Audit Methodology - School (Trust)

Income and Expenditure Account:

Income 

The primary income of the trust has been arising from the tution fees collected from the students. There are also some other sources from which income has been generated to the school i.e, Building Rent, Liabrary Income and Misc other Income

1

Tution Fess

a)

Fees structure has been obtained from the officals as to Ensured that the income booked under the relevent head has been true, correct and in accordance with the applicable fee structure.

b)

Following documents have also been obtained from the client:

 - Signed summary sheet of Fees collected by the school throughtout the year.

 - Class wise reconciliation of Students (after considering relevent adjsutments)

 - Specimen of Fees Receipt

c)

Fee Receipt has been verified on sample basis as to Ensured that :

 - Proper fees has been charged from the student or not.

 - Proper segregation of fees in the reciept have been made or not.

 - Ensured that the fees have been charged throughout the year.

 - Ensured that the fees have been received within the precribed time limit ot not.

 - In case of any late fees, compliance of late fees policy has been checked.

d)

Reconciliation of fees has been made after considering the adjustments of Late fees or arrear, or any other concession.

e)

 In case of any concession or any other special privelged allowed to any student, Ensured that the grant has allowed by the authorised offical.

2

Building Rent

a)

Rent aggrement has been verified as to Ensured the rent income booked has been true and correct.

b)

Ensured that rent has been received throughtout the period.

c) 

In case of any arrear or short received, reason of such diffrences have been asked.

3

Library Rent

Library rent consists late fees collected from the students in case where book has not been submitted within the stipulated time.

a)

Ensured that the proper records of such income have been maintained or not.

b)

Proper calculation of fees has been made or not and also Ensured that the such income has been received or booked.

4

Miscelleneous Inome

Basically it consists of following income:

i.

Interest on Fixed Deposites

a) Ensured that the income has been booked against all Fixed Deposites.

b) Principal amount of Deposit, Rate of Interest and No. of Days have been verified from the Fixed Deposit Reciept

c) Reconciliation of income has been made or reconsile it with Interest calculation as per bank as well as per 26AS.

d) Interest certificate has also been obtained from the bank.

ii.

Interest on Saving Bank A/c

a) Ensured that the income has been booked is same as mentioned in Bank statement or Pass Book.

iii.

Dividend income on mutual funds

a) Ensured that the dividend received & booked have been true and correct.

b) Rate of Dividend and No. of Mutual funds has also been verified.

c) Same has been verified through Bank statement or Passbook.

iv.

Any other Income

Ensured that the income booked have been true and correct.

In case of any requirement, relevent documents has also been obtained.

Expenditure

1

Salary

In this head, salary given to teachers and other staff have been booked. Following work has been done as to Ensured that the above account has not been materially misstaed.

a)

Salary have been given to employees on the basis of their grade, salary structure have been obtained to Ensured that the expenses booked are correct.

b)

Official document of appointment and other documents regarding Leave structure, and any other perquisites given to employees have been obtained. 

c)

In case of joining and leaving, proper letter and authorised documents have been verified.

d)

Attendance of the employees have been obtained and checked on sample basis.

e)

Verified that the calculation of salary as to Ensured the no. of present days, leave allowed and salary given as per prescribed structure.

f)

Proper Reconciliation of salary has been made after considering relevant adjustments.

g)

Salary advise has also been obtained as to Ensured that the expense booked in the accounts and actually paid to employees are same.

h)

In case of any increment, proper letter of increment has been obtained and such change have been applied accordingly.

i)

In case of salary given to office staff, security guards, gardeners and any other staff, Ensured that the salary given to such employees are same throughout the period.

j)

In case where salary has been given in cash, verified that Salary register and Signed Revenue Stamp.

2

PF Contribution and ESI Expenses

a)

Ensured the compliance of applicable provisions of Employee Provident Fund Scheme, 1952 and Employee State Insurance Act, 1948.

b)

Verified that PF/ESI have been deducted for all employees and also Ensured that the same amount of employer's share have been made.

c)

Reconciliation of PF/ESI have been made.

d)

Verified that the amount of PF/ESI Contribution have been deposited within the prescribed time limit.

e)

Obtained the challans of PF and traced it with Bank statement and matched it with the amount of expenses booked.

3

Gratuity Expenses

a)

Ensured the compliance of applicable provisions of Payment of Gratuity Act, 1972/ Sec 10(10) of Income Tax Act, 1961.

b)

Verified that the proper calculation of gratuity has been made according to the provisions of the above mentioned act.

c)

Checked that the expenses booked as gratuity is true and correct.

4

Depreciation

a)

Ensured that the assets have been categorised as per the rules and provisions of income tax act, 1961.

b)

Verified that the calculation of depreciation (Rate of Depreciation, Number of Days and any other adjustments) have been made according to the applicable provisions of the act.

c)

Ensured that the depreciation on additions and deletions have been calculated as per the provisions of the act.

5

Any Other Expenses

a)

Ensured that the expenses booked in the books are properly authorised.

b)

Relevant vouchers have been verified on the basis of materiality.

c)

Ensured that the vouchers have been signed by the authorised signatories.

d)

In case of any discrepancies, relevant documents have been asked with the relevant supportings.

e)

Verified that the Service Tax, VAT, TDS Liability have been complied.

Balance Sheet

Liabilities

1

Contribution from Trust

a)

Ensured that the proper calculation have been made for the calculation of amount transferred to Capital Fund.

b)

Verified that the amount kept as set apart are being finalised after the consent of the management.

2

Reserve & surplus

 - Surplus of Income over Expenditure

 It has been verified that the addition made to opening reserve have been transferred from Income and Expenditure Account.

 - Gratuity Fund Reserve

 It has been verified that the addition made to opening reserve have been equal to the provision made during the period less gratuity paid during the period. 

3

Security Deposits

a)

ascertained that the security has been received only for the business purpose.

b)

Verified the conditions of security received.

4

Current Liabilities

a)

ascertained the nature of liability and the period since when it was standing.

b)

Verified that the liability standing should be made against the expenses of business nature.

c)

It has been Ensured that the liability consists majorly from last month salary, PF,ESI, TDS and Service Tax Liability.

d)

In case where liabilities were unchanged since the last reporting period, reasons have been asked from the management.

Assets

1

Fixed Assets

a)

Verified that the FAR has been made in accordance of the Income Tax Act, 1961.

b)

In case of addition and deletion, authorisation letter from the management has been obtained and check its accouting treatment in the books.

c)

Physical verification have been conducted as to Ensured the FA as per books and as per Inspection should be same.

d)

Vouhcers have been verified on random basis.

2

Investments

Fixed Deposits

a)

Addition and Deletion in FD'S have been verified through Bank.

b)

In case of new FD, authorisation letter by the management and FD Receipt have been obtained.

c)

In case pre matured FD, reason of such maturity have been asked.

d)

Balance confirmation have been obtained from the Bank and reconcile those balances with the books of accounts.

Mutual Funds

a)

Addition and Deletion in MF have been verified through Bank.

b)

In case of purchases, authorisation letter by the management and MF Reciept have been obtained.

C)

Balance confirmation have been obtained from the MF Companies and reconcile those balances with the books of accounts.

d)

ascertained that the Market value of that MF and verify its valuation.

3

Current Assets & Loan and Advances

i)

Cash and Bank Balances

*

Cash

a)

Cash has been physically verified.

b)

Cash certificate from the management has been obtained.

c)

Cash authorisation matrix have been asked from the management.

d)

Ensured that the revenue stamp have been affixed where amount of payment is more than Rs.5,000.

e)

Cash book has been verified as to find out the unusual transactions.

*

Bank

a)

Balance confirmation has been obtained from the bank independently and reconcile it with the balance as per book.

b)

Reasons of any deviation have been asked from the management.

c)

Bank statement have been obtained and checked to find out the unusual transaction and transaction of large amounts.

d)

Further clearance and statements have been obtained as to verify the uncleared cheques and cheques in hand.

ii)

Loans and Advances

*

Advances

a)

ascertained the nature of advances given and period since when it was standing.

b)

Ensured that the advances have been given should be for business purposes.

c)

Ensured that no advances have been given unnecessary without any justify reason. 

d)

ascertained that the goods/services have been received/ availed in future.

e)

In case where advances were unchanged throughout the period, reasons have been asked from the management.

*

Loans 

a)

ascertained the nature of loan given.

b)

Ensured that the loan has been given for business purpose.

c)

In case where loan has been given to any employee, conditions of such loan has been obtained and verified the compliance.

d)

Verified that the installments from the party have been received according to the repayment schedule.