I am auditing the books of a charitable institution and it provides hostel services to the students…
I am auditing the books of a charitable institution and it provides hostel services to the students of the Chartered Accountancy course for a sum of Rs. 500/= per month. What are some special points that I should consider?
Consider these points while performing your audit of such institution.
(i) Study the constitution under which the charitable institution has been set up whether under the Society Registration Act, as a trust or as a company limited by guarantee. Verify whether it is managed as contemplated by the law and rules and regulations made thereunder.
(ii) Examine the internal control structure particularly with reference to admission to hostel, expenses incurred on different kinds of activities.
(iii) Verify the broad nature of expenses likely to be incurred with reference to the previous year’s annual audited accounts.
2. Verification of the receipts
(i) Check the amounts received on account of, monthly rentals, etc., and receipts issued for the same.
(ii) Ascertain that there is adequate internal control over the issue of official receipts, custody of unused receipt books, printing of receipt books, etc.
(iii) Cross - tally the rent received along with the number of students (from the student register) staying in the hostel during the year.
(v) Check the amounts received from additional services rendered like guest fees, receipts for breakage, fines, penalties, etc.
3. Verification of expenses
(i) Check the day-to-day administration expenses incurred along with the necessary vouchers, supporting for the same like salary registers, repairs register, etc.;
(ii) Verify whether the expenses incurred are in conformity with the budgets prepared internally or filed with the relevant authorities.
(iii) Check the amount spent on provisions of hostel facilities with reference to bills, etc.
(iv) See that whenever heavy expenditure has been incurred on renovation of the hostel, computer centre, etc. the same is accounted for properly. (if such facilities are being provided by the hostel)
4.Verification of Investment:
Verify investments made from surplus funds as well as existing investments by physically verifying the same and that they are in the name of the institution and that there is no charge/pledge against the same.
Verify all capital expenditure and expenditure on repairs, etc., incurred with the vouchers and also whether proper tenders, etc., were invited for the same. See that all furniture, lass, cutlery, kitchen utensils, liner, etc. are adequately depreciated.
6. Library Facilities:
See that proper library register are maintained. The system regarding issue and receipt of books is in order. Late fee fines and money received on account of lost book is accounted for properly. Obsolete books are written off only after proper authorisation. Expenses incurred on newspapers and weekly magazines as compared to Journals and periodicals have been accounted for properly.
7. Allocation of Resources on Additional facilities:
Check the provision of other additional facilities like computer facilities, etc. Ensure that proper registers are maintained for charging fees, based on monthly or hourly basis. In case such facility is extended to each room, whether the charges are payable on lump sum basis or on actual usage basis. Also ensure that amounts spent have been allocated properly.
8. Exemptions and deductions:
Verify whether the institution is eligible for income tax exemption and if not, whether provision for taxation has been made.
You marked successfully unsatisfactory answer
Please mark your satisfactory level...
My Dear ,
I thank you for marking the answer as satisfactory.
I have noted.
It will be very nice and helpful to our other members (and the answerer too) if you mark your satisfaction level on the grade scale below.
Please feel free to mark any point. I don't share it with anyone. I use it for doing my internal calculations only. I use these calculations to evaluate the service performance of the relevant virtuoso.
Here is the grade scale:
Please hit on Submit to save your choice
Virtuoso could have given a better solution.
I am satisfied with virtuoso's answer.
An excellent answer I am impressed.
I will ask my next question to this virtuoso only.
Anu, Thakurani's bestie