Internal Audit Checklist for Production

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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
ParticularsChecked ByRemarks
AGeneral
Check that
1Proper reporting is done by assistants to respective division in charge & further reporting by in charge to immediate boss
2Proper listing of products with their respective codes and brand names
3The record for no. of labour required to work at each machine for standard production is maintained as per given format
4Calculation 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
5Calculation 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.
6The total area covered by the production floor with its utility including storage for raw and finished goods is recorded in prescribed format.
BMachinery
Check that
1Fixed Assets Register is maintained & updated in the prescribed format
2Proper coding for each capital asset
3New Machinery-
aThe requirement of new machines can arise due to following reasons:
·Increase in demand
·Change in technology
·Change in product line
·Increase in production
bProper assessment is done by Production Manager/In charge approved by the Unit Head
cRequisition to the purchase department is sent for further processing as per purchase and inventory policy of the Company based on Quotation Analysis.
dThe 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.
4Capacity Analysis of machines is done in the prescribed format
5The 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.
6Separate machine log book is maintained and updated
7User manual/instruction kit of machines is displayed through charts and hoardings at various places of factory.
8Machine maintenance chart is displayed and updated for each machine near by the machine itself.
9Proper reporting of machine breakdown/shout down is done by production in charge to unit head with valid reasons
10Shut down for more than 3 hours is reported to Unit Head which further reports to higher management
CRaw material
Check that
1Need assessment is done by the Store-keeper and the authorization is done by the Production Manager/In charge.
2Purchase of raw material is done as per the Purchase Policy
3The Quality Controller properly verifies the quality of the raw material by taking samples and records the same in prescribed format.
4In 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.
5The 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.
6The issue of raw material for production is on the basis of production plan which is based on demand & availability.
DPROCESS
Method of production followed by Company-
·Job Method
·Batch Method
·Flow/Process Method
·Uniform Method
EFinished Goods
Check that
1The 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.
aQuantity Analysis is done by the Production Manager as set out in master chart of the particular product.
bQuality 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.
2Samples taken for above purpose are recorded in the quality check register. Verify the no. of samples taken per lot of production.
3The finished goods inventory is maintained as per the Purchase and Inventory Policy of the Company.
FWastage
Check that
1Proper classification of wastage is done into Normal & Abnormal.
2Classification 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
2The 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.
3The monthly average wastage is properly calculated and if the wastage exceeds the standard wastage than necessary steps to reduce the wastage are taken.