GENERAL

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Is an organization chart readily       

available?
2. If not, have you prepared an organization       
chart on the basis of discussions with
senior officials?
3. Does the organization chart show a clear       
definition and allocation of duties and
responsibilities of officials and
employees?
4. 1. Is there a plan of rotation of duties       
of employees dealing with cash,
stocks and other valuables?
2. If not, are they required to take       
annual holiday?
5. Is an accounting manual in use?        
Note : Circulars and Instructions which
fulfil the same purpose may be regarded
as an accounting manual, for the purpose
of this questionnaire.
6. Is a chart of accounts in use?        
7. Are the accounts coded?        
8. Are the chart of accounts and accounting       
manual periodically reviewed and
amended?
9. Does the chart of accounts and       
accounting manual clearly define the
items to be recorded in the various
accounts?
10. Is the client required by law to maintain       
Cost Accounting Records?
11. 1. Are the Accounting records kept       
up to date?
2. Are they balanced monthly?        

3. Are control accounts kept in the       

General Ledger in respect of all
transactions where the volume
justifies it?
4. Are subsidiary records reconciled       
with the respective control
accounts periodically?
12. 1. Is there a system of budgetary       
control?
2. Does the budget cover all aspects       
of the client’s business?
13. 1. Is there a system of internal       
management reporting?
2. Do such reports bring to the       
management’s attention any
abnormal financial results?
3. Do such reports cover all aspects       
of company’s operation?
Sl. Yes No N.A. Explanatory
No. Queries Note

14. Is there an internal audit system in force?        

15. Is an Internal Audit Manual in use?        
16. Is the Internal Auditor independent of       
accounting functions?
17. Does the Internal Auditor report to the       
Chief Executive?
18. Are you satisfied with the scope of the       
internal audit?
19. 1. Is the Internal Audit Department       
adequately staffed?
2. Are you satisfied with the caliber       
of the Internal Audit staff?
20. Does the Internal Auditor follow written       
programmes?
21. Have you made notes of the defects, if       
any, pointed out by the Internal Auditor?
22. Are proper follow up actions taken on       
Internal Auditor’s report?
23. Are security deposits fidelity guarantees       
obtained in respect of employees
handling valuables such as cash and
stocks?
BRANCHES / FACTORIES
 

Sl. No. Yes No N.A. Explanatory Note

Queries

1. Are the       
branches/factori
es self-
accounting?
2. If so, has the       
Internal Control
System at the
branches been
evaluated?
3. Does the Head       
Office exercise
control over the
branches/factori
es? (e.g.
through
budgets, target
return on
investment,
etc.)
 4. Are collections       
of
branches/factori
es deposited in
special bank
accounts,
subject to
withdrawal
only by the
Head Office?
5. Are the       
disbursements
at the
branches/factori
es controlled on
imprest basis?
6. Is there an       
adequate
control over
stocks at the
branches/factori
es?
7. Is there an       
adequate
control over
inter-branch
transfers of
stocks?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

8. Are daily       
returns and
reports received
from
branches/factori
es for :
 1. collection
s?
2. sales and       
dispatche
s?
3. productio        
n and
receipt of
goods?
9. Are periodical       
returns and
reports received
from
branches/factori
es, covering
their
operations?
10. Is there proper       
check of the
returns and
reports at the
Head Office?
11. Are there       
frequent spot
checks and
audits by the
Head Office
over the
branches/factori
es?
12. Are inter-office       
accounts
reconciled
periodically?
13. Are the items in       
the
reconciliation
reviewed and
followed up
promptly?
PETTY CASH
 

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Is petty cash maintained on :        

1. imprest basis?

2. limited to reasonable amount?        

2. Is it handled by only one person       

whose duties are divorced from other
cash receipts and disbursements?
3. Is petty cash kept separate from cash       
from other sources? (e.g. cash receipts,
unpaid salaries, etc.)
4. Is it physically verified periodically by       
a senior officer not connected with the
custody or recording of such cash
transactions?
5. Are insurance covers relating to cash       
in transit and cash in hand adequate?
6. Does the system prohibit payment of       
cash for transaction, which may
normally be paid by cheque?
7. Are all payments supported by       
vouchers?
8. Are such vouchers cancelled upon       
reimbursement to prevent re-use?
9. Are such payments duly       
authorized/approved?
10. Are reimbursement cheques drawn       
only in favour of the petty cashier
(custodian)?
 
Sl. Yes No N.A. Explanatory
No. Queries Note

11. 1. Is prior approval of a       

responsible official required for
paying cash against employee’s
cheques?
2. Are these cheques banked       
promptly?
12. Are IOUs prohibited?        
13. If IOUs are permitted, are they :        
1. approved by senior officials?

2. cleared within reasonable time?        

14. Are stamps, money order forms,       

Hundi and other stamp papers etc.,
reimbursed on imprest basis?
15. Are stamps affixed by franking       
machine only?
CASH AND BANK RECEIPTS
 

Sl. No. Yes No N.A. Explanatory Note

Queries

1. Is inward mail       
opened by
persons not
connected with
handling cash
or the Accounts
Department?
2. Is the inward       
mail date
stamped?
3. Is there a       
detailed record
of receipts
prepared?
4. Are all cheques       
specially
crossed by
employees
opening mail?
5. Are bank       
deposits
prepared and
made by some
one other than
those
responsible for
cash receipts
and / or
personal
ledger?
6. Are duplicate       
(or counterfoils
of) receipted
deposit slips
received from
the bank?
7. Is there any       
comparison of
items listed on
the duplicate
(or counterfoils
of) deposit slips
with the
amounts of
cheques
recorded in the
cash receipts
records?
8. Are receipts       
given for over-
the-counter
collections?
 9. Is there       
reconciliation
of such proofs
of collection
with amounts
banked?
10. Are collections       
of branch
offices and
sales offices
deposited in
special bank
accounts,
subject to
withdrawal
only by the
Head Office?
11. If collections       
are made by
representatives
of the company
in cash, have
serially
numbered
receipts been
issued to them?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

12. Is there a       
system of
issuing
Permanent
receipts in lieu
of the
Temporary /
Provisional
receipts issued
by bill
collectors, etc.?
13. Are such       
collections
promptly
received and
banked?
14. Are the receipt       
forms :
1. serially
numbere
d?
2. kept in       
safe
custody?
3. controlle        
d by
register?
4. unused        
stocks
checked
regularly
?
5. made out       
by one
employee
and
dispatche
d by
another?
6. accounte        
d for,
including
those
cancelled
?
7. in respect       
of
partially
used
receipt
books not
 intended
to be
used,
cancelled
?
15. Are cancelled       
receipts
preserved?
16. If post-dated       
cheques are
received, are
they held in
safe custody
until deposited?
17. Are such       
cheques entered
in a separate
register?
18. Is the opening       
of bank
accounts
authorized by
the Board of
Directors?
19. Are sundry       
items, such as
dividends,
interest, rent,
commissions,
etc. regularly
checked by
responsible
official to
satisfy himself
that correct
amounts are
received?
20. Is there a       
procedure to
ensure that
Hundi
 borrowings are
only by
cheques crossed
“Accounts
Payee”?
21. Is the cash       
balance verified
frequently?
22. Incoming        
money orders,
VPP receipts,
etc.:
1. Are they
signed by
any
official
other
than the
cashier?
2. Are they       
listed
immediat
ely?
3. Are such       
lists
compared
with the
Cash
Book
regularly
?
4. Is there       
an
arrangem
ent with
the Postal
authoritie
s to
receive
cheques
instead of
 cash?
23. Are the       
cashier’s duties
taken over for a
few days, by
some one else,
occasionally?
 

Sl. No. Yes N.A. Explanatory Note

Queries No

24. If a rough cash       

book is
maintained :
1. Is the fair
cash
book
written
up
promptly
?
2. Is the       
fair cash
book
checked
with the
rough
cash
book by a
person
other
than the
cashier?
CASH AND BANK PAYMENTS
 

Sl. Yes No N.A. Explanatory

No. Queries Note
1. Does the company’s policy prohibit       
disbursements directly from cash
receipts?
2. Are all disbursements made by       
cheques?
3. Are the names of officials and the       
limits up to which they are authorized
to sign cheques specified?
4. Are all cheques payable ‘to order’ and       
crossed ‘Account Payee only’ except
cheques for wages and petty cash?
5. Are cheque protectors used?        
6. Are unused cheques under proper       
physical control?
7. Are cancelled cheques mutilated?        
8. Is the practice of signing cheques in       
blank, prohibited?
9. Are payments made only against       
original invoices (or equivalent
documents)?
10. Are cheques accompanied by vouchers       
when presented for signature?
11. Do vouchers contain evidence of       
examination by persons signing
cheques and / or those authorizing
vouchers for payment?
12. Is the accounting distribution on the       
voucher checked at the time of
payment?
13. Are all supporting documents properly       
defaced and identified by cheque
number at the time of signature?
14. Is there a method to check if cheques       
are dispatched immediately?
 
Sl. No. Yes No N.A. Explanatory Note
Queries

15. Are remittances       

by bank
transfers or
letters of
instructions
(e.g. TTs, MTs,
standing
instructions)
subject to the
same controls
as cheque
payments?
16. Is there an       
effective
system in force
for following
up receipts
from payees
and filling
complete
vouchers?
17.                                  
                          
       bank
accounts?
18. When “stop-       
payment”
instructions are
issued, are the
original entries
reversed
immediately?
19. Is there a       
schedule of
dates in each
month for the
recurring
payments such
 as P.F., Tax
deducted at
source,
Telephone bills,
Electricity bills,
etc.?
20. In respect of       
bills accepted :
1. is there a
record of
such
bills?
2. are they       
signed by
officials
authorize
d to do
so?
21. Are bank loans       
or overdrafts
(including
temporary
overdrafts)
arranged only
by officials
authorized by
the Board?
SALARIES AND WAGES
 

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Are there approved scales of pay?        

2. Are there approved schemes for       
benefits to employees? (e.g. pension,
gratuity, medical reimbursements, etc.)
3. Are the following approved by a       
competent official?
 1. employment of an individual?

2. fixing his starting pay in the       

company’s scale of pay?
4. Are such written authorities       
communicated to Accounts
Department?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

5. Are there       
written
authorities from
competent
officials for :
1. General
increases
in pay?
2. Individua        
l
increases
in pay?
3. Advances        
of
wages?
4. Leave        
availed?
5. Leave        
encashme
nt?
6. Holiday        
pay?
7. Reimburs        
ement of
medical
and other
 expenses
in
accordan
ce with
the
company’
s
scheme?
8. Bonus?        

9. Gratuity        
and
terminal
payments
?
10. Discharg        
es?
6. Are records       
kept for each
employee
showing
particulars of :
1. Employm
ent?
2. Retireme        
nt or
dismissal
?
3. Rates of       
pay?
4. Incremen        
ts and
promotio
ns?
5. Leave        
availed /
encashed
?
 6. Benefits        
availed
under
various
schemes?
7. Specimen        
signature
s?
7. Is there       
physical control
over personnel
records?
8. Are identity       
cards :
1. issued to
all
employee
s at the
time of
appointm
ent?
2. renewed        
periodica
lly?
3. got back       
at the
time of
ceasing
to be in
service
and
before
final
payment
is made?
9. Are time-       
keeping and
attendance
recording
functions
separated from
 payroll
preparation?
10. Is there       
adequate
supervision of
employees
checking in and
out?
11. Is overtime       
working
authorized by a
competent
official?
12. Does        
preparation of
payroll
include :
1. check of
original
time
records?
2. check        
against
employm
ent and
rates of
pay
records?
3. check        
against
productio
n cards?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

13. Are payrolls       

checked
 independently
by another
person?
14. Is the payroll       
completed in
ink or other
permanent form
before it is
approved for
payment?
15. Is approval of       
the payroll
given by an
authorized
official?
16. Is the gross pay       
for each wage
period
reconciled with
the
corresponding
amount for the
preceding wage
period?
17. If payment is       
made in cash, is
the net amount
withdrawn from
the bank?
18. Is the net       
amount payable
sorted and
tallied, before
payment starts?
19. Are employees       
identified at the
time of
payment?
20. Are employees’       
signature
obtained at the
 time of
payment?
21. Are employees       
advised of their
gross pay,
deductions and
net pay?
22. Is written       
authority from
an employee
required for
someone else to
collect his
wages?
23. Are surprise       
checks made at
the time of
wages payment
by a
responsible
official
independent of
the wages
department?
24. Does the       
paying official
make an
immediate
record of all
unclaimed
wages handed
to the cashier?
25. Does he obtain       
and
acknowledgem
ent from the
cashier?
26. Does a       
responsible
official
regularly check
 unpaid wages?
27. 1. Is a       
separate
voucher
obtained
at the
time of
disbursin
g unpaid
wages?
2. Is the       
payroll
cross
reference
d to such
voucher?
28. Are the unpaid       
wages
periodically re-
deposited in the
bank?
29. Are deductions       
from wages
properly
recorded in
control
accounts?
30. Is there a       
proper system
for checking
the ESI cards
periodically
against payrolls
and salaries
record?
 

Sl. No. Yes No N.A. Explanatory Note

Queries
 31. Is there       
periodical
checking to see
that the cards
are up to date?
32. Is the official       
responsible for
checking
independent
of :
1. maintaini
ng the
cards?
2. control of       
the
stamps
franking
machine?
3. maintaini        
ng
records
relating
to direct
payments
?
PURCHASES AND CREDITORS
 

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Is purchasing centralized in the       

Purchase Department?
2. 1. Are purchases made only from       
approved suppliers?
2. Is a list of approved suppliers       
maintained for this purpose?
3. Does the master list contain       
more than one source of supply
 for all important materials?
3. Are the Purchase Orders based on       
valid purchase requisitions duly signed
by persons authorized in this behalf?
4. 1. Are purchases made on behalf       
of employees?
2. If so, is the same procedure       
followed as for other purchases?
5. Is special approval required for :        
1. Purchase from employees,
Directors and Companies in
which Directors are interested?
2. Purchases of capital goods?        

6. Are purchases based on competitive       

quotations from two or more
suppliers?
7. Is comparative quotation analysis       
sheet drawn before purchase are
authorized?
8. If the lowest quotation is not accepted,       
is the purchase approved by a senior
official?
9. If the price variation clause is       
included, is it approved by a senior
official?
 

Sl. Yes No N.A. Explanatory

No. Queries Note

10. Are purchase orders pre-numbered and       

strict control exercised over unused
forms?
11. Are purchase orders signed only by       
employees authorized in this behalf?
12. Do purchase orders contain the       
following minimum information :
1. Name of supplier?

2. Delivery terms?        

3. Quantity?        

4. Price?        

5. Freight terms?        

6. Payment terms?        

7. Any extra applicable?        

13. Is revision of terms of purchase orders       

duly authorized?
14. 1. Are copies of purchase orders       
and revisions forwarded to
Accounts and Receiving
Departments?
2. If ‘yes’, do the copies show the       
quantities ordered?
3. If ‘no’, is there an adequate       
procedure for the Receiving
Dept. to be notified to accept
deliveries?
15. Is a list of pending purchase orders       
compiled by the Purchase Dept. at
least once every quarter?
16. Are all materials, supplies, etc.       
received only in the Receiving Dept.?
17. If they are received directly by User       
Department/ Processors/ Customers, is
there a procedure of obtaining
acknowledgements for the quantity
received and the condition of the
 goods?
18. Are persons connected with receipt of       
materials and the keeping of receiving
records denied authority to issue
purchase orders or to approve
invoices?
19. Are materials, supplies, inspected and       
counted, weighed or measured in the
Receiving Department?
20. Are quantities and description checked       
against purchase order (or other for of
notification) and goods inspected for
condition?
 

Sl. Yes No N.A. Explanatory

No. Queries Note

21. 1. Does the Receiving Dept.       

deliver or supervise the delivery
of each item received to the
proper Stores or Department
location?
2. Are acknowledgements obtained       
from suppliers for goods/
containers returned to them?
22. Are all receipts of materials evidenced       
by pre-numbered Goods Received
Notes?
23. Are copies of Goods Received Notes       
forwarded to Accounts Department
and a list of goods received to
Purchase Department?
24. Are all cases of materials returned,       
shortages and rejections advised to the
Accounts Departments for raising
Debit Memos on suppliers or claim
bills on carriers insurance companies,
as the case may be?
25. Are all debit notes etc.,        
1. pre-numbered?

2. numerically controlled?        

3. properly recorded (in the       

financial accounts or in
memorandum registers, as the
case may be)?
26. 1. Are all suppliers’ invoices       
routed direct to the Accounts
Department?
2. Are they entered in a Bill       
Register before submitting them
to other department for check
and/or approval?
3. Are advance and partial       
payments entered on the
invoices before they are
submitted to other departments?
27. Does the system ensure that all       
invoices and credit notes received are
duly processed?
28. In respect of raw materials and       
supplies, are reconciliation made of
quantities and/or values received, as
shown by purchase invoices, with
receipts into stock records?
29. Are duplicate invoices marked       
immediately on receipt to avoid
payment against them?
30. If payments are made against       
duplicate invoices even occasionally,
are adequate precautions taken to
avoid duplicate payments?
 
Sl. Queries Yes No N.A. Explanatory
No. Note

31. Does the Accounts Department match       

the invoices of suppliers with Goods
Received Notes or acknowledgements
received as per Q. 17 and purchase
orders?
32. 1. Are Goods Received Notes and       
receiving records regularly
reviewed for items for which no
invoices have been received?
2. Are all such items, investigated       
and is provision made for the
liability in respect of such
items?
3. Is such review/ investigation       
done by a person independent of
those responsible for the receipt
and control of goods?
33. Do all invoices bear evidence of being       
checked for prices, freight terms,
extensions and additions?
34. Is the relative purchase order attached       
to the invoice for payment?
35. Where the client both buys from and       
sells to a person regularly, is a periodic
review made of all amounts due from
that person to determine whether any
set-off is necessary?
36. 1. Is a special request used for       
making payments in advance or
against documents through
Bank?
2. Thereafter, are the invoices       
processed in the normal course?
37. 1. Are all advance payments duly       
authorized by persons
competent to authorize such
payment?
 2. Is a list of pending advances       
made at least every quarter and
is a proper follow-up
maintained?
38. Are all adjustments to creditors’       
accounts duly approved by those
authorized in this behalf?
39. Is a list of employees, by designation,       
with limits of authority in respect of
several matters referred to in this
section maintained?
40. Are all suppliers’ statements compared       
with ledger accounts?
41. Is there any follow-up action to       
investigate differences, if any, between
the suppliers’ statements and the
ledger accounts?
Sl. Yes No N.A. Explanatory
No. Queries Note

42. Is a list of unpaid creditors prepared       

and reconciled periodically with the
General Ledger Control account?
43. Is there a system of ensuring that cash       
discounts are availed of whenever
offered?
SALES AND DEBTORS
 

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Are standard price lists maintained?        

2. Are prices, which are not based on       
standard price lists, required to be
approved by a senior executive outside
the Sales Department?
3. Are written orders from customers       
 received in all cases?
4. If oral/ telephonic orders are received,       
are they recorded immediately in the
client’s standard forms?
5. Is there a numerical control of all       
customers’ orders?
6. Are credit limits fixed is respect of       
individual customers?
7. Are these limits approved by an       
official independent of the Sales
Department?
8. Are credit limits reviewed       
periodically?
9. Are customers’ credit limits checked       
before orders are accepted?
10. Is this done by a person independent       
of the Sales Department?
11. If sales to employees are made at       
concessional prices :
1. Is there a limit to the value of
such sales?
2. Is there an adequate procedure       
to see that these limits are not
exceeded?
3. Are the amounts recovered in       
accordance with the terms of
sale?
12. Are dispatches of goods authorized       
only by Despatch Notes, Gate Passes
or similar documents?
13. Do such Despatch Notes/ Gate Passes       
or similar documents bear pre-printed
numbers?
14. Are they under numerical control?        
Sl. Yes No N.A. Explanatory
No. Queries Note

15. Are they prepared by a person       

independent of :
1. the Sales Department?

2. the processing of invoices?        

16. Except when all documents are       

prepared in one operation, are the
Despatch Notes/ Gate Passes matched
with :
1. Excise Duty records?

2. Sales invoices?        

3. Freight payable to carriers       

(where applicable)?
17. Are unmatched Despatch Notes/ Gate       
Passes reviewed periodically?
18. Are the goods actually dispatched       
checked independently with the
Despatch Notes/ Gate Passes and
Customer’s Orders?
19. Are acknowledgements obtained from       
the customers for the goods delivered?
20. Are the customers’ orders marked for       
goods delivered?
21. Are shortages in goods delivered to       
the Customers investigated?
22. Are credits to customers for shortages,       
breakages & losses in transit match
with claims lodged against carriers/
insurers?
23. Are sales invoices pre-numbered?        
24. Are all invoice numbers accounted       
for?
25. Are invoices checked for :        
1. prices?

2. calculations (including excise       

duty and sales tax)?
3. terms of payment?        

26. Are ‘no change’ invoices authorized       

by a person independent of the
custody of goods or cash?
27. Are invoices mailed direct to the       
customers promptly?
28. Are credits to customers for       
remittances posted only from the
entries in the cash book (or equivalent
record)?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

29. Does cashier       

notify
immediately :
Sales
Department,
Debtors’        
Ledger Section
and
Credit        
Controller;
1. of all       
dishonou
red
 cheques
or other
negotiabl
e
instrume
nts?
2. of all       
document
s sent
through
bank but
not
returned
by the
customer
s?
30. Is immediate       
follow-up
action taken on
such
notification?
31. Are bills of       
exchange (or
other negotiable
instruments)
accepted by
customers
recorded?
32. Are the bills of       
exchange, etc.
as per such
record
periodically
verified with
the bills on
hand?
33. 1. Is a       
record of
customer
s’ claims
maintaine
d?
 2. Are such       
claims
properly
dealt with
in the
accounts?
34. Does the       
Receiving
Department
count, weigh or
measure the
goods returned
by customers?
35. Does the       
Receiving
Department
record them on
a Sales Returns
Note?
36. Are copies of       
Sales Returns
Notes sent to :
1. Customer
?
2. Sales        
Departme
nt
3. Debtor’s        
Ledger
Section?
37. Are the       
returned goods
taken into stock
immediately?
38. Is a Credit Note       
issued to the
customer for
the goods
returned?
 39. Are all Credit       
Notes pre-
numbered?
40. Are Credit       
Notes
numerically
controlled?
41. Are Credit       
Notes
authorized by a
person
independent
of :
1. Custody
of goods?
2. Cash        
receipts?
3. Debtor’s        
Ledger?
42. Are Credit       
Notes :
1. compared
with
Sales
Returns
Notes or
other
substanti
ating
evidence
?
2. checked        
for
prices?
3. checked        
for
calculatio
ns?
 
Sl. Yes No N.A. Explanatory
No. Queries Note

43. Are corresponding recoveries of sales       

commissions made when Credit Notes
are issued to customers?
44. Are units of sales (as per sales       
invoices) correlated and reconciled
with the purchases (or production) and
stocks on hand?
45. Is the Sales Ledger balanced       
periodically and tallied with the
General Ledger Control account?
46. Are ageing schedules prepared       
periodically?
47. Are they reviewed by a responsible       
person?
48. Are statements of accounts regularly       
sent to all customers?
49. Are the statements checked with the       
Debtor’s Ledger before they are
issued?
50. Are the statements mailed by a person       
independent of the ledger keeper?
51. Are confirmations of balances       
obtained periodically?
52. Are the confirmations verified by a       
person independent of the ledger
keeper and the person preparing the
statement?
53. Is special approval required for :        
1. Payment of customer’s credit
balances?
2. Writing off bad debts?        
54. Is any accounting control kept for bad       
debts written off?
55. Is any follow-up action taken for       
recovering amounts written off?
56. In the case of export sales :        
1. is a record maintained of import
entitlements due?
2. does the record cover the       
utilization disposal of such
entitlements?
3. is there a procedure to ensure       
that claims for incentives etc.,
receivable are made in time?
57. Are sales of scrap and wastage subject       
to the same procedures and controls as
sales of finished goods?
 
 

SHARE CAPITAL
 

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Does the company have its own share       

department?
2. Are all share certificates signed       
manually by all the persons authorized
to sign them?
3. If any signature on a share certificate       
is affixed by mechanical means, are
the plates or other devices kept under
the control of a person other that the
one who signs the certificates
manually?
4. Is there a record of :        
1. duplicate share certificates
issued?
2. split share certificates issued?        

3. certified transfer deeds issued?        

4. new share certificates issued in       

lieu of damaged certificates?
5. Are the old share certificates marked       
“cancelled”, after new or split
certificates are issued?
6. Is there a register for share transfers/       
transmissions lodged?
7. Are transfer deeds individually       
numbered on receipt?
8. Are the transfer deeds entered in the       
Register immediately on receipt?
9. Are transfers notified immediately on       
receipt of the transfer deeds?
10. Is the share transfer/ transmission       
Register verified by an authorized
officer, before the share transfers/
transmissions are placed before the
Board/ Committee for approval?
11. Is the share transfer/ transmission       
Register signed by the Chairman of
the Committee/ Board, in token of
approval of the transfers/
transmissions?
12. Are the entries in the Share Ledgers       
initialed by an authorized officer?
13.                                              Ledger :        
1. as on the Balance Sheet date?
 2. when preparing dividend lists?        

3. on any other occasion?        

(Example : when issuing rights or
bonus shares)
 

Sl. No. Yes No N.A. Explanatory Note

Queries

14. Does the       

schedule of
balances under
item (13) show
separately :
1. amount
paid up
on each
share?
2. amount        
of calls in
arrears?
3. amount        
of calls in
advance?
15. Is the printing       
of share
certificates
authorized by
the Board?
16. Are the share       
certificates
numbered at the
time of
printing?
17. Are the dyes,       
blocks, etc.
used for
 printing the
share
certificates kept
in safe custody?
18. 1. Are        
unused
share
certificat
es kept in
safe
custody
by an
authorize
d officer?
2. Is a       
record
kept of
the stock
of unused
share
certificat
es?
3. Are the       
stocks of
such
unused
share
certificat
es
verified
by an
authorize
d officer
and
tallied
with the
Stock
Register?
19. Are dividend       
mandates :
1. scrutinize
d?
 2. filed in       
sequence
and
cross-
reference
d to the
Share
Ledger?
20. If dividend       
warrants are
pre-signed :
1. is a
certificat
e
obtained
from the
printers
regarding
the
number
of
warrants?
2. is a       
reconcilia
tion
prepared
of the
number
of
warrants
used and
the spare
warrants?
3. are        
unused
warrants
marked
to
prevent
unauthori
zed use?
21. 1. Is the       
 dividend
list
checked
by a
person
other
than the
one who
prepared
it?
2. Is the       
dividend
list
compared
with the
dividend
warrants?
3. Is a       
separate
bank
account
kept for
dividends
?
4. Are the       
paid
warrants
returned
by the
Bank?
5. Is a       
schedule
of unpaid
dividends
taken and
tallied
with
balance
in the
applicabl
e Bank
account?
 22. Is revalidation       
of stale
dividend
warrants
prohibited, and
are fresh
cheques issued
in lieu of stale
dividend
warrants
surrendered?
Sl. No. Yes No N.A. Explanatory Note
Queries

23. Powers of       

Attorney :
1. Are they
entered in
a separate
register?
2. Are        
copies
kept?
3. Are        
specimen
signature
s of the
power of
attorney
holders
obtained
and kept
on file?
24. If the Company       
uses the
services of a
Share Transfer
Agent or
Registrar, does
the company
obtain a
certificate from
 such Agent of
Registrar to the
effect that all
the controls
mentioned
above are in
operation?
BORROWINGS
 

Sl. Yes No N.A. Explanatory

No. Queries Note

Gen
eral

1. Does the Board resolution authorizing       

the borrowings specify :
1. the total amount up to which
monies may be borrowed?
2. the persons authorized to       
borrow?
3. the security that can be offered       
against the borrowings?
4. the period of the borrowings?        

5. the rate of interest?        

2. If the company uses the services of a       

Transfer Agent or Registrar or other
person, does it obtain a certificate
from such Agent or Registrar as to
adequacy of the controls in force?

Issu
e of
Secu
ritie
s/
Exe
cuti
on
of
Loa
n
Agr
eem
ent

3. Where Debentures are issued :        

1. are Debenture Certificates pre-
numbered?
2. are the numbers accounted for?        

3. are the unused certificates kept       

in safe custody by an authorized
official?
4. is the printing of Debenture       
Certificates authorized by a
Board resolution?
4. In the case of Public Deposits :        
1. are the Deposit Receipts serially
numbered?
2. are the numbers accounted for?        

3. are the unused receipts kept in       

safe custody by an authorized
official?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

5. Is there a       
review by a
 responsible
official
periodically to
ensure that all
covenants
under the Loan
Agreement are
complied with?

Transfers

6. Are Transfer       
Deeds received
in respect of
Debentures :
1. numbere
d on
receipt?
2. entered in       
a
Transfer
Register?
7. Are the       
Transferors
notified
immediately on
receipt of the
Transfer Deed?
8. Is the Transfer       
Register
verified by an
authorized
official before it
is submitted for
approval?
9. Is the Transfer       
Register signed
by the
Chairman of
the Committee/
Board in token
 of approval?
10. Is there a record       
of :
1. duplicate
certificat
es
issued?
2. new        
certificat
es issued
in lieu of
damaged
certificat
es?
11. Are the old       
certificates
marked
“Cancelled”
after new
certificates are
issued?
12. Are the entries       
in the
Debenture
Holders’ /
Depositors’
Ledger initialed
by an
authorized
official?
13. Is the       
Debenture
Holders’ /
Depositors’
Ledger
reconciled with
the financial
ledger
periodically?

Repayment of
Principal /
Payment of
Interest

14. Is a Schedule of       

Repayments
maintained?
15. Is a list of due       
dates for
payment of
interest
maintained?
16. Is a list of       
interest
warrants
payable
prepared and
reconciled with
the total interest
payable?
17. Is a separate       
bank account
kept for
payment of
interest?
18. Are paid       
interest
warrants
returned by the
bank?
19. Is a schedule of       
unpaid interest
warrants taken
and tallied with
the balance in
the bank
account?
20. Are mandates       
received
entered in a
 separate
register?
21. If interest       
warrants are
pre-signed, is a
certificate
obtained from
the printer
regarding the
number of
warrants?
 

Sl. Yes No N.A. Explanatory

No. Queries Note

22. Is a reconciliation prepared of the       

numbers used and spare warrants?
23. Are there controls to ensure that spare       
warrants are not used without proper
authorization?
24. Are fresh cheques issued in lieu of       
stale interest warrants surrendered?
25. Are Debenture Certificates / Deposit       
Receipts surrendered to the company
on maturity :
1. discharged by the Debenture
Holder / Deposit Holder?
2. cancelled after payment?        

FIXED ASSETS
 

Sl. No. Yes No N.A. Explanatory Note

Queries
Purchases and
Disposal

1. Are budgets for       

capital
expenditure
approved by the
Board?
2. Are approved       
budgets
communicated
in writing to :
1. Purchase
Departme
nt?
2. Accounts        
Departme
nt?
3. Departme        
nt
originatin
g the
request?
3. Are written       
authorizations
required for
incurring
capital
expenditure for
items included
in the budget?
4. Is the authority       
to incur capital
expenditure
restricted to
specified
officials?
5. Are purchases       
of capital items
 subject to same
controls as are
applicable to
purchases of
raw materials,
stores, etc.?
6. Are receipts of       
capital items
subject to same
procedures as
applicable to
raw materials,
stores, etc.?
7. Is there proper       
check to see
that amounts
expended do
not exceed the
amount
authorized?
8. Are        
supplemental
authorizations
required for
excess
expenditures?
9. Is there an       
established
procedure for
moving plant
and machinery
from one
location to
another?
Sl. No. Yes No N.A. Explanatory Note
Queries

10. 1. Is written       
authority
required
for :
1. scr
app
ing
fix
ed
ass
ets
?
2. sell        
ing
fix
ed
ass
ets
?
2. I        
s
t
h
e
a
u
t
h
o
r
i
t
y

t
o

p
e
r
m
i
t
s
c
r
a
p
p
i
n
g

/
s
e
l
l
i
n
g

o
f
f
i
x
e
d

a
s
s
e
t
s
r
e
s
t
r
i
c
t
e
d

t
o

s
p
e
c
 i
f
i
e
d

o
f
f
i
c
i
a
l
s
?
3. A       
r
e
l
i
m
i
t
s
s
p
e
c
i
f
i
e
d

i
n

t
h
i
s
r
e
g
 a
r
d
?
4. A       
r
e
s
a
l
e
s
o
f
f
i
x
e
d

a
s
s
e
t
s
s
u
b
j
e
c
t
t
o

s
a
m
e
p
r
o
c
e
d
u
r
e
s
a
s
a
r
e
a
p
p
l
i
c
a
b
l
e
t
o

s
a
l
e
s
o
f
f
i
n
i
s
h
e
d

g
o
o
d
s
?
 11. Are reports       
issued promptly
in respect of :
1. Units
sold?
2. Units        
scrapped
?
3. Units        
moved
from one
location
to
another?
Records :

12. Are fixed assets       

under
construction :
1. subject to
separate
control
account
in
General
Ledger?
2. controlle        
d by job
number?
13. Is expenditure       
on wages,
materials and
stores charged
to capital
account on
reasonable
basis?
14. Is there any       
official
 responsible for
ensuring that
allocation of
expenditure
between capital
and revenue is
in accordance
with the
company’s
accounting
policy?
15. Is a register of       
all fixed assets
(including fully
depreciated
assets)
maintained?
16. Is the register       
regularly
written up
throughout the
year?
17. Is the register       
periodically
tallied with the
financial
accounts?
18. Is the following       
information
available, in the
register?
1. Supplier’
s name
2. Date of       
purchase
3. Cost        
(includin
g
additions,
improve
ments,
 exchange
rate
adjustme
nts, etc.)
4. Location        
and
identifica
tion
number
5. Rate of       
depreciati
on and
estimated
life
6. Accumul        
ated
depreciati
on
7. Estimate        
d salvage
value
19. Is a record       
maintained of
equipment used
by the
company, but
owned by
others?
Sl. No. N.A. Explanatory Note
Queries Yes No

20. Is the register       

of patents or
trade marks
maintained up-
to-date?
21. Is there a list of       
title deeds for
the landed
properties and
 buildings?
22. Are title deeds       
of properties
kept in safe
place?
23. If they are       
lodged as
security, are
certificates
obtained to that
effect
periodically?
24. Are registration       
books of
vehicles
periodically
verified?
25. Are fixed assets       
verified
periodically?
26. Is there a       
written
procedure for
such
verification?
27. Does the       
procedure
provide for
verification /
confirmation of
fixed assets
with third
parties?
28. Does the       
procedure
provide for
verification of
compliance
with the
warranties and
conditions in
 the relevant
insurance
policies?
29. Are reports       
prepared on
such
verification?
30. Do such reports       
indicate
damaged /
obsolete items
of fixed assets?
31. 1. Are        
discrepan
cies
disclosed
by such
reports
investigat
ed?
2. Are the       
records
and
financial
accounts
corrected,
with
proper
authority
?
32. Are damaged /       
obsolete items
disclosed by
such reports,
removed from
the records and
financial
accounts with
proper
authority?
Moulds,
Patterns, Jigs,
Fixtures,
Tools, etc.
33. Is there       
satisfactory
control over the
acquisition and
write off of
such items?
34. Are there       
physical
safeguards
against theft or
loss of tools
and other
movable
equipment?
35. Are records       
maintained for :
1. items
treated as
stock?
2. items        
treated as
fixed
assets?
 

Sl. No. Yes No N.A. Explanatory Note

Queries

Insurance :

36. 1. Are the       

following
risks
covered
in respect
of
buildings
 and
machiner
y:
1. Fire

2. Strike,        
riot and
civil
commoti
on
3. Flood        

4. Earthqua        
ke
5. Nuclear        
risks
6. Maliciou        
s damage
7. War risks        

2. If the       
answer to
any of
the above
is
negative,
is it due
to a
specific
decision
taken by
a senior
official?
37. Is there an       
adequate
procedure to
ensure that
assets acquired
between two
renewal dates
 are also covered
by insurance?
38. Is there an       
official who
decides on the
value for which
policies are
taken?
39. Are the fixed       
assets insured
at re-
instatement
basis?
40. Does the       
official, who
decides on the
value for which
policies are
taken, review
periodically the
adequacy of the
insurance
cover?
41. 1. Is there       
loss-of-
profits
insurance
cover?
2. Is there       
machiner
y-
breakdow
n
insurance
cover?
3. If the       
answer to
(i) or (ii)
is
negative,
is it due
 to a
specific
decision
taken by
a senior
official?
 
 
INVESTMENTS
 

Sl. No. Yes No N.A. Explanatory Note

Queries

1. Is an       
investments
register kept,
showing :
1. the nature
and
descriptio
n of the
investme
nts?
2. in the       
case of
investme
nts in
companie
s, the
name of
company
in which
the
investme
nt has
been
made?
3. certificat        
e
numbers?
 4. distinctiv        
e
numbers?
5. cost,        
amount
paid-up
and face
value?
6. the        
names in
which the
investme
nts have
been
made?
7. due dates       
for
receipt of
interest?
8. date on       
which
dividends
are
ordinarily
received?
9. maturity        
dates?
2. Are the scrips       
etc., kept by
independent
custodian with
adequate
security
arrangements?
3. Are the scrips       
etc. periodically
physically
verified with
the Register?
4. Is there a       
 periodic review
to ensure that
all investment
income whether
standing in the
name of
company or not
is received
when due?
5. Are        
transactions in
investments
authorized by
the Board or a
person to whom
powers have
been delegated?
6. 1. Are        
transactio
ns
invariabl
y put
through
recognize
d
brokers?
2. If not, is       
there a
procedur
e to
review
the rates
at which
purchases
and sales
are
made?
7. Is a proper       
record made of
all bonus
issues, sub-
divisions of
shares,
 entitlements to
rights, etc.?
STOCKS
 

Sl. Yes No N.A. Explanatory

No. Queries Note

1. Are stocks stored in assigned areas?        

2. If so, is access to these areas limited?        
3. Are stocks insured against the       
following risks :
1. Fire?

2. Strike, riot and civil       

commotion?
3. Flood?        

4. Hail damage where applicable?        

Sl. Yes No N.A. Explanatory

No. Queries Note

4. If the answer to any of the above is       

negative, is it due to a specific
decision taken by a senior official?
5. Is a record maintained for the       
insurance policies?
6. Is the record reviewed periodically?        
7. Is there an official who decides on the       
value for which the stocks are to be
insured?
8. Is the adequacy of the insurance cover       
reviewed periodically?
9. Are perpetual stock records kept for :        
 1. raw materials?

2. work-in-progress?        

3. finished goods?        

4. stores?        

10. Are they periodically reconciled with       

accounting records?
11. Is there a system of perpetual       
inventory for stocks of :
1. raw materials?

2. work-in-progress?        

3. finished goods?        

4. stores?        

12. Where there is a system of perpetual       

inventory count :
1. Is there a periodical report of
shortages / excesses?
2. If so, are these differences       
investigated?
3. Are these differences adjusted in       
the stock records and in the
financial accounts?
4. Is written approval obtained       
from a responsible official to
adjust these differences?
13. Are there norms for stock levels to be       
held?
14. Is there a periodic reporting of :        
 1. slow moving items?

2. damaged items?        

3. obsolete items?        

4. over-stocked items?        

15. Is there a well-laid out written       

procedure for inventory fount?
 

Sl. No. Queries Yes No N.A. Explanatory Note

16. 1. Are stocks physically verified at       

least once in a year?
2. Is this done by a person       
independent of persons who are
responsible for maintaining
these records or the storekeeper?
3. Are written instructions       
prepared for guidance of
employees engaged in physical
stocks taking to cover :
1. proper identifications and
arrangement of stocks?
2. cut-off points of receipts       
and deliveries?
3. recording of the condition       
of the stocks?
4. compliance with the       
conditions / warranties in
the relative insurance
policies?
17. Are the physical inventory records,       
such as tags, cards, tally sheets, under
numerical control?
18. Are the clerical steps in the       
preparation of stock sheets checked
independently for :
1. summarization of quantities?

2. unit’s rates?        

3. additions?        

4. extensions?        

5. unit conversions?        

6. summarization of cards and / or       

sheets?
19. Are the quantities shown in the stock       
sheets compared with the quantities
declared to banks or insurers, where
possible?
20. If there are significant variations       
between the actual stocks and book
stocks :
1. are they investigated?

2. is a recount made where       

necessary?
3. is the stock book corrected with       
proper authority?
21. Are the following stocks checked :        
1. physically by the Company’s
staff?
2. with certificates from concerned       
holders of the stocks?
1. stocks in public warehouses?        
 2. stocks with consignees?        

3. stocks with sub-contractors for       

fabrication, etc.?
4. stocks with customers, on       
approval?
5. stocks in bonded warehouses?        

6. stocks pledged with third       

parties?
Sl. Queries Yes No N.A. Explanatory
No. Note

22. Is stock on hand relating to third       

parties, such as customers’ stocks and
consignments physically segregated or
properly identified?
23. Are the procedures relating to record       
keeping and stocktaking made
applicable to third party stocks also?
24. Are confirmations obtained from the       
third parties for stocks held on their
behalf?
25. Are records maintained for :        
1. scrap available for sale?

2. by-products?        

3. returnable containers?        

26. Is there an adequate recording       

procedure for :
1. stocks with outsiders?

2. stocks of outsiders held by the       

company?
27. Is there a system of job / production       
 orders for control of production?
28. Does the storekeeper issue raw       
materials, stores, etc., only against
Requisition Notes signed by properly
authorized officials?
29. Does the storekeeper acknowledge in       
writing the quantity of finished goods
received from the Factory?
30. Is the stock record periodically       
checked with such
acknowledgements?
31. Does the cost system provide for       
obtaining units or job order costs for :
1. work-in-progress?

2. finished goods?        

32. Is the cost system integrated with / or       

reconciled to General Ledger controls
as regards :-
1. material?

2. labour?        

3. overheads?        

33. Does the cost system provide for       

detailed units or job order costs in
favour of :
1. Raw material costs?

2. Direct labour?        

3. Overheads?        

4. Physical quantities?        
 5. Unit rates?        

34. Are similar records kept for service       

departments also?
 

Sl. Queries Yes No N.A. Explanatory

No. Note

35. Are overhead rates :        

1. reviewed periodically by
designated employees?
2. adjusted in the light of current       
experience?
36. Are separate control accounts       
maintained for stock of :
1. work-in-progress?

2. finished goods?        

37. In a job order industry, are the       

estimates of costs compared with
actual costs?
38. If standard cost system exists :        
1. are variances investigated?

2. are standards reviewed       

periodically?
BANK BALANCES
 

Sl. Queries Yes No N.A. Explanatory

No. Note

1. Are bank statements opened by a       

person other than the person signing
cheques, recording cash and receiving
 or disbursing?
2. Are the bank accounts reconciled at       
regular intervals?
3. Is Bank reconciliation statement       
drawn by a person independent of cash
receipt and disbursement function?
4. Does the reconciler compare each item       
in the deposit and withdrawal columns
of the bank statement with amount
deposited or withdrawn as shown by
the cash records both as regards date
and amount?
5. Is there a periodic follow-up of old :        
1. outstanding deposits?

2. outstanding payments?        

3. outstanding stop-payment       
advices?
6. Are the items under reconciliation       
reviewed by a responsible official
promptly or upon completion?
7. Are confirmations of balances       
obtained periodically is respect of all
bank balances and compared with the
bank statements?
 

Sl. No. Queries Yes No N.A. Explanatory Note

8. Is there a       
periodic review
of balances
held as security,
for Letters of
Credit,
Guarantees,
etc., to ensure
 the need for
their
continuance?
9. Are Fixed       
Deposit
Receipts held in
safe custody?
10. Is there a       
register of
Fixed Deposits
showing
maturity dates,
rates of interest
and dates for
payment of
interest?
11. Is there a       
follow-up
system to
ensure that
interest on
Fixed Deposits
is received on
due dates?
12. Is a Certificate       
obtained from
the bank for
Deposit
Receipts lodged
as security?
LOANS AND ADVANCES
 

Sl. No. Queries Yes No N.A. Explanatory Note

1. Does the Board       

resolution
authorizing the
loans specify :
1. the total
amount
 up to
which
loans
may be
made?
2. the        
purposes
for which
loans
may be
made?
3. maximu        
m
amount
of loans
which
may be
made for
each such
purpose
in
individua
l cases?
4. the term       
on which
such
loans
may be
granted?
2. Does the       
resolution
specify the
persons who
are empowered
to make loans?
3. Where loans are       
sanctioned to
outsiders, is a
formal credit
rating carried
out?
 4. Are all       
advances to
employees
under a scheme
duly approved
by the
competent
authority?
5. Do letters       
sanctioning the
loans /
advances
specify :
1. the
number
and
amount
of
instalmen
ts
payable?
2. rates of       
interest
payable?
6. Are all       
variations in the
terms duly
approved in
writing?
7. Where security       
is taken against
the loans, are
the form and
adequacy of
security
reviewed by a
responsible
official?
 

Sl. Queries Yes No N.A. Explanatory

No. Note

8. Are the loan and security documents :        

1. kept in safe custody?

2. centered in a Register?        

3. periodically verified?        

9. Is there a review to ensure that       

instalments / interest are received on
the due dates?
10. Are outstanding balances on loans /       
advances reviewed with General
Ledger periodically?
11. Are confirmation of balances obtained       
periodically?
12. Is there a procedure to ensure that       
advances for travel and other expenses
are cleared within a reasonable time?
13. Is specific approval of a senior official       
required for drawing an advance while
an earlier advance is outstanding?

Pre-
paid
Exp
ense
s

14. Are the balances in prepaid expense       

accounts reviewed to ensure that they
are properly chargeable to future
accounting periods?
15. Is there a system to ensure that refunds       
due on premature termination of
contracts are accounted for?

Clai
ms
and
Oth
er
Rec
eiva
bles

16. 1. Is a detailed list kept in the form       

of a Register or similar record?
2. Is the Register compared with       
the financial accounts?
3. Are the outstanding items       
reviewed periodically?

Tax
Ded
ucte
d at
Sou
rce

17. Are the original tax deduction       

certificates held is safe custody till
they are filed with the Tax
Department?
 

Sl. No. Queries Yes No N.A. Explanatory Note

Deposits

18. Does the       

company
maintain proper
records of
deposit made
showing :
 1. name of
the
authority
with
whom the
money is
deposited
?
2. amount?        

3. the        
period for
which the
deposit is
to be
held?
4. the mode       
of
repaymen
t, e.g.
whether
by refund
order or
by
adjustme
nt against
bills?
5. the date       
on which
interest,
if any, is
receivabl
e on the
deposits?
19. In the case of       
refundable
deposits, are the
original receipts
kept in safe
custody for
production at
the time of
 refund?
20. Is there a       
system of
follow-up on
the deposits,
which are due
for refund?
21. Is the Deposit       
Register tallied
with the
General Ledger
periodically?
22. Is there a       
procedure to
obtain periodic
confirmations
for deposits?