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HELP NEEDED!!!

27 July 2010

Hello every one..!!

I am to conduct an audit of a firm which is a works contract firm. It's main business is to take up contracts of pillar erections. I am little confused about how exactly should i go on with the audit. I have carried out audit for manufacturing and trading concerns. But i dont know what to check in the present firm...so any help would be appreciable...!!

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7 Replies

Shudhanshu Agrawal (Business) (2570 Points)
Replied 27 July 2010

According to me if possible before audit try to go through AS 7 properly. With the help of AS 7 you will understand so many things about contractor business

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(Guest)

be careful about the TDS compliances and you can also look after the compliance of the labour act and the works contract act. For eg. the employer of labourers will have to deduct ESI of the labourers.

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chetan nagpuria (article) (29 Points)
Replied 29 July 2010

Thank you for your replies..!!

If you could also tell me, whether there are other things than ESI of the labourers that i should observe carefully, It would help me a lot..!!

s.vaidyanathan (CA ) (119 Points)
Replied 26 August 2010

You could also refer AS-9 for Revenue Recogonition

CA dillip (Head Finance) (74 Points)
Replied 27 August 2010

Understand the business first and the linked to the Laws and Standards....... will be helpful to prepare Audit programme..........

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V P Narasimhan (Accounts Manager) (793 Points)
Replied 29 August 2010

Dear

TDS will attract for not only labour but also for machinery hiring for concrete work, Building equipments for RMC machines, Centering sheetsw etc., Get a gist from what are all they are hiring & TDS hv been deducted/paid promtly. If they have previous year's audit report obtain & go thro' it before conducting audit. In manufactuing industries U can quantify the items & its value. Here they will have BOQ (Bill of Quantity) & BOM (Bill of Materials) These two are the basic cost deriving element & to budget (if the company possess)This is not but quotation so the Billing shouldbe in line with that. Here RAB (Running Actual Bill) which willbe in a qumulative calue. If they have 3rd party involved in Certifying the bills. We hv to account Certified value only. All the best.

pooja Charkha (Partner) (22 Points)
Replied 30 August 2010

Hi, Follow the following steps 1. Understand the business carefully with all the aspects. For eg. Industry profitabilty, Customers, nature of contracts, milestones of payments, fund arrangements etc. 2. Study the previous year audit report 3. Study accounting under AS 7 4. Study also the income tax implication of AS 7 5. Broadly review current accounting system for eg. Recording of purchase of material, issue of material, cost tracking, accounting of milestone payments, contract payments etc. Notice that revenue is the concerned area in this business. All other are all around revenue. Also analyze fund arrangements for eg. Realted party loans, secured loan arrangements etc. 6. Review the TDS compliances For any furher query can contact me at prcharkha @ gmail.com or + 91 98909 34352. I have extensive experience in real estate audits. Can help you in practical issues.