Internal Audit Report
Per 15th Annual General Meeting held on
20.02.2011 I was appointed Internal Auditor of the Society for the year
2011-2012.
I reported to the members in the meeting that I would be out
of the country for about 5 / 6 months.
After coming back to India I started my internal audit on
06.11.2011.
On that date cash book was written only upto 31.10.2011 and
ledger posting was done upto 15.09.2011.
Even after completion of posting upto 06.11.2011 it was
observed some vouchers were yet to be passed. As a result cash balance could
not be verified.
I again started the audit on 17.11.2011 and on that date
physical opening cash balance of Rs.790.50 was verified & found to be
correct. Bank balance as per cash book was reconciled with the Bank balance
shown in the Pass Book.
I verified the
entries in the Cash Book and General Ledger from 01.04.2011 to 20.03.2012 and
found that the vouchers were all properly signed and posting was correctly
done. The relative cash memos / bills etc are invariably attached to vouchers.
01. Maintenance
of Accounts:
Double
Column Cash Book showing cash and bank account is maintained by the Society.
Along with the said accounts, Cres A/C on both debit & credit sides are
maintained. As a result there is no space left for drawing balance in cash
& bank A/C on daily basis. Only at the bottom of the page, cash & bank
balances are drawn in pencil.
It is
absolutely necessary daily cash & bank balances are drawn. This is
essential to monitor cash management effectively.
It is
therefore suggested Cres A/C should be removed from Cash Book and should be
located in General Ledger. As a result enough space will be available for
keeping a balance column where the daily cash & bank balances should be drawn.
Bank Reconciliation Statement
without mentioning any particulars is made in one side of the cash book in
pencil which could be understood only by the writer and without his help nobody
is in a position to follow it.
Whenever there is
difference in bank balance as per Cash Book & Pass Book, proper Bank
Reconciliation Statement should be prepared and kept in a Register.
It is also suggested monthly or
quarterly Trial Balance should be prepared from the extract of balances from
the Ledger & the same will establish arithmetical accuracy of the accounts.
Ledger Accounts:
All accounts relating to revenue
items (both income & expenditure) are opened.
Accounts relating to Assets (other
then fixed assets) & Liabilities are opened it there is operation in such
Accounts.
Opening balance have not been
brought forward, only debit & credit entries are posted from the Cash Book.
There is no column provided for drawing the balance.
I was told that at the end of the
year, opening balances from the earlier Ledger is brought forward and final
balance is drawn which ultimately finds place in final accounts.
If at any time, during the year,
information relating to any account/s is required by the Board, such
information is given after adding up the entries in the account in pencil and also
adding / subtracting the last year’s closing balance, if there is any. This is
not a very happy situation.
In the beginning of the financial
year, all accounts whether Revenue or Assets / Liabilities account should be
opened with the opening balance and ledger accounts should contain a balance
column where balance should be drawn, it will help monitor the movement in the
account & particularly sensitive accounts.
For Fixed Assets, no permanent
Register is maintained. Every year on a sheet of paper any addition/ disposal
and depreciation are recorded & typed out.
It is absolutely necessary a
permanent Fixed Assets Register cum Ledger is maintained.
02. Delay observed in banking the cheques received
from the members:
Unusual delays were observed between the date of receipt of
the cheques from the members and subsequent deposit of the cheques with the
bank. As savings banks interest is now caculated on the daily credit balance, it
means interest loss to the Society. Some of the examples of such delays:
Receipt No.
Date of Receipt Amount Date of banking
6082
5.5.2011
9000.00 27.5.2011
6083
9.5.2011
4210.00 27.5.2011
6084
9.5.2011 600.00 27.5.2011
6085
9.5.2011
1300.00 27.5.2011
6093
9.5.2011
1050.00 27.5.2011
6094
17.5.2011 1050.00 27.5.2011
6102
5.6.2011
3520.00 30.06.2011
6107
6.6.2011
3733.00 01.07.2011
6112
10.6.2011
2860.00 01.07.2011
6113
10.06.2011
1050.00 01.07.2011
6114
10.06.2011
6600.00 01.07.2011
6125
30.06.2011
4000.00 05.07.2011
6159
13.08.2011
300.00 23.08.2011
6164
14.08.2011
11563.00 23.08.2011
6165
14.08.2011
13600.00 23.08.2011
A good number of cheques for Rs.2500.00 each received
between 24.08.2011 & 28.08.2011 were deposited between 13th Sept
and 16th Sept, 2011.
These are only a few examples of delay. It is observed
whenever cheques deposited in large numbers just before the scheduled date of
deposits, delay happens. The Caretaker has to issue receipts and thereafter
fill up the paying in slips for banking. To cope with the bunching problem of
cheque deposits, some external assistance by a volunteer may be considered.
However, there are instances of delays even when bunching problem does not
exist.
As of
17.11.2011 , 15 persons deposited maintenance cheques of Rs.2500.00 each
without late fee. Effort should be made to recover the late fee charges.
03. TDS A/C:
TDS is deducted from the contractors’
bill before making payment to them. But the said TDS is not deposited in the
Govt.A/C within the statutory period.
Similarly quarterly returns to be
submitted to Income Tax Authority is not being submitted within the statutory
period.
I give below the time frame for
deposit of TDS and submission of quarterly returns as per requirement of I.T.O.
Tax deducted for all the months excepting From the month end within
the month of March 7 days in the following month
Tax deducted in the month of March within 30th April
It is compulsory for e-filing of quarterly returns to I.T.O.
as the Society’s Accounts are statutorily audited.
Quarterly Returns
For quarter ended 30th June 15th July
30th September 15th October
31st December 15th January
31st March 15th May
Deposits were never made within statutory period and there
are delays even upto 3 / 4 months.
Previously, the caretaker has to travel all the way to RBI
for depositing TDS. Now many local branches of nationalized banks accept TDS.
Further while depositing, care should be taken to correctly
fill up the PAN and assessment year, otherwise deductee will not get the due
credit in the assessment year for which he submits I.T.Returns.
For quarterly returns, if installation of special soft ware
and also training of the caretaker is required, it is suggested to file all the
pending returns through an external agency. During the current year only return
submitted is for quarter ended June. The returns for quarter ended Sept &
December, 2011 are overdue.
Incidentally as per
notification of I.T.O. delay in deposit of TDS & submission of quarter
returns attract penal charges.
04. Employees
Contribution for Welfare Fund:
Employees’ contribution is deducted promptly from their
salaries on the date of salaries, but along with Society’s matching
contribution were deposited in the RD A/Cs
of the employees after 3 to 5 months in some cases.
This causes interest loss
to the employees. The contribution should be deposited promptly.
Both TDS A/C & Employees contribution to welfare fund
being sensitive accounts, the same should be monitored by the Treasurer.
Further, as the last year closing balance in both the
accounts were not brought forward in the ledger and time to time balance in
those accounts were not struck, it causes difficulty to ascertain whether any
balance is outstanding which requires immediate action.
05 Cash Management:
There is a scope for improved cash management. Idle cash
balance should not be kept, because it does not earn interest.
The Board has already taken steps in their Board Meeting onb
11.11.2011 limiting the cash balance to be kept not more then Rs.2000.00. This
should be followed strictly.
The matter of concern is huge balances in S.B. A/C which attracts only 4% interest. Since
01.04.2011 to December, 2011 huge bank balance in S.B.A/C was maintained
varying between Rs.3 laks to more then Rs. 7 laks; only on one occasion i.e.on
16.01.2012 Rs. 6 lacs was transferred to Short-Term Fixed Deposit A/C.
The Secretary / Treasure should review every week the likely
expenditure to be met within next 15 days, 30 days & 45 days and thereafter
transfer the balance to short- deposit A/C with different maturity period. It
will ensure better return to the Society’s fund. They should be delegated power
to place the fund in short-deposit A/C if the said power is not there and after
placing they may report the matter to the Board.
06. Two major
items of expenditure are being carried out during the
period
under internal audit
i) Repair
of external surfaces of Residential Building & other
common
areas:-
The original estimated cost was
Rs.6.16 las, accordingly Rs.3,520.00 was collected from each member.
Building reparing work on daily
wages basis started on 13.03.2011 at Building No: 01. Damages being observed
were much more than what was estimated. Thereafter the budget was revised to
Rs.8.5 lacs necessitating further contribution of Rs.650.00 from members.
The work was being done on labour
contract basis, and supervised by the Society’s members / directors. As the
progress was slow,two modes of execution were adopted through departmental
labours on daily wage basis and the other through labour contract system,
materials being supplied by the Society in both the cases.
Repairs of 6 buildings were done
@Rs.45,000.00 per building. Others were done through departmental labour
employment.
Sinking Fund raised through
collection from members as under:-
1) From 162 members
Rs.3520.00 Rs.5,70,240.00
2) From 119 members
@Rs.650.00 Rs. 77,350.00
3) Amount yet to paid
Rs.86,330.00
4) Transfer from General Fund Rs.1,20,000.00
Rs. 8,53,920.00
Between 12.03.2011 to 06.03.2012
the following amount was spent:-
|
Sl.No.
|
Particulars
|
Amount(Rs.)
|
|
01.
|
Cement
|
1,05,294.00
|
|
02.
|
Sand
|
32,331.00
|
|
03.
|
Bricks
|
3,205.00
|
|
04.
|
Safety Belt & Helmet
|
4,066.00
|
|
05.
|
Pvc Pipe
|
800.00
|
|
06.
|
Coire Rope
|
3,383.00
|
|
07.
|
Tarpolin
|
2,000.00
|
|
08.
|
Sika Chemicals
|
29,286.00
|
|
09.
|
Buket
|
1,300.00
|
|
10.
|
Labour Charges Departmental
|
3,70,657.00
|
|
11.
|
Labour Charges (Dipak Contractor)
|
1,35,000.00
|
|
12.
|
Labour Charges (Haripada Gayen)
|
90,000.00
|
|
13.
|
Bamboo
|
16,265.00
|
|
14.
|
Miscellaneous (Hardware items)
|
8,238.00
|
|
15.
|
Supervision Charges
|
32,298.00
|
|
16.
|
Medical Expenses
|
3,505.00
|
|
17.
|
Labour Charges for small repair
at the time of painting
|
13,700.00
|
|
|
Total Expenses
|
8,51,328.00
|
Some repair work may be necessary
at the time of painting which is on going.
Incidentally I observe that in the
last year’s Balance Sheet as at 31.03.2011, Building Repairing (Work in
progress) Rs.79,435.00 was shown as an Assets item.
I trust that this is a temporary
arrangement & it was shown in the spirit of Deferred Revenue Expenditure.
When the work of repairing will be complete, the same should be removed from
the Balance Sheet and should be charged to Revenue account as against the funds
collected from the members.
Repairing of building is not for
any addition / or replacement but to keep the capital assets intact and
basically a revenue item. I trust that this will be discussed with the
statutory Auditor before finalizing the accounts.
07. Painting Works of external surfaces of Residential
Buildings &
other common areas:
Estimated budget as approved in
Half-Yearly General Meeting held on 23.10.2011 is Rs.16,60,000.00 necessitating
contribution of Rs.9,500.00 from each member.
Initially 3 companies namely ICI,
Asian Paints & Berger Paints were short listed. Technical / Tender
Sub-Committee supervised the process of Tendering & further negotiation.
Ultimately offer dated 28.12.2011
of Asians Paints was recommended to the Board by Technical / Tender
Sub-Committee as under:-
For materials cost Rs. 11,62,000.00
to be supplied by earmarked authorized dealer of Asian Paints.
Labour cost of Rs. 5,56,900.00
& a special discount of Rs.9,000.00.
Total estimated cost of painting
thus comes to Rs.17,09,930.00 subject to payment being made on actual
measurement basis.
For labour cost, work order has
been issued to one Mr.Prabal Kumar Das as the Applicator as recommended by the
Asian Paints.
Worl will be supervised by Asian
Paints for external surface, warranty is for 7 years.
Funds collected upto
20.03.2012 Rs.
Amount spent so far
Payment for paint on
15.03.2012 Rs.
5,00,000.00
Labour payment between 20.2.2012 to
15.03.2012
Rs.1,10,000.00
 |
Rs. 6,10,000.00
Painting work in progress.
08. Security Service
Deekay security was the security
service provider. Their services were not satisfactory and in spite of giving
them several opportunities, they failed to improve their services. Ultimately
they denied to continue their services. Their contract valid upto 30.04.2012
was terminated per Board Resolution dated 07.08.2011.Clarion Security was appointed upto 30.04.2012
on the same terms and conditions.
Clarion
Security has asked for a maximum period of 2 months for procuring licence to
run the business of Private Security Agency from the Home Department Govt. of
West Bengal. The Society got a copy of the certificate in Feb, 2012.
09. Board of Directors Meeting
During the period under internal
audit from 01.04.2011 to 20.03.2012 total 10 (ten) nos. of Board of Directors
Meetings were held:-
05.05.2011, 26.06.2011,
09.07.2011,07.08.2011,22.09.2011,11.11.2011,
15.11.2011, 19.12.2011,06.01.2012
& 20.02.2012
Number of Board of Directors
Meeting held are within the compliance of the Society’s New Act & Rules.
Audit observations in the
Statutory Audit Report of the Society for the year 2010-2011.
Separate sheet enclosed.
Finally, I thank the Board of
Directors & Shri Joydev Giri Caretaker, of the Society for their
co-operation & understanding in carrying out my task of Internal Audit.
(DILIP KUMAR MUKHOPADHYAY)
Audit observations in the Statutory Audit
Report of the
Society
for the year 2010-2011
As per Section 98 of the West
Bengal Co-operative Society’s Act and also as per Rules a Compliance Report
should be prepared on the Audit observations and submitted the same to the
Director of Co-operative Audit within 45 days from the date of the Audit
Report.
I have been informed, no such
Compliance Report was submitted in the last few years. However, observations
were duly attended and the position was shown to the Auditor.
Although there are no major
irregularities observed still as per provisions of the Act & Rules, Compliance
Report should be prepared and submitted to the Director of Co-operative Audit.
The draft Compliance Report should be approved by the Board.
I summarise the observations /
suggestions which require response from the Society.
i)
Transfer of Flats:- Prior permission to be obtained from the
Society as per Acts 2006 and Rules 2011.
ii)
Investments of Rs.64,75,000.00:- a) Fixed Deposits were
physically verified except one for which photocopy of original certificate
seen. b) Interest on Fixed Deposit should be checked and verified by the
Society in regular intervals.
iii)
Maintenance Charges Receivable:- Penal interest @2% on dues of
Maintenance Charges was not accounted for. As well as the outstanding of car
parking charges / Service Charges from letting out of flats was not also shown
in the account. They are accounted on cash receipt basis.
General /
Suggestion
The Society is
maintaining the Membership Register.
i)
In a few cases signature of members are not found in the
Membership Register.
ii)
Name of the nominee should be filled up properly
iii)
The Register is damaged / torn in some places were photograph
pasted.
My
Suggestions:
It is observed that in many cases,
where there are joint owners, signature of one owner is missing. Some of them
are residents too. To start with atleast residents’ signature can be obtained.
For non residents letters / e-mail may be sent. Similar is the case with
nominees.
It appears when the Society was
formed photographs of the large number of members were pasted at a time but
before raw gum was dried up, the Register was folded & this caused damage
to the photographs.
Members
may be requested to give another photograph. For this, exercise can also start
with the resident members.
For pasting the photographs,
instead of liquid gum, adhesive like FEVI STIK should be used.
For the purpose, of action I
compile separate list for I) Signature missing ii) Nominee missing iii)
Photograph damaged (IV) photographs missing.
Excepting signature were physical
presence of the signatory is necessary, the name of nominee and photograph can
be obtained through letters from non residents.
Signature Missin
Mr.Amitava Roy 1/9
Ms.Rinku Chowdhury 2/7
Mrs.Sulekha Chakraborty 2/15
Mrs.Snehalata Purkayastha 3/3
Mr.Sujata Bagchi 3/5
Mrs.Jayanti Chatterjee 3/6
Mrs.Ranjita Banerjee 3/15
Mr.Aranayak Maitra 4/2
Mr.Debotosh Lodh 4/6
Mr.Prabir Kumar Roy 4/14
Mrs.Pratima Kundu 5/6
Mrs.Subhra Ghosh 5/9
Mrs.Krishna Patra 6/2
Mrs.Saswati Dutta 7/9
Dr.Anandinath Archarya 7/13
Mr.Debasis Chakraborty 8/4
Dr.Gour Gopal De 7/4
Mr.Mahesh Kumar Balasaria 10/1
Mrs.Subhra Das
11/3
Dr.Ranu Roy(Biswas ) 10/4
Mr.Avijit Roychowdhury 7/14
Mrs.Mrinalini Das
5/4
Mrs.Sharmila Mondal 3/1
Mr.Swarup Ghosh 7/1
Mrs.Subha Bhattacharya 3/10
Mrs.Sandhya Jalan 10/13
Nominee Missing
Mr.Aranyak Maitra
4/1
Mr.Debotosh Lodh 4/6
Mrs.Pratima Kundu
5/6
Mr.Debasis Narayan & Mrs.Rupa
Narayan 6/13
Dr.Anandinath Acharya &
Mrs.Mary
Anthoney Archarya
7/13
Mr.Debasis Chakraborty 8/4
Nargis Sattar Hossain
8/6 after the death of the
nominee, new nominee
is required
Dr.Gour Gopal De
7/4
Mr.Mahesh Kumar Balasaria 10/1
Mrs.Shipra Verma 11/11
Dr.Nirmalendu Sarkar &
Dr.(Mrs.)
Ranu Sarkar 7/16 nominee other than
Joint holder
required
Mr.Bankim Mondal & Mrs.Sharmila
Mondal 3/1
Mr.Swarup Ghosh
7/1
Mrs.Sandhya Jalan
10/13
Photograph Damaged
Mr.Kushal Roy 7/6
Dr.Dipak Chanda (Since Died) 8/11 nominee Mrs.
Sudhakhina
Chanda after transfer of
property in the name of the
nominee, fresh nominee
along with photograph will
be required. It appears some
fallow up action is necessary
Mr.A.K.Saha 4/11
Col Shiv Sharma
1/1
Mrs.Bharati Dey
1/3
Mr.G.B.Thakur &
Mrs.S.B.Thakur 1 /2
Mr.Sisir Kanjilal & Mrs.A.Kanjilal 2/6
Mr.A.N.Dutta
2/10
Mrs.Sulekha Chakraborty 2/15
Mr.Arun Kumar Bhowmic 3/2
Mr.Satyendra Purkayastha 3/3
Mr.Dilip Kumar Banerjee 4/7
Mr.Sunity Bhattacharya 5/11
Mr.Basubev Mukherjee 5/12
Mr.Samareswar Sen 6/1
Mr.S.K.Patra
6/2
Mr.P.K.Mukherjee &
Mrs.Sumita Mukherjee 6/3
Mr.Debasis Das
6/7
Mrs.Rama Majumdar 6/10
Mr.Debasis Narayan 6/13
Mr.M.K.Balasaria
10/1
Dr.Niranjan Bhattacharya 10/5
Mrs.Shikha Bhadra 11/6
Group.Capt.S.B.Majumdar 11/8
Mr.P.K.Ghosh
11/10
Mr.Rajender Singh 11/12
Mr.Debabrata Guha Majumdar 5/10
Mrs.Mita Banerjee 7/2
Mr.P.B.Majumdar 7/11
Photograph Missing
Dr.Rudrabhan Chatterjee &
Mrs.Jayanti Chatterjee 3/6
Mr.Asit Kumar Banerjee &
Mrs.Ranjita Banerjee 3/15
Mr.Debotosh Lodh 4/6
Mrs.Prakriti Ghosh 4/10
Dr.Satish Dasgupta 6/11
Mr.Pranoy Dutta &
Mrs.Saswati Dutta
7/9
Dr.Anandinath Acharya 7/13
Dr.Gour Gopal De 7/4
Mr.Udayan Mukherjee 9/11
Dr.Asoke Gangopadhyay 1/8
Mrs.Mrinalini Das 5
/4
Mr.Swaroop Ghosh 7/1
