Audit of books of educational institutions i.e.

Schools, Colleges, Universities

etc is known as audit of educational institutions. This type of audit comes
under the category of special audit.

Generally, the procedures for auditing is same like other audit even auditor
need to follow  other  steps.

The auditor may thoroughly study the trust deed of the trust to which the
school or the college belongs and in the case of the audit of an University,
he may study the Act of Legislature and the rules that are applicable to that
university.

The Audit of Educational Intuitions, sometimes referred to as

Audit of Books in the education industry, is a process of
systematic evaluation and documentation of financial
statements, taxes, expenditures, and incomes, obtained by the
educational organizations such as schools, colleges and
universities from Registration & Academic Fee, Payment
Transactions, Fines & Penalties, Funds & Donations, Hostel
Accommodation, Assets & Investments, Grants from
Government or other local bodies, and via other sources.
Audit of books of educational institutions like school, college, universities, etc. or
other such institutions which are engaged in the educational field is known as an
audit of educational institutions. 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. The auditor should check income and expenditure
account and balance sheet of such institutes in order to verify and report the true
and fairness of results presented by income statements and financial position
presented by the balance sheet.
Generally, the methods and procedures for vouching and auditing is the same
even though an auditor of an educational institution should perform the following
tasks:

The auditor should go through the University Act. Examine the Trust Deed or
Regulations, in the case of school or college and note all the provisions affecting
accounts. Trust deeds and should note the rules and regulations relating to
accounts. The governing body may pass resolutions from time to time with
respect to accounts. A copy of minutes books should be made available to him
so that he may be able to confirm whether the decision of the governing body
has been compiled with.

The auditor should obtain a copy of the budget or financial statements to study
different heads of income and expenditure. 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.

The auditor should thoroughly assess the strength of an internal check. Confirm
that fines for late payment or absence, etc. have been either collected or remitted
under proper authority. The auditor should vouch for the grant-in-aid from the
government carefully. Confirm those hostel dues were recovered before
student’s accounts were closed and their deposits of caution money refunded.

The auditor should verify the receipts of monthly fees from students, from
counterfoils or carbon copy of the receipts. He should also see whether cash
received has been banked daily or not. Other charges from the students such as
examination fees, laboratory fees, fines, etc. should be carefully verified.

Any fees received in advance should be properly adjusted. Report any old heavy
arrears on account of fees, dormitory rents, etc. to the Managing Committee. The
concession of fees and other charges should be duly authorized by the proper
authority. Any charges becoming irrecoverable should be written off only after the
proper authority has recommended.

Any grant-in-aid or funds received for a particular purpose must be utilized for the
same. He should verify that the fees are collected from all the students and if
there is any concession, the same is granted by a person who is so authorized.
The donations and other subscriptions from the various authorities have been
accounted for and acknowledged. The income from property, investment, etc.,
should be properly verified from the vouchers.
The auditor should vouch the number of salaries paid with the Salary Register.
Any increment given to an employee shall be duly sanctioned. The staff provident
fund should be verified and it should be seen that it is invested as per the rules.

The establishment expenses must be carefully vouched and it should be seen

that capital expenditure has not been treated as revenue expenditure or
vice versa. The payment of scholarship should be verified with the receipt from
students and Scholarship Register.

The stock of equipment, stationery, furniture should be carefully verified. While

making payment of staff salaries, income tax should be deducted at source and
shall be duly deposited with the Income Tax Department.

The steps for audit of educational institutions are as follows:-

 Study of the trust deed or regulations.

 Examine the previous financial statements.
 Noting of provisions applicable.
 Evaluation of internal control system.
 Examine the minute of the meeting and resolution.
 Verification of students fee register.
 Authorization for fee concessions .
 Verification of cashbook with respect of counterfoils of receipts and
payments.
 Examination of capital fund regarding admission fees.
 Verify free studentship and concessions .
 Confirmation of fines for late payment or absence.
 Check hostel dues recovery.
 Verification of rental income or expenses
 Examination of capital fund regarding admission fees.
 Verify free studentship and concessions .
 Confirmation of fines for late payment or absence.
 Check hostel dues recovery.
 Verification of rental income or expenses.
 Examine the bank pass book  of different nature.
 Verification of investment register and also ask about any interest and
dividend from investment if any.
 Verify grants from any local bodies or Government with reference to
memo or sanction letter.
 Reporting of any arrears.
 Vouch counterfoils of receipts taken from donors.
 Confirmation of any deposits and caution money and its treatment.
 Examination of expenses for library books and sports equipments.
 Checking of acknowledgement letter if any with regards to scholarship.
 Examination of payments with respect to prizes if any.
 Examine the salary register.
 Verify the Provident Fund Register.
 Check annual report with accurate supporting documents.
 Vouching of all establishment expenses.
 Vouch payment for electricity and water bill.
 Examination of payment for hostel maintenance and any other
miscellaneous expenses.
 Inspection of facilities given to students under any schemes associated
with Government.
 Verification of Fixed Assets Register.
 Verify ownership and existence of Fixed Assets .
 Confirmation of statutory compliance i.e. P.F., Income Tax etc.
 Verification of separate statements of accounts for different funds.
 Checking of calculation of salary payable and deductions.
 At last, cross check all procedure.