VISION COLLEGE OF MANAGEMENT

KANPUR

SUBMITTED TO,
MISS. KEERTI TIWARI
SUBMITTED BY,
MS.ANAM FATIMA
3RD YEAR B.B.A
ROLL. NO. 0204566
 Q1.WHAT ARE THE STAGES FOR PERFORMING
AN AUDIT OF A BANKING COMPANY?
There are six specific steps in the audit process that
should be followed to ensure a successful audit.
 Requesting Financial Documents. ...
 Preparing an Audit Plan. ...
 Scheduling an Open Meeting. ...
 Conducting Onsite Fieldwork. ...
 Drafting a Report. ...
 Setting Up a Closing Meeting.

Q2. What are the major areas which need more

attention during an audit of an Insurance
company?
1. VERIFICATION OF PREMIUM
The premium collections are credited to a separate bank
account and no withdrawals are normally permitted from
that account for meeting the general expenditure. As per
the policy of the insurance company, the collections are
transferred to the Regional Office or Head Office. No
Risk shall be assumed by the insurer without receipt of
premium according to section 64VB of the Insurance
Act, 1938. Verification of premium is of utmost
importance to an auditor because Insurance premium is
collected upon issuing policies. It is the consideration for
bearing the risk by the insurance company. The auditor
should apply the following procedures: – • Before
commencing verification of premium income, the auditor
should look into the internal controls and compliance
which are laid down for collection and recording of the
premiums. • Cover notes should be serially numbered •
The auditor should check whether Premium Registers
have been maintained chronologically, giving full
particulars including GST charged as per acceptance
advice on a day -to-day basis. • The auditor should
verify whether the figures of premium mentioned in the
register tally with those in General Ledger. • The auditor
should verify whether instalments falling due on or
before the balance sheet date, whether received or not,
have been accounted for as premium income as for the
year under audit.
2. VERIFICATION OF CLAIMS
The auditor should obtain from the divisions/branches,
the information for each class of business. The auditor
should determine the total number of documents to be
checked giving due importance to claim provisions of
higher value. The claims under policies comprise the
claims paid for losses incurred, and those estimated or
anticipated claims pending settlements under the
policies. Settlement cost of claims includes surveyor fee,
legal expenses, etc. The Claim Account is debited with
all the payments including repair charges, fire fighting
expenses, police report fees, survey fees, amount
decreed by the Courts, travel expenses, photograph
charges, etc. The auditor should-
• Check whether provision has been made for all
unsettled claims.
• Check whether provision has been made for only such
claims for which the company is legally liable.
• Check whether provision made is normally not in
excess of the amount insured.
• check in case of co-insurance arrangements, the
company has made provisions only in respect of its own
share of anticipated liability.
• Check claimed paid should be duly sanctioned by the
authority concerned
3. VERIFICATION OF COMMISSION
The remuneration of an agent is paid by way of
commission which is calculated by applying a
percentage to the premium collected by him.
Commission is payable to the agents for the business
procured and is debited to Commission on Direct
Business Account. An insurance business is solicited by
insurance agents. The auditor should verify-
 Voucher disbursement entries with reference to
the disbursement vouchers with copies of
commission bills and commission statements.
 Check whether the vouchers are authorized by
the officers- in –charge as per rules and income
tax is deducted at source, as applicable.
 Test check correctness of amounts of
commission allowed.
 To check whether commission outgo for the
period under audit been duly accounted or not.
4. VERIFICATION OF OPERATING EXPENSES  
All the ministrative expenses in an insurance company
are broadly classified under 13 heads as mentioned in
Schedule IV. The auditor should check-
• Expenses in excess of Rs.5 Lakhs or 1% of net
premium, whichever is higher, should be shown
separately; and
• Expenses not directly relating to insurance business
should be shown separately for example, expenses
relating to investment department, bank charges etc.
Q4. DUTIES AND RIGHTS OF AUDITOR IN EDUCATIONAL
INSTITUTION ?

The auditor of a Educational Institution has a right to

examine the books and vouchers of the business to
enable his to satisfy himself whether or not the balance
sheet is drawn up, so as to exhibit a true or fair view of
the state of affairs of the business, according to the best
of his information and explanation given to him. To
enable him to perform his duty, the auditor should take
the following steps:

1. Examine the Trust Deed, or Regulations in the case

of school or college and note all the provisions affecting
accounts.  In the case of a university, refer to the Act of
Legislature and the Regulations framed thereunder.

2. Read through the minutes of the meetings of the

Managing Committee or Governing Body, noting
resolutions affecting accounts to see that these have
been duly complied with, specially the decisions as
regards the operation of bank accounts and sanctioning
of expenditure.

3. Check names entered in the Students’ Fee Register

for each month or term, with the respective class
registers, showing names of students on rolls and test
amount of fees charged; and verify that there operates a
system of internal check which ensures that demands
against the students are properly raised.

4. Check fees received by comparing counterfoils of

receipts granted with entries in the cash book and
tracing the collections in the Fee Register to confirm that
the revenue from this source has been duly accounted
for.

5. Total up the various columns of the Fees Register for

each month or term to ascertain that fees paid in
advance have been carried forward and the arrears that
are irrecoverable have been written off under the
sanction of an appropriate authority.

Q5.DEFINE THE TERMS...

Performance audit
 Utilize a performance audit to gauge whether or not a
business is meeting its objectives and carrying out those
objectives in the most efficient way.
1. Selection Process. Identify which areas of
performance to review. ...
2. Outline the Schedule. ...
3. Examine the Data. ...
4. Report Findings. ...
5. Follow-up.

SOCIAL AUDIT
Social accounting is a systematic assessment and
reporting on those parts of a company’s activities, which
have a social impact. It refers to the identification,
measurement, recording and reporting the information
as to social activities of the concern to its users (both
internal and external). On the other hand, social audit
refers to the systematic evaluation of an organization’s
social performance. Here, its economic performance is
not considered. It discloses the company’s involvement
in socially oriented activities, activities taken for the well-
being of the employers of the concern, activities as to
prevention of environment from pollution etc.

ENVIRONMENTAL AUDIT
 Environmental audit is defined as basic
management tool which comprises a systematic,
 documented, periodic and objective evaluation of
how well organization, management systems and
equipments are performing.
 A good environment management policy requires
that there should be a constant effort to analyze and
monitor various various industrial working system
and processes to generate and transmit this
information for the inspecting authority such as
exercise which generates necessary information on
analysis of pollution being generated or will be
generated and completion of annual estimate has
been termed as environmental audit.


 Generally following are the 3 phases when an
environmental audit is taken up for an industry:
 phase: Preaudit activity- pertaining to collection of
information.
 phase: Activity at site pertaining to evaluation of
information collected.
 phase: Post audit activity pertaining to drawing
conclusion and identifying areas of improvement if
any.