Transcript Particular - Indore

STOCK & BOOK DEBTS AUDIT
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Prepared by –
CA Gokul B. Rathi
COMMUNICATION WITH THE BORROWER –
M/s. ----------------------------
dated
------------------------------
__________________
Sub. :
Stock & Receivable Audit of ____________________ .
Kind Attention : Mr. ________ (DF/G.M. – Accounts & Finance of the Company).
Sir,
This is with reference to _______________ Bank letter No. _________________
dated ________________ regarding Stock Audit of the Company. You are requested
to provide the following information/ details so that the stock audit can be
commenced at the earliest :
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REQUIREMENTS –

Copy of Stock Statement submitted to the Bank as on the last day of the
previous month.

Statement of stock with sub contractors, if any

List of Debtors as on the last day of the previous month with bifurcation of
Debtors below 90 days and above 90 days.

List of Creditors as on the last day of the previous month – with bifurcation
as Creditors for Capital goods, Creditors for Raw Material, for expenses,
etc.

Copy of Tentative / Audited Balance Sheet as on 31/03/13
List of Advances from Customers as on the last day of the previous month.

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
List of Statutory Dues pending till date
REQUIREMENTS –

List of A/cs with other banks with their present balances

List of Fixed Assets

List of Unsecured Loans

List of Obsolete/ Non moving/slow moving Stock as on the last day of the
previous month.

Details of method of valuation of different items of stock such as
RM/WIP/FG, etc.

Copies of insurance policies obtained.

Copy of the latest sanction letter.
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BORROWERS’ PROFILE NAME OF BORROWER
NATURE OF BUSINES
TYPE OF INDUSTRY
MAIN PRODUCTS
ACCOUNT AT (BRANCH / ZONE)
CONSTITUTION
FULL ADDRESS – OFFICE
FULL ADDRESS – FACTORY
FULL ADDRESS – GODOWN
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BORROWERS’ PROFILE
CREDIT RATING (MARKS/ CATEGORY)
STATUS
DATE OF LAST INSPECTION
DATE OF CURRENT INSPECTION
INSPECTION BY
PERSON CONTACTED (MET AT SITE)
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GIST OF MAJOR OBSERVATIONS

Reconciliation of the stock statements submitted to Bank by
the Company with their accounting records.

Physical Verification of Stocks, excluding obsolete/ damaged /
defective goods, covering 100% of high value items, 50% to
75% of medium value items and 10-20% of low value items.

Valuation of Inventory at the cost price or market price
whichever is lower indicates both the cost and market price
with comments on weighted average purchase price of main
raw material.
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GIST OF MAJOR OBSERVATIONS

Condition and location of storage, godown – whether open or covered,
owned or rented. Verifying items in transit/lying with third parties/ on
consignment basis/ with processing houses/ customers warehouses.

Age, quality, holding levels and method of valuation of different items of
Inventory. Also Comparison with the Audited Balance Sheet as on 31st
March, ……….

Inventory management and control policies, method of procurement,
maintenance of records of issue and receipt of stock. Souring of Raw
Material and credit available. Proportion of Cash and credit sale and
average period of credit. Extent of purchases made from the sister/ allied
concerns and its genuineness.
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GIST OF MAJOR OBSERVATIONS

Age-wise and value-wise verification and evaluation of debtors /
Receivables . Reasons for non-collection of long standing debts, if
any.

Verification and evaluation of Sundry Creditors relating to stocks and
other creditors.

Verification & Correctness of registration/ modification of Bank’s
charge with ROC.

Sufficiency and currency of Insurance policies and risk covered.

General attitude of Promoters/ staff for safety of stock and
recoveries of receivables.
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GIST OF MAJOR OBSERVATIONS

Comments on overdue statutory liabilities.

Comments on demand/ supply and market for products of
Company.

Comments on maintenance of Excise Record in tune with Stock
Record

Examination of Shareholding Patterns etc.

Verification of A/c Statement to ascertain any diversion of funds
the
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FACILITIES ENJOYED
Type of Facility
Sanctioned
Limit
Ruling Limit
O/s. Bal. as on
Overdue
Cash Credit
Bill Discounting
Packing Credit
Term Loans: TOTAL FUNDED
Letter Of Credit
TOTAL NON- FUNDED
GRAND TOTAL
Whether consortium a/c. Name of Lead Bank
% of our Bank’s Share
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SECURITY POSITION
Particulars
Value as
on--Rs.
Basis
Perm.
Limit
Rs.
O/s. Bal.
as on Rs.
Stock
Debtors < 90 days
Debtors > 90 but < 120 days
(subject to margin)
Total
Tools, Dies, etc.
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CALCULATION OF DRAWING POWER AS ON
____________
Particulars
As per Stock
Statement of Co.
As per Physical
Verification
Stock
Less: Outstanding LC for RM
Stock as on ------------------
Debtors below 90 days
Total
Less: Trade Creditors / Advances from
Customers
Less: - Margin @ 30%
Add: Debtors between 90-120 days
considering margin of 50% (if any)
Allowable DP
Balance as on
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COLLATERAL SECURITY –
Particular
(Give brief particulars where
situated)
Area
Market Value Charge created
Rs Lacs
for
Rs Lacs
% to total
facilities
Property
Machinery
Others – FD, etc.
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INSURANCE & OTHER DETAILS–
Details of Insurance:
Policy no.
Name of
Unit
Assets
insured
Sum insured Risk covered Expiring on
a) Main Suppliers:
b) Main Customers:
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METHOD OF VALUATION OF STOCK –
a)
Method of Valuation: Stock as on
Stock
Method of
Valuation
Value Rs. in Lacs
Raw Material
WIP (Semi Finished)
Finished Goods
Notes –
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STOCK RECORDS
Sr. No.
Particulars
1
Whether Stock records are maintained up-to-date?
2
Whether the proper records of material sent out for processing
and received back are maintained?
3
Whether the records maintained permit tracking down the
movement of stock?
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% of consumption of Raw Material to Sales
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% of Wastage in process
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Whether reconciliation between RM and production is done?
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Whether the record of finished goods matches with that of the
excise record?
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% of Stores & consumables to RM Consumption
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Whether proper costing system of various types of stocks is in
place?
Remarks
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STOCK RECORDS
Sr.
No.
Particulars
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Whether amount of excise duty is added-up in Finished Goods?
If yes, what is that amount so added-up?
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% of slow moving, obsolete stocks & rejected stocks. Also give
details of major items under above categories.
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Whether such stocks are shown in the Stock Statement/s
submitted to the Bank?
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Whether a system for verification of various types of stocks at
periodical intervals is in place?
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Irregularities observed in physical verification of various types
of stock.
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Whether overstocking under any category is observed?
(Give comments as to the general norms of stock level for the
concerned industry)
Remarks
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STOCK RECORDS
Sr.
No.
Particulars
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Whether the material received for processing from clients is stated
in stock statement/s submitted to the Bank? If yes, what is that
amount?
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Any irregularity observed thereby the Drawing Power allowed by
the concerned Branch on the basis of the stock statement is more
than the actual Drawing Power.
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Whether segregation of stock as stipulated by the Bank is
maintained?
(Stocks under LC, Regular Stocks etc.)
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Physical verification of various types of Stocks:
(Give brief comments)
Remarks
Raw Materials, Finished Goods / Stores & Spares:
Work – in –process:
Whether the system for carrying our ABC analysis is in place?
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STOCK RECORDS
Sr. No.
Particulars
Remarks
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Give brief comments on the nature of stock-
a)
Whether special care is required to be taken for storage?
b)
Whether Raw Material/s is/are easily available?
c)
Whether easily marketable?
d)
Whether stocks stored are exposed to any type of risk?
Details of Slow/Non Moving Stock Sr. No.
Particulars
A)
Finished Goods
B)
Raw Material
Quantity
(Kgs)
Value
Rs.
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RECORD OF BOOK DEBTS –
Sr.
No.
Particulars
1
Whether proper records of Book Debts are maintained?
2
Whether the book debts represent only the sale of Finished Goods?
If no, then what it includes?
Whether a system to generate age-wise, party-wise book debts is in
place?
Whether the records of book debts maintained age-wise, partywise are matching with that submitted to the Bank?
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4
5
What is the basis of production? – Production on the basis of the
orders received, first produce & then sell or any other.
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Whether the associate concern/s are appearing as Debtors? If yes,
whether all these are proper, genuine trade transactions? If not,
then give the amount of such book debts not pertaining to genuine
trade transaction/s.
(Give comments only if the amount is significant)
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Whether a system for prompt recovery of book debts is in place?
Remarks
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RECORD OF CREDITORS –
Sr.
No.
Particulars
1
Whether proper records of Creditors are maintained?
2
Whether the Creditors represent only the Purchase of Raw
Materials, Stores & Spares? If no, then what it includes?
3
Whether a system to generate age-wise, party-wise Creditors is in
place?
Whether the associate concern/s are appearing as Creditors? If
yes, whether all these are proper, genuine trade transactions? If
not, then give the amount of such book debts not pertaining to
genuine trade transaction/s.
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5
Whether a system for prompt payments to creditors is in place?
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Whether the payments made to creditors during a particular
period matches with that of the Debit turnover in the account for
that period?
Remarks
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RECORD OF CREDITORS –
Sr.
No.
Particulars
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Whether the record of creditors matches that with the
creditors statement submitted to the bank? If no, state
irregularities observed.
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Give comments on whether the payment terms &
credit period is observed?
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Whether the system of sending “Balance Confirmation
Letter” is in place?
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Give comments on basis of placing the orders.
Remarks
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GENERAL INFORMATION –
Sr.
No.
Particulars
1
Whether Bank’s Hypothecation Board is displayed?
2
Whether Bank’s clause is included in the insurance policy?
3
Whether all the required risks are properly covered?
4
6
Whether the clause “Loss of profit” is covered by Insurance
Policy?
Whether all the locations where stocks of the unit are lying
are duly covered?
Is there an incidence of over and/ or under insurance?
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Whether system of monitoring of account/s is in place
8
Whether there are cases of diversion of funds? If yes, on
what account/s.
Give comments on Management – Labour relations
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Whether the assets taken as security other than stocks are
verified?
Irregularities, if any, observed while verifying the assets
other than stocks
Remarks
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GENERAL INFORMATION –
Sr.
No.
Particulars
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Irregularities, if any, observed while verifying the assets
other than stocks
Details of outstanding statutory dues viz. Excise Duty, Sales
Tax, Income Tax, ESIC, Electricity, Water Bills, Rent, rates
Taxes.
Whether the unit maintains any current account with any
other bank/s? If yes, with which bank/s? Whether
permission for the same is duly taken from the Bank?
Turnover/transactions of such current accounts with other
banks.
Whether the cash withdrawals from the account/s with the
bank are for genuine purposes?
Whether the borrower maintains the level of own funds/
unsecured loans including subordinated loans as stipulated?
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Details about factory layout, person/s responsible for factory
management, internal controls.
Remarks
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RECONCILIATION –
Type of Stock
(Lying at)
As per the records As per the Stock
maintained with the
statement
unit
Book Debts as per records verified
Below 90 days
Above 90 Days
Variance
Book Debts as per Stock Statement
as of
Below 90 days
% Of variance
Variance
%
Above 90 Days
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THANK YOU !!!!!!!
CA GOKUL B. RATHI, PUNE
M : 98500 41311
Mail : [email protected]
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