Sole Scope af Audit & Conditions for

⑧ Prop . can determine

Audet
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Partial Anot shall be carred out

Only
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- Certain Parts of Al's shall Not be checked .

- Auditor tha also Prepare Final Stallment

of AIC
-
Audit Shall be carred out

Throughout the year or at the end of the

year only

In case of change of auditor, it would be duty of incoming auditor to

communicate with previous auditor.
 Audited accounts help in settling
Dispute Mitigation accounts between partners, reducing
disputes.

Provide a reliable basis for calculating

Advantages of Auditing Partnership Firm Accounts

Retirement/Death Settlements dues for retiring partners or the

estates of deceased partners.

Accepted by tax authorities for

Income Tax Compliance
income assessment.

Loan Acquisition Trusted by banks for loan approvals.

Useful in negotiations for selling the

Partnership Changes
business or admitting new partners.

Prevents undue advantage by working

Protection Against Mismanagement
partners.
 Review the name and style under
Business Conduct
which business is conducted.

Note any specified duration of the

Duration
partnership.

Examine capital contributions by each

Capital Contribution
partner and variability.

Understand the period for closing

Profit Sharing accounts and the profit or loss sharing
ratio.
Matters to be considered before starting audit

Check bookkeeping maintenance,

profit determination provisions
Accounting Provisions
(reserves, depreciation), and account
reopening terms.

Determine the partnership's borrowing

Borrowing Capacity
limits.

Note interest rates on capitals, loans,

Interest Rates
and drawings.

Review any salaries or permitted

Compensation
withdrawals for partners.

Management Identify duties and managing partners.

Determine who operates the bank

Bank Operations
account and surplus funds investment.

Understand limitations, rights, and

Restrictions and Rights
authority of partners.
 Ensure the audit appointment letter,
authorized by a partner, specifies the
Letter of appointment
audit's nature and scope, including
any limitations.

Study the minute book for policy

decisions, especially on
Partnership documents
Matters which should be specially considered in the audit

extraordinary and capital

expenditures.

Verify the partnership's business

Objects of partnership activities are authorized by the
of accounts of a partnership:

partnership agreement.

Examine if the books of account are

Books of accounts reasonable and sufficient for the
business's nature.

Ensure no partner's interest is

Mutual interest prejudicially affected by
unauthorized activities.

Confirm that provisions for the

partnership's tax liabilities are
Provision for Taxes
accounted for before profit
distribution.

Verify profits and losses are shared

Division of Profits according to the agreed profit-
sharing ratio among partners.
 Ensure entrance is via printed, serially numbered
tickets, with distinct tickets for each class and
separate series for advance bookings.
Ticket Verification

Confirm tickets are stored

securely by a responsible official.

Verify ticket sales statements

Sales and Cash Reconciliation post-show and reconcile cash
collected.

Check records for 'free passes'

Free Passes Record and their issuance under proper
authority.

Reconcile tax collected with

Tax Collection and Returns tickets issued per class and verify
monthly tax returns.
Audit Procedures for Cinema

Verify charges for advertisement slides

Advertisement Charges
against the Register of Slides and
Verification
advertiser agreements.

Vouch expenditure on advertisement, repairs, and

Expenditure Vouching maintenance. Ensure only extensive redecoration is
treated as deferred revenue expenditure.

Confirm appropriate
Depreciation depreciation rates on machinery
and furniture.

Vouch film hire payments with

Film Hire Payments distributor bills and reference to
agreements.

Examine unadjusted advances to distributors for

Advance Payments Review recoverability and inquire about unadjusted
advances for completed runs.

Inquire into restaurant income collection arrangements and audit

Restaurant Revenue restaurant accounts if run by the cinema, covering sales and purchases
of food items, cold drinks, cigarettes, etc.

Vouching involves examining documentary

evidence to confirm that transactions have been
correctly recorded and are substantiated by
accurate, valid documents that support their
occurrence, amount, and inclusion in the
financial statements for the relevant period.
 Vouch patient register against bill
copies, verify billing accuracy with
Register of Patients
attendance records, and ensure all
recoverable amounts are billed.

Compare cash book entries with

receipts, counterfoils, and billing
Cash Collection
evidence like patient bills and rent
bills.

Reference the Property and

Investment Register to confirm
Property and Investment
collection of rents, dividends, and
interest.

Ensure legacies and donations for

Specific Purpose Legacies and
specific purposes are applied as
Donations
intended.

Trace subscription and donation

collections from the Cash Book to
Collection Reconciliation
Registers and reconcile totals due
versus collected.
Audit Procedures for Hospitals

Vouch purchases and expenses,

ensuring capital expenditure and staff
Purchases and Expenses
changes are authorized by Trustees or
Managing Committee.

Account for government grants and

Government Grants and Tax Refunds
claim tax deduction refunds properly.

Compare actual expenditure and

income against budgeted amounts,
Budget Comparison
highlighting significant variances to
Trustees or Managing Committee.

Review internal checks on the receipt

and issue of stores, medicines, and
Internal Check on Inventory
equipment, ensuring proper recording
and authorization.

Confirm assets are depreciated at

Depreciation Rates
appropriate rates.

Inspect bonds, shares, property deeds,

Securities and Property Verification and verify entries in the Property and
Investment Register.

Obtain and physically verify a

percentage of year-end stock and store
Inventories
inventories, comparing totals with
ledger balances
GreenFarms LLP, an organic farming partnership, has a total turnover of
₹38 lakh and total contributions from partners amounting to ₹26 lakh for
the financial year 2022-2023.
 Check entrance fee receipts
Entrance Fee Verification against applications, counterfoils,
and committee minutes.

Match subscriptions with receipt

Subscription Reconciliation counterfoils and reconcile with
the Member Register.

Confirm accurate carryover and

Arrears Management adjustment of subscription arrears
and advance payments.

Verify accuracy of the Member

Arithmetical Checks
Register's totals.

Identify arrears, evaluate recovery

Irrecoverable Dues actions, and report irrecoverable
amounts.
Audit Procedures for Clubs

Confirm pricing accuracy for food,

Pricing Checks drinks, and services to members
and guests.

Ensure member accounts are

debited for all recoverable
Member Account Debits
amounts from services and
supplies.

Validate entries of purchased

Purchases Vouching
items into inventory registers.

Test sale prices against purchases

Gross Profit Rates to confirm gross profit margins;
verify and value unsold inventory.

Conduct physical checks of

Physical Inventory Verification
inventory against records.

Inspect investment documents,

Investment Review check current values, and confirm
safe custody.

Review and report abuse of

Management Power Examination secretary's financial powers to the
Managing Committee.
 Gain knowledge about the NGO’s
Understanding the NGO mission, vision, operational areas,
and environment.

Update knowledge on relevant laws

and regulations, including
Legal and Regulatory Updates
amendments and judicial decisions
relevant to NGOs.

Assess the legal form, Memorandum

of Association (MOA), Articles of
Organizational Structure Review
Association (AOA), and rules and
regulations.

Examine the organization chart,

financial and administrative manuals,
Operational Documentation Review
guidelines for projects and programs,
and budgetary policies.

Review minutes from

Board/Managing
Meeting Minutes Examination Committee/Governing Body
meetings for decisions impacting
financial records.
Planning the audit

Study the accounting system,

Accounting and Controls Evaluation procedures, internal controls, and
checks for their effectiveness.

Determine materiality levels for

Materiality Levels
auditing.

Plan the timing and nature of audit

Reporting Timing and Nature
reports and communications.

Consider the involvement and

Expert Involvement
reports of experts.

Analyze findings from the previous

Previous Audit Report Review
year’s audit report.
 Vouch contributions/grants with donor letters. Verify interest income
Corpus Fund
against Investment Register and physical investments.

Vouch transfers with donor letters and NGO board resolutions. Check asset
Reserves
sale transfers from capital to general reserve.

Review donor requirements, NGO

Ear-marked Funds resolutions, and specific fund
regulations.

Vouch disbursements and

Project / Agency Balances expenditures against donor
agreements.

Verify loans with agreements and

Loans
receipt counterfoils.
audit programme should include

Vouch acquisitions/disposals, depreciation, and

Fixed Assets authorizations. Check donor letters/agreements for grants
and title documents for immovable property.

Review Investment Register,

physical investments, approval for
Investments
transactions, and bank records for
principal and interest.

Physically verify cash and imprest

Cash in Hand
balances with account records.

Examine bank reconciliation

Bank Balance statements for
outstanding/unadjusted amounts.

Verify physical inventory and

Inventory obtain management certification
on quantities and valuation.

Verify agreements with donors to ensure compliance with conditions,

Programme and Project Expenses
including tax deductions and filings for contracted projects.

Confirm timely deductions, contributions, and deposits for provident fund,

Establishment Expenses life insurance, employee state insurance, and review other administrative
expenses like postage and travel.
 Audit of NGO
Receipts

Contributions and Fundraising Interest and

Membership Fees Subscriptions
Grants Program Receipts Dividends

Confirm donor agreements and Compare received Cross-check

Evaluate internal Match interest and
letters match recorded funds. fees against the Subscription
controls, identify dividends with
Ensure compliance with the Foreign Membership Register with investment records
Contribution (Regulation) Act for collection
personnel, and Register, receipts, ensure for accuracy.
foreign funds. differentiate fee distribution
verify daily bank
deposits. types, and reconcile matches
expected versus subscriptions, and
received fees. verify rates.

Include grants, donations, fundraising events,

advertisements, membership fees, technical/service fees,
subscriptions, gifts, and sales of produce/publications.

Donations and grants as promoter contributions are

Capital Receipts capital receipts, shown as liabilities on the Balance Sheet.
These can be corpus contributions or for a revolving fund.

Defined by Section 11(1)(d) of the Income Tax Act

Corpus Contributions 1961, these are not included in total income
calculations as they form part of the NGO's corpus.
Sources of Funds

Aims to rotate funds through temporary loans to

other NGOs or beneficiaries for projects, with the
Revolving Fund
option to add interest earned back to the fund or
credit it to the Income and Expenditure Account.

Sources and NGOs may receive

application of Donations for Fixed Assets contributions for acquiring
funds specific fixed assets.

Include assets like land, buildings, vehicles,

In-Kind Contributions and office equipment, plus articles for
programs/projects.

Funds are used for establishment costs, office/administrative expenses,

Applications of
maintenance, program/project expenses, charity, and
Funds
donations/contributions.
 Receipt of
Donations: Audit
Points

Internal Control Custody of Receipt Foreign

Receipt of Cheques Bank Reconciliation Cash Receipts
System Books Contributions

Assess Check issuance and Align bank Thoroughly vouch Focus on legal
Confirm receipt statements with
responsibilities for return of receipt cash donations; compliance for
book duplicates are cash deposit
collecting books, with physical verify donor foreign donations.
signed and detail records, including
donations, verification of information
cheque information date and amount,
managing receipt numbering. through
accurately. referencing receipt
books, and securing acknowledgment
funds. books. letters.

Remittance of
Donations to
Different NGOs –
Audit Points

Confirming Direct
Mode of Sending Identity Donation NGOs’ Selection
Receipt of Confirmation
Remittance Verification Utilisation System
Remittance Procedure

Ensure remittances Validate all Ensure donations

remittances with Confirm the Issue confirmation are used
are via account recipient NGO's Maintain an
receipts and letters to NGOs exclusively for the
payee cheques or unbiased selection
acknowledgments. legitimacy by receiving intended purpose.
demand drafts, verifying its system for
donations.
with detailed address and 80G choosing recipient
scrutiny of the NGOs.
Registration
recipient. Number.
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 Expenditure Audit
Major component of government audit

Audit against rules and orders

& Ensures expenditure is as per provision of Constitution, law and regulation and
orders issued by competent authority,
& It is also called regularity audit,
O Categories of rules, regulation and orders

Rules, orders related to

· power to incur and sanction expenditure from CFI or of a state.
· presentation of claims
procedures to be followed by government servants
· Conditions of service, pay and allowances and pensions of government
servants.

With respect to rules and regulation, it is not the function of audit to prescribe
what such rules, regulations and orders shall be.

Auditor has to check that whether rules, regulations and orders are applied
properly by the subordinate authorities.

Auditor will examine rules, regulation and order to see that

· they are not inconsistent with provisions of Constitution or any law
O
Consistent with requirement of C&AG.
·
Not in conflict with orders or rules made by any higher authority
②

The issuing authority possesses the necessary rule-making power

Regularity audit is quasi-judicial work

It involves interpretation of constitution, rules, regulation, law and orders
The final power of interpretation is not with comptroller and auditor general
of India
 Audit of sanctions
⑳ Ensure expenditure is covered by a sanction either general or special of a
competent authority

Audit against provision of funds

· Ensure expenditure is made for purpose for which grant was provided,
· Ensure it does not exceed the appropriation made
O

Audit against propriety

Expenditure should confirm the propriety principles

Propriety principles,

Expenditure should not be more than the occasion demands

Same degree of vigilance must be exercise for expenditure from public money as
a man of ordinary prudence would exercise in respect of own money,

Power of sanctioning expenditure should not be used by an authority For its

own advantage whether directly or indirectly

Public money should not be utilised for benefit of a particular person or

section of a community unless
O Insignificant amount,
O Legally justifyable amount. That is to say that amount can be enforced in a
court of law
O Amount paid because of a recognised policy or a custom

O
Any allowance for meeting expenditure should not be a source of profit for
- -

the recipient

Audit should bring to the notice of proper authorities the cases of improper
avoidable and ineffective expenditure
Performance Audit

It covers efficiency, economy and effectiveness

Also known as full scope audit

Efficiency, Audit
-

Checks whether scheme and projects are executed economically and are giving
results as expected

Economy Audit
Examine economy of acquisition of financial, human and physical resources.
--

Whether sanctioning and spending authorities have observed economy while

spending public money

Effectiveness audit,
appraisal of programs, schemes and projects with reference to planned
objectives and efficient utilisation of resources for attainment of those
objectives.

Efficiency cum performance audit Additional topic

-
-

Objective examination
Of financial and operational performance
Of an organisation, programme, authority
The goal is to identify opportunity for greater economy and effectiveness

Procedure for conducting performance audit

Identification of topic
Preliminary study
Planning
Execution of audit
Reporting
 Audit of
educational
institution

Other receipts,
Assets and
General Fee from students grants and Expenditures Compliances
liabilities
donations

General

Regulatory Minutes and

Framework Resolutions
Review Compliance

For schools or colleges,

examine the Trust Deed or Scrutinize minutes of the
Regulations to understand Managing Committee or
provisions impacting Governing Body meetings.
accounts.

Ensure compliance with

resolutions, especially those
For universities, review the concerning bank account
Act of Legislature and operations and expenditure
related Regulations. approvals.
 Compare entries in the Student Fee Register
with the Class Registers to ensure all
students are billed correctly.

Fee Registers

Implement a robust internal check system

for accurate fee demands.

Match receipt counterfoils with Cash Book

entries.

Receipts and Cash Book Reconciliation

Trace Fee Register collections to confirm all

revenue is accounted for.

Total the Fees Register columns to ensure

advance payments are carried forward and
Advances and Irrecoverable arrears
irrecoverable arrears are appropriately
written off.
Fees

Verify admission fees against admission

slips.

Admission Fees Scrutiny

Ensure admission fee is credited to Capital

--

Fund unless decided otherwise by the

Managing Committee.

Check that scholarships and concessions are

Concessions and Scholarships granted by authorized personnel according
to Managing Committee rules.

Ensure fines for late payments or absences

Fines and Penalties are collected or waived by authorized
authority.

Confirm hostel dues are cleared before

Hostel Dues and Deposits closing student accounts and refunding
caution money deposits.
 Audit of Other Receipts,
Grants, and Donations:
Key Steps

Rental Income Verification Endowments and Legacies Government and Local

Authority Grants

Confirm rental income Vouch for income from

against rent rolls and endowments and Cross-verify grants
related documents for legacies. received with grant
accuracy. memos.

Review interest and

dividends from Investigate any expenses
investments, including disallowed in grant
inspection of relevant calculations and
securities. understand the reasons.

Assets and Liabilities

Student Deposits Provisions and Inventory Verification

Arrears Management Endowment Funds
Inventory Control

Ensure student Check inventories

deposits (e.g., caution Confirm investments (furniture, stationery,
Report significant money) are correctly for endowments are Assess the efficiency of clothing, provisions,
overdue fees and classified as liabilities, segregated, with procedures for equipment) against the
dormitory rents to the not income, unless surplus income inspecting, receiving, and Inventory Register or
Managing Committee explicitly non- reinvested with the issuing provisions, prior year inventories,
for action. refundable. principal. foodstuffs, clothing, and and test check
equipment, ensuring all valuation of items.
expenses are authorized.

Audit of Compliances

Tax Refund Claims Separate Fund Accounts

Verify annual financial

Confirm claims for tax refunds on
statements, ensuring distinct
investment income (e.g., interest
accounts are maintained for
on securities) are made and
specific funds like the Poor Boys
recovered, leveraging the °
-

Fund, Games Fund, Hostel, and

institution's tax-exempt status. °
⑥

Staff Provident Fund.

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 Audit of Charitable Institution
Audit of
Charitable
Institution

Subscriptions
General Other Income Expenditure
and donations

Investment Special Income Tax

Legacies Grants Rent
Income Functions Etc Refunds

General

Trust Deed /
Constitutional Internal Control Income
Legal Compliance Regulations
Review Assessment Verification
Examination

Analyze the Ensure the Evaluate the Scrutinize income Review governing
institution's institution's effectiveness of sources, ensuring
-
documents to
-X

foundation management internal controls timely and confirm

documents to aligns with over financial accurate bank adherence to
understand its legal statutory transactions and deposits. specified
record-keeping.
-

and operational requirements. regulations and

°

framework. objectives.
--
 Subscriptions
and Donations
Audit

Receipt Cancelled Subscription

Subscription Receipt Book Collection Public Report
Issuance Receipt and Donation
Adjustments Audit Integrity Reconciliation
Control Scrutiny Records

Verify any Ensure robust Collect and Closely inspect Match the Assess internal
Cross-verify
changes in oversight over review all cancelled printed list of controls for cash
reported
membership unused receipt receipt books receipts against contributions collections,
subscription
fees during the books to from the audit cash book with total particularly for
and donation
period. prevent period for entries for collections public
totals with
misuse. completeness. anomalies. reported in fundraising
amounts
financial events, to
disclosed in
statements. guarantee all
public
funds are duly
recorded. documents or
charity reports.

Other Income
Audit
Procedures

Investment Income Tax

Legacies Grants Rent Special Functions
Income Refunds

Vouch received Verify dividends Review rent rolls Audit receipts Confirm tax
Confirm receipt amounts with and interest with and lease and expenses for refund claims for
amounts through correspondence counterfoils. agreements for events. investment
corresponding and official rent amounts income
documentation receipts. and due dates. deductions.
and information Check interest Verify ticket
to ensure all calculations on proceeds
legacies are fixed-rate accounting, Check
Obtain Cross-check rent
accurately securities. including for correspondence
certification of receipts with
recorded. returns. with the Tax
received grants cash book
from a entries. Department and
Ensure correct refund
responsible dividend receipt
official. calculations.
for investments
sold ex-dividend
or bought cum-
dividend.

Investigate
missing
dividends.
 Audit of Expenditure

Securities and Cash and Bank Special Purpose

Grants Payment: Salaries and Expenses:
Properties: Payments: Funds:

Vouch grants paid Ascertain funds are

Verify securities Check payments with
align with charitable Verify all cash and used specifically for
schedules and supporting
purposes within bank transactions. their designated
property inventories. documents.
institutional purpose
objectives.

Inspect securities, title

Confirm proper
deeds, and physically
Ensure no benefits to sanction by
verify movable
trustees, directors, or appropriate authority.
properties.
committee members.
 ID
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 Auditor’s
responsibility

Use Follow Audit

Obtain List of Comply with Apply Test Consider
Professional Auditing Documentatio
Records Standards Checks Materiality
Skills Procedures n and working
papers
The auditor Follow the Conduct the Factor in the
Employ audit using Implement test concept of
should acquire Accounting checks based Maintain
a list of the Standards (AS) professional generally materiality as
skills and accepted on the detailed notes
books and and Standards per the specific
expertise, auditing assessment of on the
records the on Auditing context of the
applying audit procedures. internal control evidence relied
Trust maintains (SA) as case.
tests tailored to procedures. upon and keep
and ensure mandated by all working
they meet ICAI. the case.
papers.
mandatory
requirements.

Notes forming part

of Working papers

Information and Judicial Written

Work Conducted Decision Making
Explanations Pronouncements Representations

Detail the audit Record explanations Note decisions List judicial Include certificates
work performed and and information made on various pronouncements issued by the client
identify the provided during the points throughout referenced in the and any
individuals audit, including the the audit. audit report management letters
responsible. sources. preparation. received.

Nature of
Working Papers

Completeness of
Evidence Basis Basis of Opinion Verification
Information

Audit working Highlight that the Ensure all Indicate that the
papers should show auditor's opinion necessary auditor tested the
the auditor's opinion considers the provided information and information's
is grounded in their information and isn't explanations accuracy and
examination. arbitrary. were sought to completeness, not
form the opinion. just relying on the
assessee's word.
 Confirm regular maintenance
Accounts Maintenance
in line with applicable laws.

Receipts - Verify accurate

Receipts and Donation representation in accounts and
proper application of donations.

Cash Balance and Check agreement with

Vouchers accounts on audit date.

Ensure all required

Document Availability documents were
presented for audit.
Maintain and update
Property Register register, rectify previous
audit defects.
Verify manager/trustee
Cooperation provided necessary
information.
Ensure funds applied
Proper Application of
solely for trust's
Funds
Points that should be taken into account

objectives.
while conducting audit of Trusts

Note long-standing
Outstanding Amounts outstanding and written-
off amounts.

Ascertain compliance with

Investments
Act regarding investments.

Identify any
Irregular Expenditures mismanagement or waste
of trust's assets.

Maintain within maximum

Trustee Number
and minimum limits.

Confirm regularity and

Meetings Regularity
documentation.

Check for any conflict of

Trustee Interests
interest in investments.

Determine any debt or

Trustee Financial
credit relations with the
Relations
trust.

Ensure proper accounting

Anonymous Donations and adherence to cash
donation limits.

Compliance with Previous Address previously

Audit pointed out irregularities.

Report any significant

Special Matters findings to relevant
authorities.
 Verify the legal framework under
Governing Legislation
which the society operates.

Determine the purpose as per its

Society's Object
foundational documents.

Check for compliance with FCRA,

Foreign Contributions
2010 if receiving foreign funds.
Points that should be taken into account while

Confirm registration under Income

Tax Registration
conducting audit of Societies

Tax Act for possible exemptions.

Understand controls for auditing

Internal Controls
donations and expenditures.

Assess policies related to donations

Accounting Policies
and grants.

Identify recognition methods for

Reimbursed Expenses donor-reimbursed expenses in
financial statements.

Investigate any official inquiries

Registrar Inquiries
and their audit implications.

Examine any unauthorized or

Irregular Expenditures
wasteful spending and its causes.
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