Experts' Guide plz:
One of our client Company books shows that their Petty Cash expenses for the FY 2010-11 is Rs.1 Crore. I have vouched petty cash book and there is no voucher without bill. The company's turnover is Rs.200 Crores.
I have ensured that there is no deviation u/s. 40A(3). But, I still feel that there is something wrong.
As an Internal Auditor, What are the type of queries I have to raise in this regard.
Experts' guide plz.
-Thanks in advance
-RAM
Try to analyse the petty cash expenses of same period for previous year and find deviations. If the deviations are more than the tolerable limit then try to trace out activities where the major expenses are booked. Try to know the reasons for such expenses, their validation, their authorizations and their knowledge to the management (all concerned levels). If anything wrong is going on then one or the other level of management will be unaware of it or else the authorizations and validations would not be proper.
check out the previous year ratio, Do analytical review procedure and check the TDS certificates if it is applicable on that expenses, and most important thing to check are they booked under Right Head.
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