Checklist for Audit of Expenses for Manufacturing Companies

Direct Expenses

** Expenses vouching

** Expenses for Fuel consumption

** Freight and forwarding Expens analysis – relating to RM

** Cut off procedure

** Variance analysis

Indirect Expenses analysis and vouching

** Cut off procedure

** Variance analysis

Persoanl Expenses of Director

*Travelling Exp and conveyance ledger analysis

* Foreigin Tour Ledger Analysis

Capitalization of freight and custom duty

for Import Machinery

* Freight ledger analysis

*Machinery Ledger Analysis

Prior Period Transaction Verfication– Cut off procedure (Expenses and Incomes)

**Analysis of Cash ledger

** Find out the expenses in cash book which are relating to previous financial year

** Purchase account analysis

** Stock ledger and GRN analysis

Prepaid Amount Verification

** Prepaid expenses calculation sheet

** Ledger analysis

**Freight

**Custome Duty

**Any other Expenses

Revenue / Capital Expense analysis

** Find out the freight and other expenses for capital goods in profit and loss account .

** Find out the revenue expenses have been debited in the Asset account

The following ledgers can be taken for analysis

** Freight ledgers

** Custom duty account

** Prepayment custom duty account

** Asset repair and maintenance expenses

** Asset account and other assets account.

** Finally capitalize all the expenses in the PL which are relating to capital nature

** Finally decapitalize all the expenses in asset account which are relating to revenue nature

Electricity Expenses

** Monthwise breakup for all payments

** Check whether there is any interest receivable for deposits

** Check whether there is any deposit adjustment during the year for the current year consumption.

** Match with TDS receivable certificates and for Interest receipt for the interest from electricity board

Royalty Calculation and Agreement Verification

* Net Sales to be consider for calculation

* Net sales excludes of Taxes and import component of RM and freight and Sales return.

* TDS

*Payment of TDS and Service tax to be verified

*Check RBI cess on gross royalty and taking the servie tax credit

Financial Charges

** Break up of Expenses and detailed interest calculation Workings

** Wheather any default in repayment of interest

** Check whether provision for March in the OD account