Special Points in Audit of Educational Institutions
Auditing & Assurance
Rights and
Duties of the Auditor in case of audit of Educational Institution
The auditor of a Educational Institution has
a right to examine the books and vouchers of the business to enable his to
satisfy himself whether or not the balance sheet is drawn up, so as to exhibit
a true or fair view of the state of affairs of the business, according to the
best of his information and explanation given to him. To enable him to perform
his duty, the auditor should take the following steps :
1.
Examine the Trust Deed, or Regulations in the
case of school or college and note all the provisions affecting accounts. In the case of a university, refer to the Act
of Legislature and the Regulations framed thereunder.
2.
Read through the minutes of the meetings of the
Managing Committee or Governing Body, noting resolutions affecting accounts to
see that these have been duly complied with, specially the decisions as regards
the operation of bank accounts and sanctioning of expenditure.
3.
Check names entered in the Students’ Fee
Register for each month or term, with the respective class registers, showing
names of students on rolls and test amount of fees charged; and verify that
there operates a system of internal check which ensures that demands against
the students are properly raised.
4.
Check fees received by comparing counterfoils of
receipts granted with entries in the cash book and tracing the collections in
the Fee Register to confirm that the revenue from this source has been duly
accounted for.
5.
Total up the various columns of the Fees
Register for each month or term to ascertain that fees paid in advance have
been carried forward and the arrears that are irrecoverable have been written
off under the sanction of an appropriate authority.
6.
Check admission fees with admission slips signed
by the head of the institution and confirm that the amount had been credited to
a Capital Fund, unless the Managing Committee has taken a decision to the
contrary.
7.
See that free studentship and concessions have
been granted by a person authorised to do so, having regard to the prescribed
Rules.
8.
Confirm that fines for late payment or absence,
etc., have either been collected or remitted under proper authority.
9.
Confirm that hostel dues were recovered before
students’ accounts were closed and their deposits of caution money refunded.
10.
Verify rental income from landed property with the
rent rolls, etc.
11.
Vouch income from endowments and legacies, as
well as interest and dividends from investment; also inspect the securities in
respect of investments held.
12.
Verify any
Government or local authority grant with the relevant papers of grant. If any expense has been disallowed for
purposes of grant, ascertain the reasons and compliance thereof.
13.
Report any
old heavy arrears on account of fees, dormitory rents, etc, to the Managing
Committee.
14.
Confirm that caution money and other deposits
paid by students on admission have been shown as liability in the balance sheet
and not transferred to revenue.
15.
See that the investments representing endowment
funds for prizes are kept separate and any income in excess of the prizes has
been accumulated and invested along with the corpus.
16.
Verify that the Provident Fund money of the
staff has been invested in appropriate securities.
17.
Vouch donations, if any, with the list published
with the annual report. If some
donations were meant for any specific purpose, see that the money was utilised
for the purpose.
18.
Vouch all capital expenditure in the usual way
and verify the same with the sanction for the Committee as contained in the
minute book.
19.
Vouch in the usual manner all establishment
expenses and enquire into any unduly heavy expenditure under any head.
20.
See that increase in the salaries of the staff
have been sanctioned and minuted by the Committee.
21.
Ascertain that the system ordering inspection on
receipt and issue of provisions, foodstuffs, clothing and other equipment is
efficient and all bills are duly authorised and passed before payment.
22.
Verify the inventories of furniture, stationery,
clothing, provision and all equipment, etc.
These should be checked by reference to Stock Register and values
applied to various items should be test checked.
23.
Confirm that the refund of taxes deducted from
the income from investment (interest on securities, etc.) has been claimed and
recovered since the institutions are generally exempted from the payment of
income-tax.
24.
Verify the annual statements of accounts and
while doing so see that separate statements of account have been prepared as
regards Poor Boys Fund, Games Fund, Hostel and Provident Fund of Staff, etc.
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