Fund Account - Kindly Help - Urgent

Originally posted by : Rahul
	Dear Friends, Currently I am doing the audit of an educational institution. They are having a lot of earmarked funds and a lot of corresponding FDs.(The previous year audit was done by another auditor). 1) As per the last balance sheet the total of funds and the corresponding FDs differ ... Should it be the same..? 2)How should I treat the current year interests received.. What are the entries... ? 3)How to make the entries for the payments made out of the fund? KINDLY HELP

 It is not necessary that FD's and funds should tally.  It is to be understood that FD's are made out of funds received.  balance amount may be in any other form say bank account.  it depends on the memorandom and policy of organisation.

It is advisable to go through the policy throughly.

Each funds may have a seperate objective.  while auditing these funds, an auditor shall audit whether the funds are used for their respective purpose.

Interest received or accumulated shall be credited to the respective funds and payments shall be debited to the respective funds..

Another important statutory aspect is TDS.  The bankers may deduct TDS if interest are credited to the bank  acoc*nt.  Therefore, to get the clear picture a statement showing the amount deposited, interest thereon, and actual interest received.  By preparing the statement TDS deducted may be known.