SIDBI Venture Capital Limited

Main items (Summary)

SL. Items Frequency

No.
(A) General
1 General Review of systems and procedures relating to fi- Half-yearly
nancial and accounting transactions.
2 Management Information System and reports with specific Quarterly
reference to financial performance and perusing financial
statements
3 Whether company has Adequate licenses for software it Half-yearly
uses.
(B) Financial & Accounting
1 Review of Accounting Policies and any changes thereof Half-yearly
2 Debtors Age Analysis Quarterly
3 Cash Flow Statement Quarterly
4 Verification of Fund Utilisation Quarterly
5 Review of the extract of no-lien Account during the cur- Quarterly
rency of the disbursement.
6 Scrutiny of investments /deployment of Surplus Funds Half-yearly
(C) Administrative Expenses
1 Examine Administrative & other expenses Quarterly
2 Foreign Travel expenses Quarterly
(D) Personnel
1 Review of the terms of appointment (or alteration in such Quarterly
terms) of the top management of the Company including
changes if any.
(E) Statutory Compliance’s
1 Review of all Statutory deductions and payments covering Quarterly
accuracy of deductions, Timely payment and Filing of TDS
returns. Exceptions to be reported with type of dues, due
date, actual payment date, period of delay and reasons for
delay as per Company.
2 Maintenance of Statutory Books as required under Compa- Quarterly
nies Act such as Minutes Book, Register of Contacts, Reg-
ister of Members etc. Checking of compliance's of docu-
ments/returns to be filed with ROC.
(F) Associate/group Companies and Subsidiaries
1 Checking transactions related to associate/group compa- Quarterly
nies, if any, and the accuracy thereof, compliance of legal
requirements relating to the same.
(G) Compliance on observations made in Audit Report of previ- Quarterly
ous quarter.

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SIDBI Venture Capital Limited

BROAD SCOPE OF INTERNAL AUDIT

Frequency of Reports :

Internal audit team to visit periodically and make quarterly reports.

(A) General

1) General Review of systems and procedures relating to financial and accounting

transactions. Also to give suggestions regarding changes thereof.

2) Review of existing Management Information System and reports with specific refer-
ence to financial performance and perusing financial statements, for any observa-
tions. Also to give suggestions for changes thereof.

3) Review of actual performance as compared with budgeted performance (limited to

important areas of operations).

4) Review whether Software used by the Company is adequately covered under the
relevant Software licensing programme of the respective vendors (on a half-yearly
basis).

5) Review adequacy of Insurance for Hardware/Software (on a yearly basis).

(B) Financial & Accounting

1) Change in Capital Structure, if any

2) Examination of Capital commitments, contingent liabilities and Major one-off transac-

tion

3) Review of Accounting Policies and any changes thereof (on a quarterly basis)

4) Examination of the basic books of account requiring vouching of financial transac-

tions with relevant documents, records etc.

Coverage of books of account shall be as follows :

Books of account Coverage

(a) Cash Book All transactions above Rs. 1000/- in depth and
overview of other transactions. Physical cash
verification with book balance.
(b) Bank Book All transactions above Rs. 10,000/- in depth and
overview of other transactions.
(c) Sales Book Check basis of sales value of all range of prod-
ucts.
(d) Purchase Book In depth examination with purchase orders, quo-
tations etc.
(e) Journal All the transactions in detail
(f) Ledgers Scrutiny, six monthly. Also see control accounts
with subsidiary ledgers.

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SIDBI Venture Capital Limited

Books of accounts to be examined particularly from the propriety angle, besides sat-
isfying on the accounting and financial aspects.

5) Fixed assets accounting - Capitalisation of assets, Depreciation, Entries in Fixed As-

sets Register and Physical verification.

6) Sales realisation, collection of book debts, special concessions given to specific par-
ties and other aspects regarding debtors - Examination of aging of Book debts in ref-
erence to overdue book debts.
- Debtors Age Analysis

7) Review and analysis of Financial Results

A) Common size Statement - Balance Sheet (on a half-yearly basis).
B) Common Size Statement - Profit and Loss Account (on a half-yearly basis).
C) Ratio Analysis (on a half-yearly basis).
D) Cash Flow Statement (on a quarterly basis).

8) Verification of Fund Utilisation

Checking utilisation of inflow of funds from SVCL and other sources with reference to
the project in hand, accuracy thereof, reporting deviation, if any and reasons. Check-
ing accounting accuracy particularly with reference to Capital raised and Deferred
revenue expenses (on a quarterly basis).

9) Quarterly review of the extract of no-lien Account during the currency of the dis-
bursement.

10) Half-yearly scrutiny of investments /deployment of Surplus Funds.

11) Bank reconciliation - quarterly. Also, general review of bank facilities available

(C) Administrative Expenses

1) Study of procedures adopted by the respective departments at least once in a year,

any improvements thereon, if any.

2) General review of cost records, cost determination and allocation methods followed.

3) To examine Administrative & other expenses like Advertisement & Sales Promotion,
legal and professional, traveling and conveyance (domestic), rent and rates, etc.

4) Review of foreign Travel expenses on a quarterly basis.

5) To examine the purchase system with respect to Pre-ordering system, Indenting, In-
quiries Quotations, Comparative, Statements, Issue of Purchase Orders. Subsequent
Follow-up with respect to receipts and billings, other landing cost and charges, Stock
Records, etc.

(D) Personnel

1) Review of the terms of appointment (or alteration in such terms) of the top manage-
ment of the Company including changes if any (on a quarterly basis).

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2) At least once in a year, pay roll examination and payments to employees.

3) Review of the number of staff on the Companies payroll, new appointments (com-
pensation at cost to company) and layoffs (liabilities is any) - Quarterly.

4) Details of relatives of promoter group employed in the Company.

(E) Statutory Compliance's

1) Review of payments regarding statutory dues (PF, ESI), deduction of Income Tax at
source from various payments such as Salaries, Contractual payments, professional
fees, Interest etc. and other compliance. Accuracy of deductions, Timely payment
and Filing of TDS returns.

2) Checking compliance of other statutory deductions/payment such as Professional

Tax, Employee's Provident Fund, ESI etc.

3) Maintenance of Statutory Books as required under Companies Act such as Minutes

Book, Register of Contacts, Register of Members etc. Checking of compliance's of
documents/returns to be filed with ROC.

(F) Associate/group companies and Subsidiaries

1) Checking transactions related to associate/group companies, if any, and the accu-

racy thereof, compliance of legal requirements relating to the same.

Overall approach to be selective, touching upon various aspects of accounting from a

propriety angle and due compliance of systems and procedures in ensuring internal checks
and controls. The reports to be brief, but purposeful for management's consideration high-
lighting the areas of business stakes, requiring attention for improvements and meeting the
objectives of internal audit in the context of present business environment and expectations.

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