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Greetings of the Day to All the Members of CCI Family!

Friend's My last Article was on "Auditing - An Beginners Guide" and It Comprised of the Basics to Deal An Audit.

After writing it Most of my friends Requested me to Continue the series and Write On Audits Of Educational Institutions, Clubs, Hotels, Etc.

So I thought To start an series on Several Audits. 

So lets go for it my friends - 


1. Introduction - 

- Examine the regulations or the Deed Of the Institution

- Ask from the Accountant - Regarding the Major source of Income

-  Whether they are serving for Profit or Non Profit Purpose

-  Whether They Have received any Grant From Government Or Not

- Where they have Invested their Respective Income

- After Doing all the Preliminary work, Move toward Checking Of Receipts.

2. Audit Of Receipts - 

While doing Audit of An Educational Institution ( herein after refereed to as " EI ", All of you will generally Observe the following Incomes - Fees, Donations , From Investments, Etc. We will discuss one by one, So that it would be easier for All of you to Understand.

 Fees From Students - 

This is the major source of Income for most of the  EI's. So while doing the Audit make sure you consider the following points -

(a) Admission fee should be duly checked and check whether or not the Refundable Amount has been shown in Liabilities

(b) Fee received from students should be duly verified with the Receipts issued to them.

(c) In case of late payment of fees, it should be seen whether or not Fine has been duly imposed as well as collected.

(d) Fee concessions should be duly Authorizes

Income from Investment's -

- It is generally found that all the EI's invest their income in Fixed Deposit's with specific Bank.

- So it should be properly checked whether or not Interest Or Dividend has been properly Accounted i.e Shown In Profit & Loss Account

- Demand Form No. 16A as well as Bank Confirmation Certificate from the client

Donations & Grants - 

- This is also one of the major source of income for EI's

- EI's generally receive Grants From Government, so for it It should be seen that AS- 12 should be properly Accounted

- Suggestion should be given to client that Heavy Donations should not be received in cash and if they are doing it, they should ask for the PAN No. From The Donors for Transparency Purpose

- Counterfoils of Receipts of Donations should be properly Vouched

Rent -

- Most of the EI's give some of the land on Rent to Banks, Canteens, etc

- So ask for the Rent Agreement from the client

- Rent received should be checked with the Receipts Issued.

3. Audit Of Expenses - 

- Vouching should be done for the expenses

- Salary Register Should be Duly checked 

- Expenses on Prize Distribution, Sports Day, Library, Sports Items should be duly authorised.

4. Provident Fund, ESIC and TDS -

- Check the link to my Earlier Article Given Above

5. Audit of Assets -

- Ownership as well as Existence of Fixed Assets should be physically Verified

- Ask the management to show the current balance of cash they have with them and verify it with the respective Account. In case of Discrepancies Qualify The Audit Report.

6. Audit of Liabilities -

- Main Focus Should be on the Corpus Fund Maintained By the EI'S.

- The  term  ‘corpus’ is often confused  and   misunderstood. The literal meaning of the term ‘corpus’ is the main part/organ of a body. The term ‘corpus’ also denotes the sum and substance of an issue/entity. From a layman’s point of view a corpus fund should be understood as the capital of the organization ; the funds generated and kept   for  the existence and  sustenance  of   the organisation

7. Requirements -

- Form No. 16A and Bank Reconciliation Statement

- Bank Confirmation Certificate

- Rent Agreement

- Letter of Grant

- Additions to Fixed Assets

8. Disclosures - 

Regarding AS - 12 ( Accounting for Govt. Grants )

So My Article Comes to an end.

I Hope all of you will Appreciate My small Effort.

Any sought of Suggestions for the betterment of Further Articles will be Highly Appreciated

Thanks & Regards

Sanyam Arora

Published by

(“It's hard to beat a person who never gives up.”)
Category Audit   Report

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