Professional Documents
Culture Documents
Manufacturing Enterprises
Version 01 Revision 00
Key Steps
1.
2.
3.
4.
5.
6.
7.
Preparatory Action
Ledger Scrutiny
Provision
Reconciliation
Validation
Comparison
Final Output
Preparatory Action
a.
b.
c.
d.
e.
f.
g.
h.
Ledger Scrutiny
a.
b.
c.
d.
e.
f.
g.
h.
Verify if expenses provided for in previous period have been duly adjusted against
payments and not expensed again in the current period
Verify if routine / periodic expenses have been duly recorded (eg. payroll,
contracted labor, security, canteen, contracted transport, interest (expense), etc.,
Utilities viz. rent, electricity, telephone, etc.)
Verify if relevant prepaid expenses brought over from the previous period have
been charged / allocated to the current period as applicable.
Verify if annual expenses have been duly accounted or provided for (viz. insurance,
license fees, rates, taxes, annual maintenance contracts, etc.).
Verify if transaction entries were made on holidays.
Verify if all goods received have been recorded.
Check cash for negative balance.
Check inventory for negative balance.
Reconciliation
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Reconciliation
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
Validation
a.
b.
c.
Check cash payment and receipt vouchers for authorization and correct recording.
Check all debit / credit notes for authorization and correct recording.
Check whether both sides of the Trial Balance tallies.
Comparison
a.
b.
c.
d.
e.
f.
g.
Compare Gross margin and Cost of Goods Sold with previous period(s).
Compare Selling, Marketing and General (including Administration) Expenses with
previous period(s).
Compare Sales and Other Incomes with previous period(s).
Compare EBIT, EBITDA, Interest (cost), DSCR with previous period(s).
Compare Inventory, Receivables, Cash and other Asset items with previous
period(s).
Compare Equity, Outside long-term liabilities (Secured / Unsecured), Payables and
other current liabilities / provisions with previous period(s).
Compare Net Profit, Dividend (distribution), Reserves with previous period(s).
Final Output
a.
b.
c.
d.
e.
f.
g.
Thank You
For queries / concerns, mail :
gupta.satya.prakash@icai.org