Internal Audit Checklist for Production

Production includes  raw material process, including various stages like job method,, batch methods, flow methods etc and  packing material, testing processes. Wastages etc.

Internal auditor have important role to check  production planning document, production data sheet and instructionss,  capacity of machines, availability of raw material, co-ordination with lab department for sending sample and get approval for continuing production. Internal auditor check necessary documents of all the production process.


Here is the Checklist for Internal audit of Production department.




Production
Particulars Checked By Remarks
A General
Check that
1 Proper reporting is done by assistants to respective division in charge & further reporting by in charge to immediate boss
2 Proper listing of products with their respective codes and brand names
3 The record for no. of labour required to work at each machine for standard production is maintained as per given format
4 Calculation of idle time is done on percentage basis and in case the idle time exceeds 25% the reporting of the same to the higher management on daily/weekly basis with proper reasons
5 Calculation of overtime and recording of the same is done by the Production Manger and he further reports it monthly to the Unit head and the HR coordinator of the unit.
6 The total area covered by the production floor with its utility including storage for raw and finished goods is recorded in prescribed format.
B Machinery
Check that
1 Fixed Assets Register is maintained & updated in the prescribed format
2 Proper coding for each capital asset
3 New Machinery-
a The requirement of new machines can arise due to following reasons:
· Increase in demand
· Change in technology
· Change in product line
· Increase in production
b Proper assessment is done by Production Manager/In charge approved by the Unit Head
c Requisition to the purchase department is sent for further processing as per purchase and inventory policy of the Company based on Quotation Analysis.
d The new machines is properly installed in supervision of the Technical person and the Unit Head and the reporting of the same is done to the higher management after installation.
4 Capacity Analysis of machines is done in the prescribed format
5 The upkeep and maintenance of machine is done on regular basis so as to increase their life and proper track of the machine overhauling is maintained in the prescribed format.
6 Separate machine log book is maintained and updated
7 User manual/instruction kit of machines is displayed through charts and hoardings at various places of factory.
8 Machine maintenance chart is displayed and updated for each machine near by the machine itself.
9 Proper reporting of machine breakdown/shout down is done by production in charge to unit head with valid reasons
10 Shut down for more than 3 hours is reported to Unit Head which further reports to higher management
C Raw material
Check that
1 Need assessment is done by the Store-keeper and the authorization is done by the Production Manager/In charge.
2 Purchase of raw material is done as per the Purchase Policy
3 The Quality Controller properly verifies the quality of the raw material by taking samples and records the same in prescribed format.
4 In case the quality of the raw material is not of good quality, the reporting of the same is done to the Unit Head and higher Management .The whole lot of raw material is stored separately and Material Return Form is filled by the Store keeper, duly verified by the Quality Controller.
5 The raw material to the production is issued by the storekeeper/store in-charge after signing the issue slip. The production in-charge give its receiving through its initials on the issue slip after properly weighing the material issued.
6 The issue of raw material for production is on the basis of production plan which is based on demand & availability.
D PROCESS
Method of production followed by Company-
· Job Method
· Batch Method
· Flow/Process Method
· Uniform Method
E Finished Goods
Check that
1 The production Manager verifies the final product according to the standard production plan and records the same with deviations, if any in respect of quality and quantity both.
a Quantity Analysis is done by the Production Manager as set out in master chart of the particular product.
b Quality Analysis is done by the Quality Controller for the finished goods. The Master Card for the quality check is pasted at each such place where the production process is carried on.
2 Samples taken for above purpose are recorded in the quality check register. Verify the no. of samples taken per lot of production.
3 The finished goods inventory is maintained as per the Purchase and Inventory Policy of the Company.
F Wastage
Check that
1 Proper classification of wastage is done into Normal & Abnormal.
2 Classification as abnormal is done if wastage is occurred due to the following:
· Error in machine
· Raw material quality issues
· Power cut with prior information
· Labour mistake
· All other wastage which is not normal
2 The wastage is properly recorded in the wastage register/sheet on daily basis along with proper reasons and it is shown in the production MIS in the prescribed format.
3 The monthly average wastage is properly calculated and if the wastage exceeds the standard wastage than necessary steps to reduce the wastage are taken.

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