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Wednesday, 21 September 2011

Explain the important steps or special points that an auditor should take into consideration while examining the accounts of manufacturing concern

Following are important points which an auditor should keep in view while auditing the manufacturing concern :

1. Adequate Staff :-
For the effective and good system of internal check in a large business there is a need of sufficient staff.

2. Use Of Printed Receipts :-
Printed receipts should be used for the cash received from the customer. Receipts should be prenumbered. Each receipt should be signed by the one or more than one officials. Unused books should b kept by the reasonable official.

3. Daily Deposit Of Cash :-
All the received cash should be deposited daily in the bank. Pass book should be reconciled with the cash book time to time.

4. Record Of Receipt :-
All the crossed cheques, drafts and money received should recorded daily.

5. Books In Proper Hand :-
Books of accounts and ledgers should be in the proper hands. The cashier and ledger clerk have no access to these books.

6. Personal Ledgers :-
By means of total accounts the personal ledgers should be proved and these should be kept under the control of reasonable officer.

7. Checking At Regular Intervals :-
There should be a surprise checking of stock cash and other balances at regular intervals by the responsible officer.

8. Payments :-
Cash for payment purpose should never be taken out of cash received. All payments should be made by cheque and these should be properly authorized.

9. Payment To The Employees :-
The payment made to the officials and officers should be supervised properly.

10. Cash Sale :-
Cash sale is also an important problem. There should be proper supervision that sales are made at correct price.

11. Instruction About Cash :-
To the staff member, specific instructions should be given for handling the cash receipts, payments, recording and checking.

12. Purchase :-
It is very important section for internal control. While checking the purchase all the inward invoices should be checked.

13. Protection Of Assets :-
Security measures must be adopted to protect the assets and property of the company.

14. Allocation Of Duties :-
The internal control system should prove that all the duties are performed by the employees which were allocated to them.

15. Dispatch Of Goods :-
Authority for dispatch of goods and evidence should be fixed there should be proper record and examination of the dispatched goods.

16. Separate Staff :-
There should be a separate staff on the duties of recording sales and sales return.

17. Checking Of Customer's Account :-
A responsible officer should examine the accounts sent to the customers. He should also collect the over due accounts.

18. Petty Cash Book :-
A man who is responsible for petty cash he must take a properly authorized voucher for the amount disbursed. So imprest system must be maintained.

19. Use Of Mechanical Instruments :-
To keep the accurate record various mechanical instruments like computers and other instruments should be used if possible.


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