Internal Audit Checklist – Part B – Internal Audit of Specific Functions – III
(5) Checklist for Operational and Administrative Expenses
Operating expenses include Office Expenses and Sales & Marketing expenses. Office expenses include accounting expenditures, insurance costs, legal fees, property tax, and depreciation of fixed assets. Sales & Marketing expenses include advertising cost, entertainment cost, sales brochures/ pamphlets, travel cost, etc.
Administrative expenses include security service, housekeeping service, telephone lines, photocopy machines, courier service, travel expenses, stationery expenses, hotel reservations, canteen expenses, subscription and professional expenses, etc.
Documentation
- Expense policy of the organisation.
- Purchase order/ contract/ agreement/ employment letter for expenses.
- Original invoice
- Purchase register/ attendance records, etc.
Legal Compliance
- Deduction and payment of TDS on expenses.
- Payment of service tax under reverse charge/ ESI/ PF.
- The payment in cash shall not be more than Rs. 20,000.
Authorisation Matrix
- Agreements, attendance records, requisition for procurement of service, and purchase of material.
- Opening of tender/ quotations
- Comparative chart of technical and financial biddings
Compliance with Accounting Standards and Standards on Auditing
- AS1, AS11, AS18, SA550, SIA18
Procedures/ Controls
Recording of Transactions
- Expenses have been booked properly
- Value of service has been recorded net of CENVAT credit
- Service tax liability shall be booked in separate heads
Quality/ Good Governance
Reporting
(6) Checklist for Fixed Assets, Depreciation, and Amortisation
Depreciation is the systematic allocation of the depreciable amounts of an asset over its useful life. Tangible assets are depreciated over the useful life of an asset whereas Intangible assets are amortised.
Documentation
- Fixed Assets Register
- Depreciation Rates Table
- Capital Budget
- Documentary proof of subsidy received
- Proof of installation and commissioning of assets
- Capitalisation Worksheet
Legal Compliance
- Tangible assets, Intangible assets, Capital work in progress, and Intangible assets under progress.
- Hoists and Lifts are properly maintained as per Factories Act 1948.
- Deduction & Payment of TDS for installation, fabrications, and commissioning of plant and machinery.
Authorisation Matrix
- Requisition for purchase of machinery.
- Opening of tender/quotations of purchase of machinery.
- Purchase order for the purchase of fixed assets.
- Comparative chart of technical and financial biddings.
- Quality check.
Compliance with Accounting Standards and Standards on Auditing
- AS6, AS10, AS11, AS16, AS18, AS26, AS28
Procedures/ Controls
- Fixed Assets
- Depreciation
- Under the Companies Act, 2013
- Under Income Tax Act, 1961
- Intangible Assets
Recording of Transactions
Quality/ Good Governance
Reporting