Internal Audit Checklist of Accounts Deptt.

Cash Vouchers \ Bank Vouchers

Check authorization of Cash Vouchers \ Bank Vouchers by a responsible person.

Check supporting Bills / Invoices
Check the correctness of the accounting head expense / income
Check for cash receipts signature /acknowledgement of cash recd.
Check that all the relevant columns of the Cash/ bank vouchers have been properly filled in.
Check that all the supportings to the Vouchers are crossed as cancelled after the payment.
Check that payments are made only against original supportings.
Purchase Vouchers

Check authorization of Purchase Vouchers by a responsible person.

Check the Purchase Voucher with the supporting documents like Bill / Invoice and the Goods Received Note(GRN).
Check whether the rates given in the purchase invoices are as per the purchase Orders raised/amendments to the
Purchase Orders/ approved by an appropriate authority.
Check whether payment has been made/Bill passed for rejected quantity of material as per the GRR.
Check whether a proper accounting head - expense has been debited.
Check that all the relevant columns of the Purchase Vouchers have been properly filled in.
Check that the PV is passed as per the terms given in the Purchase Orders.
Check that the purchase voucher is prepared only in respect of original Bills / Invoices.
Photocopies of invoices \ duplicate invoices should not be passed.
Check that the Bills / invoices are passed strictly as per the PO terms.
Journal Vouchers

Check authorization of Journal Vouchers by a responsible person.

Check the Journal vouchers with supporting Bills / Invoices /documents.
Check that supporting documents are duly approved by an appropriate authority.
Check the correctness of the accounting head - debit / credit.
Check that all the relevant columns of the journal vouchers have been properly filled in.
In case of contractors bills check that bills submitted by the contractors are supported by the Work Orders issued in
advance to the contractors. No bill should be passed unless supported by a/ WO and the value of the Bill should be in
agreement with the WO prepared. Check that the Work Orders are prepared in advance before the start of the work.
Check that the bills of the contractors are duly approved and certified for payment by the person responsible for getting
the work done i.e the user. All the bills must have Approval for payment in writing by the user on the face of the bill.
Check that all the supporting bills / invoices to a journal voucher are approved / certified for payment by the User
Department. The user Department should specifically put a remark on the bill for approval\ payment.
In case of contract jobs relating to labour supply the bills are to be supported by attendance sheets duly certified by the
Time Office.
In case of transporters bills - check the bills with the agreed rates and receipted copies of consignment notes.
Check the measurement books in case of bills for civil work and ensure that the Measurement books are signed and
checked by the Engineer in charge of the Work.
In case of running and final bills for civil work check that the civil engineer has checked and verified the measurements
and entries of all running and final bills are made in the Measurement Books.
Advance to Employees
Check the Trial balance in respect of Advance to employees to ascertain the amount outstanding in the name of each
employee. Find out the date since when the advance is outstanding to be settled and make a list if employees advances
that have not been settled for a long period.
Ensure that no further advance is given to an employee unless the previous outstanding advance is cleared by him.
Advance to an employee may be towards - Travel / Official work\ loan or a salary advance. Ensure that the recovery is
made from the salary of the employee when the advance taken by the employee is not settled by him within a reasonable
period.
Further check that the recovery of installments in respect of loan / salary advance is made correctly on monthly basis
from the salary of the employees.
Check and make a list of employees who have left the company and their full and final settlements have not been made
but debit balances are still appearing in their names in the Advance to employees account.
Confirmation of Balances

Confirmation of balances with the banks \ Lending institutions should be obtained on a monthly basis for the purpose of
preparation of bank reconciliation statements.
Confirmation of balances with the Creditors / Debitors should be obtained on a six monthly basis. The balances in the
Creditors\ Debtors Ledger account should also be reconciled with the balances as per the partys books on a six monthly
basis.
Debtors Ledger Trial Balance \ Debtors Ledger account
Check that the balance shown by the Debtors Ledger Trial balance agrees with the balance shown by the Debtors control
account in the General Ledger Trial balance.
Check the Agewise analysis of Sundry Debtors and comment upon it.
Check the Debtors Accounts that are stuck up for long and are doubtful of recovery.
Check the debtors accounts where legal cases have been filed / are to be filed and ascertain the progress in the legal
cases.
Carry out a scrutiny of various Debtors Account in the debtors ledger and check for the following :o Match the Debit and Credit entries individually.
o Give the break up of the closing balance - Invoice wise.
o Ensure that there are no such cases where the payments have been received for later bills and the earlier
invoiced are unpaid.
o Give a break up of the closing balance as above in (b) including the details of any debits on account of
debit notes raised on the parties.
o Prepare a list of Debtors account showing closing credit balances.
o Tally each debit with a corresponding credit to locate any under payment / over payment for any invoices.
Creditors Ledger Trial Balance/Creditors Ledger Account
Check that the balance shown by the Creditors Ledger Trial Balance agrees with the balance shown by the Creditors
control account in the General ledger trial balance.
Check the creditors account that are outstanding to be paid since long (unclaimed Creditors) and that can be considered
for a write back in the books of account.
Carry out a scrutiny of various Creditors account in the creditors ledger and check for the following.
o Match the Credit and Debit entries correspondingly.
o Give the break up of the closing balance Invoice wise.
o Ensure that there are no such cases when the payments have been made for later invoices and the earlier
bills are unpaid.
o Give a break up of the closing balance as above in i (b) including the details of any credits on account of
credit notes raised on the party.
o Prepare a list of creditors account showing closing debit balances alongwith the reasons for debit balances.
Comments or details should be taken from the auditee in respect of every single debit balance.
o Tally each credit with a corresponding debit to locate any over payment /under payment for any invoice.
Check all the Creditors Ledger Trial balance as given below for above details.
Suppliers
Contractors
Transporters
Others
Outstanding Liabilities
Check that the outstanding liabilities pertaining to the earlier years have been adjusted in the books of account.
Excise V/s Accounts Reconciliation

Ensure that a reconciliation statement is prepared on a monthly basis to reconcile the modvat / Cenvat balance in the
excise with the accounts balances.
Check if any old pending entry is appearing in the reconciliation statement.
Check the unreconciled / reconciled difference in the balances shown by the excise records and the accounts records.
TDS
Check that all TDS deductions are deposited in time with the government - check the monthly TDS statement and the
actual date of deposit with the TDS challans.
Check whether the TDS Returns are submitted in time with the Government.
Check that the TDS deductions are made properly from all the payees wherever applicable.
Budget V/s Actual - Expenses

Check the Budget V/s Actual position as on a particular date with the Budget statement for all the expenses - Fixed /
Variable overheads.
Check the Variances between the Budget / Actual figures.
Obtain comments on reasons for variances between the Budget V/s Actual.
Analyse the variances between Budget / Actual in terms of percentage.
Scrutiny of Ledger Account - Expenses / Others

Check that in case of expenses the distination between Capital and Revenue expenditure is properly made.
Check that proper account head has been used to debit the expenses.
Pick up a few entries from the ledger account and trace the entry to the Voucher and the supporting bills / Invoices to
ensure that the expense bills are properly approved / authorized and accounted for.
General Ledger Trial Balance / Revenue ledger Trial Balance

Carry out a scrutiny of the General Ledger Trial balance/Revenue ledger Trial balance and comment on accounts that
need to be reconciled like inter office account / Inter unit account etc.
In case of accounts like TDS Receivable / Interest Receivable/ Insurance claim Receivable / Margin money deposit with
banks ask for the break up / detailed statements of accounts and comment upon it.
In case of Creditors / Debtors account check that the amount as given in the General ledger agree with the balance shown
by the Creditors ledger Trial balance/ Debtors ledger Trial balance.
Check whether any special accounts like suspense account etc are appearing in the trial balance and carry out a scrutiny.

In case of other accounts carry out a review of the ledger of the account to locate any irregularity / reconciliation matter