Checklist in its basic from is a simple ‘ to do list’ and an advanced checklist acts asa schedule for businesses. This schedule will help to sequence the task to be conducted during various audits and act as a road map for audit conducted. Audit staff can use it as a guidance to conduct audit and the various points to stress upon. Each checklist has to be customised according to the audit in hand.
The checklist points for Management Audit will differ from that of an Operational Audit as well as Finance Audit.
Management Audit Checklist:-
It validates if the plans of a company are in sync with the company framework. It mainly consist evaluating the company plans and evaluating personnel.
a. Does the company have a vision?
b. Does the company have a written mission statement?
c. Are the objectives of the company in sync with the mission statement?
d. Do the employees understand the mission statement?
a. Is the pricing policy scientifically arrived upon?
b. Are target customer and potential market identified?
c. Are products/services upgraded and new ones introduced as and when required?
d. Are sales increasing?
a. Does the company have an annual budget?
b. Are the costs over budget?
c. Corrective measures taken for going over budget.
a) Is the job role clearly described in the appointment letter provided?
b) Does the employee know the organisational chart?
c) Is there a review procedure for employees?
d) Is there a reward programme for employee appreciation?
e) Are meetings held at regular interval with employees?
Operational Audit Checklist:- It measures the performance of the various functions of the organisation:-
i. How are the relations with the suppliers and what plans are in place to deal with them?
ii. Are various policies for inventory control and management in place?
iii. Are repair and maintenance of machine done at regular intervals?
iv. Training programmes in place for various production employees.
v. Documentation of production process
vi. Use of the best technology done or not?
vii. Environmental policies followed by organisation.
i. The sales and service policy of the organisation
ii. Who are the target customers?
iii. Who are the competitors?
iv. Revenue goals set are realistic or not.
v. Are goals achieved on time?
vi. Follow up file of prospective customers kept or not.
c) Advertising, Marketing and Promotional Strategies:-
i. Are company expenses for advertisement strategies within budget or over budget?
ii. Are the strategies effective in reaching out to customers?
iii. Are the advertisement messages clear and understandable to the target customers?
iv. Feedback of customers obtained or not?
d) Customer Service Checklist:-
i. Does the company have a grievance redress cell for handling customer’s problems?
ii. The timeliness of resolving grievances.
iii. Feedback system taken from customers after resolving problems.
Finance Audit Checklist:-
The purpose of finance audit is to validate that the set plans are effectively implemented to have an operational profit. It also sees if the statutory compliances are done on time and all interested parties to business are protected from fraudulent practises.
a) Statutory Compliances:-
i. All taxes are deposited and returns filed on time or not.
ii. Are all ROC matters are complied with?
iii. Documents are properly filed and systematically maintained.
iv. Have certificates/licenses been obtained?
b) Accounting and Financial Statements:-
i. Book keeping properly done or not.
ii. Do skilled staff handles accounts and finances.
iii. Chronological system of entry is followed or not.
iv. Ledger balancing is done or not.
v. Double entry system of book keeping is followed or single entry system.
vi. BRS and reconciliation of monthly statements done or not.
c) Evidence and Documentation:-
i. Vouchers are properly prepared or not.
ii. Third party confirmation obtained or not.
iii. Are account balance confirmation obtained at periodic interval.
iv. Vouchers are authorised by superior or not.
d) Analysis and Comparison:-
i. Cost benefit analysis done or not.
ii. Are Expenses measured against budget set?
iii. Authorisation of proper authority taken or not for expenses incurred.
iv. Comparison of statements with industry averages done or not.
These points mentioned above are not an exhaustive list; points can be added or modified to a checklist according to the type of Audit being conducted.
Apart from the above mentioned audits, checklists can be customised for various internal and external audit, inspection audit etc. It is a vital audit tool. It acts as a parameter for measuring the performance of the organisation and improving there on. Business must review their performances periodically against the set checklist, to remain competitive and sustain in the future.
CA Anuradha Biswas