Internal Audit...Doubts...Urgent Sir!!

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Rajesh (Querist)
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01 May 2011 Dear Experts,
I am about to attend an interview in a manufacturing company and if the interview is success full i would be joining in the middle level category.
So I PLEASE REQUEST ALL THE EXPERTS IN THE INTERNAL AUDIT FIELD TO KINDLY EXPLAIN ME THESE QUESTIONS SO THAT I CAN ANSWER THE PANEL IN A CONVINCING WAY.
If any of the experts think that some other question might be important for joining in the internal audit please enlighten me, i shall be greatful for all of them who guide me in this regard.
1)Can anyone explain me how is the internal audit done for purchase, sales and expenses in a manufacturing industry (in real)?
2)What are the factors considered by a company regarding PRODUCTION plan to be carried out through out the year at the beginning of a year?
3)Can anyone provide me a proforma report which can be given to the management as an internal audit report for the above.
4)How a company decides to go ahead of an Capital Expenditure?
5)Pls. explain me about Organisation Chart

Thank you and regards,

Rajesh.

V.Rajan

V.Rajan (Expert)
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03 May 2011 Better get a book on the subject "Auditing" so that it will be useful on the job.
From the Audit point of view ask for who is authorised to issue the purchase order. Since the cost and selling price depends on the purchase cost, the rates should be approved by operation Manager or GM. Ensure for the existence of proper system of inviting tender or quotations from atleast 5 parties. The purchase bills before payment should be supported by gate register entry, Stores Receipts, Inspection Report and finally purchase voucher is prepared by accounts deptt before accounting.
Sales and Production stock records are interlinked. Either stock entry is made from Delivery chalan and giving reference to the DC the sales bill is raised. The Company's approved sales rates to be checked with the sales bill. For all discounts given in the bill , it should be checked whether the buyers are listed in the respective discount structure approved by the company. For credit sales payments should be checked with the Company's credit policy.
Expenses vouchers must be approved by the competent authority, it should show the payee's name and head of account. Payees receipts (must be stamped if it is above Rs.5000/ Since payments otherwise than by cash for above Rs.20000/ will attract Income Tax reporting, it must be stopped by Internal Audit even before payment.

b) Production plan is not a subject for Internal Audit.It depends upon the Joint works of Sales Deptt and Production Deptt and the CEO. It gives total direction to the Organisation.
c)For Internal Audit the report can have the following major heads
1.Audit para number
2. Audit Point
3.Reply from Deptt
4.Further Audit Remarks
5.Final closure date of the point
Audit paras can have subnumbers like I.1, I.2..II.1,II.2....III.1 etc and all points grouped under the relevant headings.

d)Many companies do not follow any norm. But the capital cost should be analysed as per theories under the head "Capital Expenditure Decisons".
e)Normally, the CEO, comes under the BOard of Directors. Under the CEO, the production Manager, Sales Manger, Accounts Manager, HR& Admn would come, Each such divisions will have Senior/Junior Staff

Since it is a wide subject, practical experience by actually dealing the subjects alone will give you the full knowledge

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