balance as given below for above details.
I.
Suppliers
II.
Contractors
III.
Transporters
IV.
Others
Outstanding Liabilities Check that the outstanding liabilities pertaining to the earlier years have been adjusted
in the books of account. Excise V/s Accounts Reconciliation Ensure that a reconciliation statement is prepared on a monthly basis to reconcile the
modvat / Cenvat balance balance in the excise with with the accounts balances. Check if any old pending entry is appearing in the reconciliation statement. Check the unreconciled / reconciled difference in the balances shown by the excise
records and the accounts records. TDS Check that all TDS deductions are deposited in time with the government - check the
monthly TDS statement and the actual date of deposit with the TDS challans. Check whether the TDS Returns are submitted in time with the Government. Check that the TDS deductions are made properly from all the payees wherever
applicable. Budget V/s Actual - Expenses Check the Budget V/s Actual position as on a particular date with the Budget statement
for all the expenses - Fixed / Variable overheads. Check the Variances between the Budget / Actual figures. Obtain comments on reasons for variances between the Budget V/s Actual. Analyse the variances between Budget / Actual in terms of percentage.
Scrutiny of Ledger Account - Expenses E xpenses / Others Check that in case of expenses the destination between Capital and Re venue
expenditure is properly made. Check that proper account head has been used to debit the expenses. Pick up a few entries from the ledger account and trace the entry to the Voucher and
the supporting bills / Invoices to ensure that the expense bills are properly approved / authorized and accounted for. General Ledger Trial Balance / Revenue ledger Trial Balance Carry out a scrutiny of the General Ledger Trial balance/Revenue ledger Trial balance
and comment on accounts that need to be reconciled like inter office account / Inter unit account etc. In case of accounts like TDS Receivable / Interest Receivable/ Insurance claim Receivable
/ Margin money deposit with banks ask for the break up / detailed statements of accounts and comment upon it. In case of Creditors / Debtors account check that the amount as given in the General
ledger agree with the balance shown by the Creditors Ledger Trial balance/ Debtors ledger Trial balance. Check whether any special accounts like suspense account etc. are appearing in the trial
balance and carry out a scrutiny. In case of other accounts carry out a review of the ledger of the account to locate any
irregularity / reconciliation matter Checklist for Physical verification of cash Carry out a surprise physical verification of cash. Check that the physical cash balance tallies with the balance shown by the cash book. Check that the cash book is up to date at all times. Check that the cash in safe/cash in transit is within the insurance cover taken. Check that fidelity insurance cover is taken in the names of persons who have the
custody of cash.
Check that receipts are issued by the cashier at the ti me of receipt of cash from the
employees / others. Check that signatures of the payee are taken by the cashier on the cash payment
Voucher at the time of making cash payment. Checklist for Bank reconciliation Check that Bank reconciliation statements in respect of all the bank accounts are
prepared on a monthly basis. Check that the entries appearing in the Bank reconciliation statements are cleared in the
subsequent month. Check for any old pending entry and inquire into the nature and details of such an
outstanding entry. Check that entries relating to cheque issued but not presented for payment for more
than 6 months are reversed. Check that all postdated cheque received are kept in safe custody until deposited. Cheque that all cancelled cheques are kept properly in the cheque book. Check the cheque signing authorization levels of management and ensure that the
cheques are signed according to the prescribed and delegated authority. Check that cheque books / counter foils are kept in safe custody.
Checklist for Purchases: Check whether an Approved Vendor list of suppliers / authorized dealers has been
prepared and is updated on a regular basis. basis. The Approved Vendor list should carry carry all the items of purchases - Raw Material / Engineering / Consumables / Packing material etc. The approved vendor list can be Vendor - item / Item -Vendor wise. Check whether a Purchase Manual has been prepared and approved. The Purchase
Manual should include policies / procedures / and all the matters relating to purchase methodology. Find out the Rate Variations over a period of time in respect of every item of purchases.
The purchase register whether prepared Manually / Computerized would indicate the
item Code / Name of the item and purchases made of the item over a period of time at varying / same rates with reference to the Purchase Order Number. Reasons for purchases made at varying rates should be obtained. Rate Variations
without a proper justification should be reported. A scrutiny of Purchase Orders should be carried out to ensure that comparative
statement of quotations is prepared and the order is placed on the lowest bidder after considering factors like quality / delivery / payment terms / profile & competence of the vendor. Check whether the comparative statements of quotations are duly approved by an
appropriate authority and dated. The comparative statements should be prepared on a landed cost criteria. All the costs
such as the basic price / taxes / duties/ insurance / P&F / freight & cartage / interest etc should be indicated in the comparison and the final cost of comparison should be the landed cost of the item. Ensure that a proper justification (Technical / Commercial) is given in writing on the
comparative statement wherever the purchases are made from a source not being the lowest bidder. Ensure that a sufficient number (3 or 4) of quotations / offers are called from the
suppliers at the time of making a comparative statement. In case of single offer / quotation cases obtain reason s for placing the order on specific
parties. Ensure that in case of Repeat orders - fresh offers / quotations are called from the
competitive suppliers and a fresh comparative statement prepared. Further a Repeat order should not be placed beyond 6 months from the date of the original purchase order. A fresh order should be raised on the suppliers after 6 months have elapsed from the date of the original PO. Ensure that a justification note is put in writing on every comparative statement giving
reasons for awarding the PO to a supplier.
Carry out a scrutiny of Indents / Purchase requisitions to ensure that the purchase
orders are placed as per the requirements given in the Indents. Ensure that the quantity discounts / rebates offered by the suppliers as per the terms
given in the PO have been availed by the company. Obtain a list of Indents pending for conversion into PO and comment upon the old
pending indents. Obtain a list of POs pending for delivery deli very of material and comment upon the old pending
PO where the due date of delivery of material has expired. Ensure that the Purchase Orders have been signed / authorized by authorities as per the
financial limits given in the Purchase Purchase Manual / Policy. Policy. Deviations should should be reported. reported. In case of amendments to the PO ensure that the amendments are duly approved by an
appropriate authority and reasons for the amendment (Rate / Quantity ) are given by way of a Note. Comment upon the possibilities of entering into 6 monthly / annual rate contracts with
the suppliers where the consumption trend or level is high. Examine whether there is a system of standard costing or Budgetary Control in vogue i n
the Purchase Department. Department. Also, check the Monthly Purchase Purchase Variance Report wherein all items above + 10% in value should be highlighted and reasons thereof. Checklist for Goods: Check that the plan for the dispatch of finished products is received by the Dispatch
section clearly indicating the Quantity/ location and the description of the material. Examine the method and the procedure for the dispatch of material to ensure that the
dispatches are effected smoothly. Check the dispatch report prepared as at the end of the day to ensure that the
dispatches planned for the day are in fact effected in totality. Check the pending delivery / despatcher status for a particular period (on a day to day
basis). This information can be maintained in the form of a report.
Ensure that there is a proper system to weigh the finished goods for dispatch. dispatch. The
weighbridges and the related equipment should always be properly maintained (including calibration of weighing machines) If the sales invoices are prepared at the despatch section check a few invoices spread
over a period to ensure that the invoices are prepared correctly as regards Rates / Excise duty / Sales Tax etc. Ensure that a proper control is kept over the stationery of blank invoices. The sales invoices should be authorized by a person duly authorized in writing in this behalf. Check that the Freight consignment Notes are properly prepared. Check that the consignment of finished goods once weighed and okayed at the despatch
section are checked for the necessary papers - Gate pass / Sales Invoice / Road permit / Freight Consignment No, etc. at the exit gate by security or by a responsible person deputed in the sales despatch section. Verify the status of transporter transporter wise trucks provided against the trucks ordered. ordered. Also,
ensure that penalty for not providing the trucks is charged without exception. Check that all the trucks being dispatched are not being loaded less than the minimum
weight agreed for payment. payment. If so, proper justification justification & approval should be reviewed. Status of marine insurance, if any to be checked. Check that all the transporters are approved transporters and their contract is approved
by authorized person from Head Office. Check that entry for the incoming material is made at the entry gate register. Ensure that the weighment / Counting of the incoming material is made properly and
correctly at the receiving section. Check that stamp / acknowledgement of the receipt of the incoming material is made
on the back side of Freight Consignment Consignment Note. The remark should should indicate the the quantity (weight / number of pieces etc.) of the material recorded at the receiving section along with condition (ok / damaged / wet etc) in which material has has been received. The receiving section should maintain a record of all the incoming material received
consignment wise, clearly giving the date / No. of vehicle / Description of the material /
Quantity etc. This record can be maintained in the f orm of MIS report prepared on a daily basis. Check the procedure for the clearance of RM for use in the production Ensure that the procedure for quality testing of raw material / finished goods is well
documented in the form of a quality manual. Ensure and check that the raw material / finished goods once rejected are not
subsequently cleared under deviation. deviation. In special cases ensure that the approval approval under the deviation is duly approved. Check the specification / laid down standards for the testing and clearance of the raw
material / finished goods and ensure ensure that that the actual test result conform conform to the laid down specification. Whenever there is a change in the laid down specification ensure that the change is
approved and authorized in writing by an appropriate authority and that the change is incorporated in the manual of specification. Check the the time taken taken at the quality assurance to clear the sample received
for testing.
The test sample of raw material and finished goods should be cleared within a short time. Check the management level to which the Head of Quality Assurance reports- As a
matter of fact in order to ensure that the quality assurance function as an independent arm the quality assurance should report to the Head of the Organization / Unit. Ensure that the testing samples accepted / rejected are segregated and kept separately
with proper and clear marking. Ensure that the sample do not get mixed up.
Checklist for Excise Ensure that the Modvat / Cenvat is claimed and credit is taken in the excise records
immediately after the receipt receipt of the material. There should be no delay in taking the credit of Modvat / Cenvat once the material has been received. Calculate the loss of interest due to delay in Modvat / Cenvat claim. Challans / invoices in respect of material sent for processing should be received back in
the plant within 6 months. Ensure that the material material sent outside the factory for processing is received back in the factory within 6 months from the date of despatch. (180 days). (A delay beyond beyond 180 days would result in a loss of Modvat Modvat / Cenvat Cenvat to the sender). Check whether the statutory records PLA and RG - I are properly maintained. Check whether the classification, declaration, Price declaration or MRP value,
declaration of marketing pattern, and discount discount structure are filed by 15th April every financial year. Check whether RT-12 returns have regularly been filed with the e xcise authority by
10th day of the following month accompanied by copies of PLA and TRG challan and Cenvat monthly return. An acknowledgement acknowledgement should be obtained from the Excise Department. For export sales ensure that applications applications in Form AR4 and the original invoices have
been submitted to the excise authorities. Credit on Capital goods is to be taken immediately in the same financial year upto 50%
of duty paid and the balance credit in any subsequent financial year provided capital goods are still in possession and use of the manufacturer. Ensure that that the above provision is taken care of. Further the cenvat credit is allowed even if the goods (Input / Capital) are acquired by
the manufacturer on lease, hire purchase or loan agreement from a financing company. The credit is not allowed if the manufacturer claims depreciation depreciation under Section 32 of the Income Tax Act on the amount of duty paid. paid. Check whether the above provisions have been considered while considering the Modat / Cenvat Credit.
The Excise law / rules should be referred from time to time as the provisions change
every year. Ensure that full Credit for Modvat / Cenvat / PLA has been taken by 20th of every
month in respect of duty duty debited for despatches despatches made during 10/15th day of the month and full credit is taken by the 5th of the next month in respect of duty debited for despatches made between between 16th to 30/31st of the month. Ensure that there is no lapse on this account and that the duty credited is equivalent to the duty debited on fortnightly basis. Ensure that Cenvat account debit should be limited to the Credit balance available on
the 15th day and the last day of the month respectively. Checklist for Insurance Expenses: Check whether the Insurance policies taken by the company cover the following assets
at all the locations (factories, offices, branches etc.) Plant & Machinery, Furniture / Fixtures, Electrical installation, Office equipment’s etc.
Buildings / Warehouses etc. Inventories / Stocks in transit/Cash/Vehicles/A transit/Cash/Vehicles/Any ny other. Ensure that the value of Assets insured is adequate. Ensure that all the risks are covered in the policy. Check whether the loss of profits policy has been taken by the company. Ensure that the additions / deletions to the fixed assets during a particular accounting
year are fully taken care of in the policy. Check whether the insurance insurance premium amount has has been properly negotiated. Ensure
that competitive rates of 2-3 insurance companies were taken into consideration while finalizing the premium payable. payable. For this purpose, all necessary necessary precautions should be taken to reduce the level of premium. Obtain a list of all the insurance claims pending for settlement as on a particular date
and comment upon the old pending cases. Obtain a list / statement of all the Insurance policies and ensure that all the assets of the
company are fully insured.
Ensure that the value of assets / fixed assets assets declared declared by the company company is proper and and
that the assets are not under covered. Ensure that maximum discounts / rebates were availed by the company at the time of
finalizing the insurance policies / premium. Check whether insurance policies in respect of group Gratuity / Medical /
Superannuation Superannuation / accident etc. are obtained at the best rates. rates. Comparative Comparative statements / comparative data should be checked. Ensure that the Insurance policies are renewed in time i.e. before the expiry of the
period of validity. Check the list of fixed assets / assets filed with the insurance company to ensure that all
the Fixed assets / assets are covered by the insurance policies. Ensure that all the policies are obtained for the uniform period matching with the
accounting year of the company. Check whether the terms and conditions given in the insurance policy are complied with
by the company. Checklist for Personnel & Time Office Obtain a list of sanctioned strength - Department wise and compare with the actual
strength of the employees. Note the variation and comment comment upon the cases where the actual strength of the employees is more than the the sanctioned strength. Check approval for the extra man power deployed. Review the personnel service files of employees kept by the Personnel Department to
check whether – all the copies of certificates / testimonials have been taken from the employees at the
time of joining. Nomination in case of Gratuity / Pension / PF / superannuation etc. have been collected
from the employees all the other documents like increment letters / promotion letters etc. are properly filed
in the service files.
Copies of appointment advice / appointment letters / confirmation letters etc. are kept
in the service files. Obtain a list of all the pending legal cases being handled by the Personnel
Department. Check the status of all the legal cases including the the date of next hearing. Comment upon the speedy settlement settlement of the legal cases. For keeping an effective control over the legal cases the Personnel Department should prepare a status report of pending legal cases on a monthly basis. Ensure that the Personnel Department Department is taking due care in case case of contract contract labour
employed by it to ensure that legal and statutory obligation like FPS / PF / ESI are taken care of. The Personnel Department should maintain proper attendance record in respect of the contract labour and should obtain copies of monthly PF / ESI challans from the contractor. Check that the various licenses like the Factory license / license under the Contract
labour (abolition + regulation) act 1970 / license for storage of inflammable and hazardous chemicals etc. are renewed in time. Ensure that the various provisions of industrial and labor laws Like the Apprentices Act / Factories Act / Payment of wages Act Minimum wages Act Act etc. are duly taken care care of. Ensure that proper attendance attendance / leave records are maintained by the Personnel
Department is respect of all the workmen / staff / officers/ managers / higher management. Check the leave / attendance record of employees (register / punch card/ computerized attendance printouts) to ensure that there are no
irregularities. Comment Comment on the irregularities. if any, observed. Examine the agreement with with the Union Union and ensure that the terms
and conditions conditions as
agreed to by the parties to the agreement are duty complied with. Examples: Incentive scheme, loan / advance scheme, facilities, attendance procedure, leave procedure, festival advance , canteen / tea, transport ,uniform, production etc. Further check the various schemes linked to production / output to ensure that the payment under
various incentive schemes are made strictly as per the laid down productivity linked / incentive scheme. Ensure that the system installed at various locations to mark the attendance(in/out) attendance(in/out) are
working properly and are giving consistent results. Check the record relating to attendance / leave including a cross verification of data and
ensure that the methods and procedure for recording of attendance / leave are sound and sufficient internal controls exist. Point out the lacunae / weakness in the internal control system. In case of productivity linked schemes ensure that there is a proper system to record
and measure the quantity / quality / output of each employee.
Ten points to be in the audit of Income and Expenditure of a hospital:
I.
Verify the register of patients with duplicate copy of bills and patient’s admission record to see that bills have been property and correctly prepared for all the services, tests and treatments.
II.
Check cash collections from patients by tracing the receipt issued into cash book.
III.
Check receipt of interest. rent, dividend etc. with receipt counterfoil into cash book and bank book and ensure that all such income has been duly accounted for.
IV.
Check collection of subscription, donations from the receipt issued, correspondence etc., into cash book.
V.
Verify that all grants from government and other bodies have been duly accounted for and have been applied in the manner as. specified.
VI.
Verify all recurring nature of revenue expenditure, with necessary evidence like bil l, authority, period etc.
VII.
Examine the internal check as regards the receipt and issue of stores, medicines, linen etc., to ensure that these have been properly recorded and issued/consumed only on proper authorization.
VIII.
See that depreciation has been written off in respect of all the assets at appropriate rate and method as in the earlier year.
IX.
Verify the receipts from supply of food and canteen receipts and compare the same with previous year as regards number of patients.
X.
Ensure that all outstanding liabilities have been adequately provided for and similarly all accrued incomes and receipts have been duly accounted for.
Special audit points to be considered by the auditor during the audit of a Hospital:
I.
Vouch the Register of patients with copies of bills issued to them. Verify bills for a selected period with the patients' attendance record to see that the bills have been correctly prepared. Also, see that bills have been issued to all patients from whom an amount was recoverable according to the rules of the hospital.
II.
Check cash collections as entered in the Cash Book with the receipts, counterfoils and other evidence for example, copies of patient’s bills, counterfoils of di vidend and other
interest warrants, copies of rent bills, etc. III.
See by reference to the property and Investment Register that all income that should have been received by way of rent on properties, dividends, and interest on securities settled on the hospital, has been collected.
IV.
Ascertain that legacies and donations received for a specific purpose have been applied in the manner agreed upon.
V.
Trace all collections of subscription and donations from the Cash Book to the respective Registers. Reconcile the total subscriptions due (as shown by the Subscription Register and the amount collected and that still outstanding).
VI.
Vouch all purchases and expenses and verify that the capital expenditure was incurred only with the prior sanction of the Trustees or the Managing Committee and that appointments and increments to staff have been duly authorized.
VII.
Verify that grants, if any, received from Government or local authority has been duly accounted for. Also, that refund in respect of taxes deducted at source has been claimed.
VIII.
Compare the totals of various items of expenditure and income with the amount budgeted for them and report to the Trustees or the Managing Committee significant variations which have taken place.
IX.
Examine the internal check all regards the receipt and issue of stores; medicines, linen, apparatus, nothing, instruments, etc. So as to ensure that purchases have been properly corded in the Stock Register and that issues have been made only against proper authorization.
X.
See that depreciation has been written off against all the as sets at the appropriate rates.
XI.
Inspect the bonds, share scrips, title deeds of properties and compare their particulars with those entered in the property and Investment Registers.
XII.
Obtain inventories, especially of stocks and stores as at the end of the year and check a percentage of the items physically; also, compare their total values with respective ledger balance.
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