Internal Audit in Plantation Industry - Summary

Internal Audit Functions at plantation

1. Administration of the landed property held
a. Proper maintenance records
Understand the land is owned land or long-term lease from the state government. Documents
needs to be securely stored. Well maintained along with details of action to be taken and date
of such action taken. The agreement shall be signed by authorised personnel.

b. Detailed map and record of the plantation

The map shall present the area under cultivation with identification for the various sections,
area not under cultivation, area used for nurseries & other plantations, the buildings, labour
hutments and other structures, network of roads, culverts, bridges, water bodies etc. The maps
shall review periodically when there is a change and approved by authorised personnel.

c. Regular inspection of the plantation

To ensure area not under cultivation is free from encroachment and precautionary measures
can be taken for any early signal of possible encroachment or illegal gelling of tree or natural
disaster. Proper documentation of inspection report with details information and action
planned and reviewed by authorised personnel.

d. Review of the land and its utilization

Periodic reviews and documentation of records.
 Litigation – free the land from encumbrance
 Unutilized land vested to state government
 Expanding or setting up of seed nurseries

2. Management of agriculture activities

a. Ensure the irrigation system is well maintain
b. Regularly manure
c. Ascertain the need of spraying pesticide and quantity required (equipment and manpower
required)
d. Ascertain the section needed of weeding (equipment and manpower required)
e. Determine the pruning / tapping policy (if excess canopy)
f. Care of shade trees
g. The maintenance of drains and slopes of excessive water
h. Regularly review the policy for uprooting and re-plating
i. Maintain plant nursery to assess the need of manures and pesticides, supply water, gardening
implements.
j. Utilization of uncultivated (infilling)
k. Maintain statistical records to analyse the plant

3. Upkeep, repair and maintenance of assets

Maintain a schedule of maintenance or contingent plan for maintenance might be made based on
necessity. Harvest period all the machines shall be in working condition whereas the machinery
can be repair and maintenance during low season. The maintenance can be done inhouse or third
party. The maintenance shall be included the followings:
 Road, culverts and bridge connecting every nook and corner
 Labour hutments, arrangement for potable water and sanitation facility provided to the
labourers need to be maintained as per the established internal standards or the requirement of
legislation.
Internal Audit in Plantation Industry - Summary
 Upkeep of the nurseries
 Office buildings, factory and warehouse
 Mechanical and electrical tools (pump and generator)
 Machineries and motor vehicles

4. Material management
Purchase of material, storage and management. The material required for plantation and
manufacturing are as follows:
 Sampling and seeds and shade tree samplings for plantation
 Manure, pesticide, weedicide and chemical
 Fuel
 Mechanical and electrical equipment spare part.
 Sundry consumable items for production and manufacturing
 Food items for staff
 Medicine and medical consumables
 Packing materials.

Review the efficacy of the operation

Process Areas
Equipment 1. Irrigation
a. Requirement of irrigation on the area covered
b. Actual running hours of pump vs technical estimate capacity
c. Capacity and actual running hours of generator vs HSD requisitioned for and
issued from stores
d. License of generator
e. Capitalization of assets and recognition
f. Optimum labour and pay

2. Equipment control
a. Inventory of equipment
b. Record of equipment issuance
c. Return of equipment
d. Adequacy of equipment
e. Quantity check
f. Any defect equipment
g. Repair of equipment

Application of 1. Manuring application

agriculture a. Manuring schedule and contingent plans and contingent plans with written
inputs instructions mentioning section of the garden and the area covered
b. Record of number of manure requisition issued by store
c. Optimum labour and pay
d. Actual performance report by authorised personnel
e. Soil test before manure
f. Record maintained for application of manure
 Section
 Area
 Date of application
 Name of manure / fertilizer applied
Internal Audit in Plantation Industry - Summary
Process Areas
 Quantum of application of each category of manure
 Manpower deployed
g. Manure actual vs schedule
h. Quantity of manures applied vs records vs store card
i. Records of manpower deploy
j. Reasonability of manpower allocation
k. Is the records documented and verified.
l. Is the records checked regularly and signed
m. Record of unused fertilizer

2. Application of pesticide
a. Schedule of pesticide application and contingent plans
b. Record of quantity of pesticide issued by store
c. Optimum labour and pay
d. Work performed shall be scrutinized
e. Budget allocation for pesticide activity
f. Schedule or prophylactic pesticide spraying and no of times carried out
g. Documentation of pesticide activities
h. Application Register vs schedule
i. Budget vs actual
j. Analysis on the comparative expenditure
k. Check the garden records if any damages arise due to application of pesticide
l. Action taken for such pest infestation correlated with the quantum of
application
m. Quantity of pesticide applied vs records vs store card
n. Record of remaining pesticide

3. Weed control
a. Schedule of weeding and contingent plan
b. Record of quantity of pesticide issued by store
c. Optimum labour and pay
d. Work performed shall be scrutinized
e. Budget vs actual vs scheduled
f. Records of work performed
g. Control and monitor of diff chemical use
h. Documentation of weeding application
i. Quantity of weeding applied vs records vs store card
j. Records and management of remaining weedicide
k. Review the Sprayer maintenance and movement records and inventory count

4. Pruning
a. Schedule of pruning and contingent plan
b. Optimum labour and pay
c. Work performed shall be scrutinized
d. Budget vs actual vs scheduled
e. Records of work performed

5. Other cultivation operation

a. Fixation of task for different agriculture operations
i. Regular inspection or work designed for plantation work
ii. Check on the work done
iii. Compare the nature of inspection
iv. Check on the payment

b. Other agriculture operations

Internal Audit in Plantation Industry - Summary
Process Areas
i. Enquire on other activity for plantation and check on the schedule
ii. Documentation of inspection result
iii. Ensure the necessary information is recorded

c. Fresh and extension / re-plantation

i. Documentation of management approval
ii. Requisition of stores, tools and implements and issue of the same has
been in accordance with written authorization
iii. Manpower allocation
iv. Work performed shall be scrutinized
v. Check on the accounting treatment for the uprooting, preparation and
replanting
vi. Any extension planting programme
vii. If yes, what is the current status of the land and any soil test report
available
viii. Any long-term uprooting and replanting schedule
ix. The uprooting and replating shall be supported with the yield
analysis report or supported with sick report for plantation.
x. Examine the details budget has been prepared
Major elements stated in budget:
 Land clearance or uprooting expenditure
 Land levelling and cover crop expenditure
 Land survey
 Land preparation
 Soil rehabilitation
 Cost of planting material
 Planting expenses
 Maintenance expenditure
xi. Check the sourcing planting materials (either own or from external)
xii. Ensure the nursery is built and meet current requirement and future
as well
xiii. Work carried out as per plan
xiv. Any records maintained with following details
Extension planting area
 Uprooting and replantation area
 Date of commencement and completion of uprooting
 Date of commencement and completion of land clearance
 Green crop cover for soil rehabilitation
 Date of commencement and completion of land preparation
 Date of commencement and completion of planting
 Type of plants used
 Spacing of plants
 Number of plants planted
 Date of survey after planting
xv. If replantation, the following points attention needed
 Check the expenditure of uprooting
 Check the quality of timber
 Records of utilization of wood, if for internal usage
 If sold, check the process of selling (from setting the selling
price, and sales proceeds recognition)
 Check on the wood generated vs sell or used
 Records maintain on planted or replanted (shall include
budget maintenance)
Internal Audit in Plantation Industry - Summary
Process Areas
 Actual expenses vs budget
 Analyse the cost incurred per hectare
 Ensure the compliance of the formalities
 Carry out yield-wise yield analysis
 Compare section by section

Production 1. Weighing of raw material at field

a. Weighting location (factory or on the spot)
b. Weighting system (manually record or computerized)
c. Supervised by higher level during weighting
d. Manual weighting, the deduction of unnecessary weight is it factor in (weight
of truck)
e. Computerised weighting, how the adjustment is set and check on the accuracy
f. surprise checking on weighting process.
g. Any slip indicating the weight of product is prepared for sending
h. Weighting on goods upon arrived at factory.
i. Compared the slip prepared for sending and arrived factory. Analyse the
variance
j. Discrepancy should be reported.

2. Yield record examination of vacancy percentage

a. Any yield records maintained
b. Yield trend
c. Comparison of yield during the past few years
d. Identify perennially low yielding section
e. study section yield records with reference to corresponding age and report
f. compare average yield with other
g. maintain of vacancy record
h. check the vacancy percentage
i. check any bearing on the yield
j. report specifically on high vacancy percentage
k. review action taken for reduction
l. review action plan to improve

Maintenance 1. Upkeep of nursery

 schedule of maintenance and contingency plans
 Approval of requisition of material
 Optimum number of labours engaged and payment
 Budget review for requirement of plants
 Check the plantation future plans (purchasing of new plants from third party
nursery or from own)
 Check the plantation plan for arising the nursery with reference to budgeted
consumption of plants
 Check the type of nursery to be raised.
 Check the budget for nursery expenditure (material and labour cost)
 Check the maintenance manpower cost included in budget from planting till
mature
 Check the Items budgeted
 separate budget prepared for each area / block depending on the years of
maturity of the plants planting
 check each of the budget, year commencement, size of the nursery beds,
number of plants planned to be raised are clearly mentioned
 budgeted cost per plant vs market price
Internal Audit in Plantation Industry - Summary
Process Areas
 information incorporated in the Plant Nursery Record
 year of commencement of the nursery
 projected year of plantation
 bed number
 bed size
 variety of seeds / clones raised
 total weight of seeds purchased / used and approximate total number of
seeds set in polythene sleeves (seedling nursery)
 no of cutting set into rooting beds (clonal nursery)
 no of rooted cuttings transferred to soil filled or number of cuttings put
into soil filled
 number of matured plant rear as per physical count of plants (before
planting)
 Date-wise utilization of number of plants in different section
 Balance of plants / seed
 check any separate records of expenses incurred for each nursery maintained
 check the expenses incurred on inputs required for rearing nursery, fertilizers
and insecticides used for the nursery and manpower utilized for difference
operations pertaining to the nursery are recorded in the cost records
chronologically
 check all inputs materials and other materials are issued through proper issue
requisition
 manpower deployed for the preparation and maintenance are documented
properly
 physical count carried out periodically before planting and year end count
 periodic plant verification is acknowledged by authorised personnel
 actual utilization of inputs and man-days vs budgeted quantities and manpower
required
 check on physical utilization of plants set with the number of seedlings planted
in Nursery Record
 check the cost per plant
 check the computation of survival percentage with the physical verification
 check the survival percentage within normal limit
 compare over the year
 check the cost per plant is using the actual plant survived as basic
 Damaged plants vs available good plants is it within normal limit
 Accounting treatment for expenditure incurred
 Accounting treatment for the Cost of abnormal damage
 Check the method of valuation of closing stock of plants

2. Upkeep of roads, culverts and bridges

 Annual schedule and contingent plan
 Material issued form store supported with requisition
 Optimum labour and pay
 If engaged external, review engagement letter who approve and payment
 Service report checked by authorised personnel and work carried out.

3. Upkeep of the labour hutments, potable water supply and sanitation facility
 Annual schedule and contingent plan
 Material issued form store supported with requisition
 Optimum labour and pay
 If engaged external, review engagement letter who approve and payment
Internal Audit in Plantation Industry - Summary
Process Areas
 Service report checked by authorised personnel and work carried out.

4. Upkeep of tools and implements

 Annual schedule and contingent plan
 Material issued (machine oil) as per bill of material for routine repairs &
maintenance and should have been authorised in other case.
 Optimum labour and pay
 If engaged external, review engagement letter who approve and payment
 Service report checked by authorised personnel and work carried out.

5. Maintenance of drainage system

 Any drawing for drainage keeps for maintenance and development
 Review the implementation of drainage programme
 Check the records of maintenance vs actual work done
 Is the drainage system periodic examined.
 Updated land drainage map available

6. Vehicle logbook
 Maintain of logbook for vehicles use
 Date
 Destination
 KM run and / or hours
 Fuel issued
 Signature
 Milo-meter functionality
 Fuel consumption report consist
 Name of vehicle
 Km//hour run
 Fuel consumed
 Km/ hour run per litre
 Comparison of yearly fuel consumption
Internal Audit in Plantation Industry - Summary
Audit on special areas with reference to peculiar transaction
1. Deployment
Plantation industry is high labour intensive, wages and other cost pretending to labour account.
a. Daily deployment planning
 the manpower classified into:
 field operation
 factory operation
 maintenance operation
 casual worker
 review the manpower allocation
 all staff is included in planning and no one left over.
 Manpower required to run the operation and any short fall of manpower, if yes, any
casual workers employed.
 Fixed any standard task per man-day for each field operation
 Records of daily deployment planning are kept as permanent record for future reference.

b. Actual deployment
 Check the recording of the staff attendance from difference operation
 What type of system used for staff attendance (biometric system)
 Maintenance of the system
 If manual records, then cross check from logbook to duty roster
 Frequency of reconciliation of logbook to final record.
 If system record, check the result with the report
 Total number of worker vs daily attendance record
 Is the system able to identify the type of worker
 Verify the duty roaster to attendance record
 Study the actual pattern of deployment of labour
 Actual manpower deployed vs planned and reason of variation
 Review the development of duty roaster in other areas
 compare the manpower over the year for operation and other. Review the reasons for
variation.
 Reconcile of the total wages to monthly wages
 Maintenance of casual worker records and payment
 Verify the worker to the agricultural manpower register or other

2. Warehousing and storage

 Warehouse condition  safety and proper storage facilities
 Away from unauthorized access
 Adequate insurance coverage
 Policy of receiving and shipping
 Warehouse store count and obsolete inventory management
 Weighment report (discrepancy)

3. Insurance
i. Examine insurance policy coverage for all organization
ii. Over insured or under insured
Internal Audit in Plantation Industry - Summary
iii. Check on the sum insured and renewal time (monitoring control)
iv. Safeguard of insurance policy
v. Insurance:
 Burglary insurance
 Crop insurance
 Fidelity insurance

4. Human Resource Management

a. Recruitment, record maintenance and training
 Any periodic meetings conducted to ascertain the need for additional
workforce
 To get SOP and check on the compliance:
 Written procedure on interviewing candidates
 HR staff is adequately trained
 Maintenance of detailed record

b. Wages
 Understand the payment method and period
 Master payroll necessary information must contain
 Check to information in master payroll to personal file
 Master roll update regularly
 Master roll link to payroll
 Number of pay roll match with master roll
 Master roll shall not contain any resigned staff
 Check on new joiner information and payroll
 Understand the attendance system
 Examine the accuracy of the staff attendance (attendance system)
 Check the uploading of attendance recording system

c. Leave and wages

 Mode of computation of wages for the paid leave
 Method and system to recording leave earned

d. Record of absenteeism of worker

 Attendance Records
 Computation of absenteeism

e. Overtime wages
 Examine is there any overtime
 Approval of OT before granted
 Understand OT is being record and capture
 Supporting of the OT claim and approval if manual recording.
 If manual record on the OT, check the time in and time out is capture
accurately
 is the job / function is recorded.
Internal Audit in Plantation Industry - Summary
 Does the OT register is regular review by management
 If computerized system, check the system recording in OT hours
 To understand all type of OT (including non-estate operation) and criteria
(T&C) of such OT claim
 Check is there any unauthorised alteration of the OT register, if manual
record maintained.
 Recompute the OT amount with reference to OT work attendance and rate
or wages to ensure the payment calculated correctly.

7. Payroll
 To prevent creation of fictitious employee or inappropriate and unauthorised pay rate
 Examine and ensure adequate computer control
 HR got knowledge and experience to keep in compliance with labour law
 How Bonus and commission release. Accordance to BOD
 Is there any attendance or time card maintained
 Check the OT claim and relevant registers and company rules
 Review the incentive payment basis. Adhoc incentive shall be listed out
 Review the leave entitlement for staff ensure it accordance to employment contract
 Review Staff advance with salary account and ensure adjustment is made on time
 Check approval for increment or relevant agreement
 To review the calculation of deduction and taxes

8. Central Procurement
 To understand the purchasing policy and covering nature of the items, item purchase
locally at estate level, contract to awarded
 Clear demarcation of group of items purchases between HQ and Estate
 Is purchasing system being use and approval according to level of authority
 Is there any SOP for supplier selection, placement of order and monitoring the movement,
receiving, return of goods.
 How the receiving is done and communication to finance for releasing payment.
 Understand purchase of agricultural inputs is from HQ or Estate
 Is there any approved vendors’ listing maintained
 Is the agricultural inputs are purchased from authorised dealers. (part of the criteria in
approved vendor listing)
 If the purchase at estate level, to understand any SOP formalized and approved vendor
listing created.
 Is there any minimum and maximum stock level for Estate agricultural items
 Is the approved vendor listing review periodically by inducting new sources of purchase
 How the price comparison is carried out
 Inspect the specification of the items is send to vendor for quotation
 Examine the method of fixation of price for major and regular items by comparing the
last purchase price