Auditing Assignment

Name - Nishant Ranjan

B.Com(H) - Semester 4
Section - A
Enrollment no. - A50004619100
Faculty name –Dr.Shikha Sharma

Q1) briefly explain the following

1. Continuous audit
In continuous audit the auditor and his staff is constantly engaged checking the accounts
during whole period i.e., throughout the financial year.
Continuous audit involves detail and exhaustive checking of accounts and is more
suitable for big organisation and entities.
In continuousaudit full verification of assets and liabilities is done at the end of the year.

2. Interim audit
An audit conducted between two annual audits is called interim audit.It is always carried
out for interem purpose and it’s generally carried out by professional.

3. Environmental audit
Environmental audit can be defined as a management told comprising a systematic
periodic and objective evaluation of how well organisation, management and equipment
are performing to safeguard the environment.
It is also concerned with assessing whether company policy meet regularity requirement
as well as appropriate standard as perceived by the management.
At last the effect of environmental factor should be assessed with the help of
environmental audit
Q2) Internal check as regard to wages and stores.

INTERNAL CHECK WITH REGARD TO WAGES

1) Workers should be employed only after the written order of thePersonnel Officer or the
appointing authority. A copy of theappointment order be endorsed to the wage preparing section.
2) Separate staff should record attendance of workers, control of leave,payment of overtime and
disbursement of pay packets. Each staffmember shall be responsible to enter relevant
information in thewage sheet. He should also put initials for the work completed byhim.
3) The wage sheet shall contain columns for recording relevantinformation with regard to
payment of wages such as name of theemployee, designation, period for which wages are paid,
rate of pay,amount of basic pay, dearness allowance, house rent allowance,compensatory
allowance and other allowance, gross salary drawn,deductions (there should be separate columns
indicating the natureof deductions) and net amount payable and signature of employees,for
acknowledging the payment.
4) Separate records should be maintained for each worker indicating thedate of appointment,
scale of pay, rate of pay, etc. Copies of ordersrelating to increase in pay, promotions and
punishments, deduction inwages on account of Provident Fund, Loan, Medical, GroundInsurance
etc. shall be endorsed to wage preparing section.
5) Separate job cards are to be maintained for recording the workperformed by the worker.
6) Each worker is to be given a pay slip indicating the gross wages andnet wages.
7) Separate register is to be maintained for recording the name ofworkers who may be allowed to
work overtime. No worker shall beallowed to work overtime without the prior sanction of the
properauthority.
8) Time recording clocks shall be installed at the main gate of thefactory for recording the arrival
and departure of workers.
9) The rosters of workers for each work should be prepared and copy ofthe same be sent to the
wage preparing section.
10) Late arrival of workers shall be entered in a separate register and thesame be sent to the
personnel section for future reference.
11) Proper watch and ward arrangement is to be maintained to record thearrival of the workers
and the time of leaving the factory.
12) The rate of wages of each worker is to be periodically checked withreference to rate card.
13) All calculations regarding gross wages and net wages payable afterdeduction are to be
checked by an independent person.
14) In the wage sheet the names of workers, rates of pay, the period forwage to be paid shall be
entered by one person. The calculationsregarding gross wages payable shall be made by another
person.The deductions under various heads shall be made by a third person.The net wages
payable and the checking of the wages sheet withreference to leave deductions etc. should be
made by a senior staffmember. The wages sheet shall be signed by the authorised official.
15) If the wages are to be paid on the basis of piece wage system, theactual work done by each
worker must be maintained on a job cardto be given to each worker. These cards should be
counter signed bythe foreman of the department and the store department to which thegoods
produced are delivered.
16) The wage sheet shall be prepared in triplicate. One copy shall beendorsed to pay master, the
second copy to the account section andfinal copy shall be retained by the wage preparing section.

INTERNAL CHECK WITH REGARD TO STORES (STOCK)

The Stores Department has the charge of preserving and issuing stores to different departments.
Proper control of stores is very much essential to prevent pilferage (small theft) and misuse.
Therefore, the
internal check system in relation to stores must be given careful attention.
The following general rules may be followed to ensure effective check on the stores.
i. LOCATION OF STORES: Store should be located at a convenient place. It should have proper
stores facilities
so that goods may not be misplaced, misused or wasted.
ii. RECEIPTS OF STORES: On receiving stores, the Stores Department will prepare a “Goods
Received Note’ in
triplicate.

One copy will be sent to the Purchase Department.

Second copy will be sent to Accounts Department.
The third will be retained by the Stores Department itself.
All the details about stores should be noted on the note. Stores should be properly checked after
their receipt.

iii. PRESERVATION OF STORES:

Goods received should be stored at their allotted racks.
The system of Bin Cards should be used to show the receipts, issues and balance of stores. Such
Bin Cards
may be kept hanging on the places where stores are preserved. Stores inventory software may be
used on
computer for item stored.
iv. ISSUE OF STORES: No item from the stores should be issued to any person without formal
requisition or
demand note from some authority. Only authorized person should be allowed to remove articles
from the
stores according to the requisition. The Stores Officer should be seated near the gate so that all
issues
may be made under his supervision. For the materials or stores returned from the job or the
department.
Material return note should be written and properly accounted for. Likewise, Material Transfer
Notes
should be used for the materials transferred form one department or job to another. The gate
keeper
should be instructed not to allow any material out of the factory without necessary permit from
the Store-
Keeper or Invoice of Sales Department.
v. RECORDING: After the issue of materials from the stores, the Store Issue Requisition should
be sent to the
Stores Accounts Section for proper records there. The Bin Cards should be checked out
compared from
time to time with stores records.