Page 300 - CA Inter Audit PARAM

CA Ravi Taori
CNO Audit of Educational Institute-Collection Old Course -- (P16M)
ADE.20 Bhaskar CNO - ADE.040
Not yet asked in new course, but it is relevant
State any six important points to be examined by you, as an auditor, in verifying the correctness of bank
balance of an Educational Institution which deposits all its collection/receipt in separate collection account
of a bank.
Answer ➢ Verification of Bank Balance of an Educational Institution:
For verifying the balances lying with bank in collection account, the auditor should adopt following
procedure:
• Examine and compare the pay-in-slips with the entries in the ledger account of the
educational institute.
• Compare the entries in the ledger account with the bank statement.
• Check the casting, carry forwards and balancing of ledger account
• Review the bank reconciliation statement for its correctness.
• Scrutiny the subsequent period bank statement to ensure that items of reconciliation are
subsequently cleared.
• Verify the balance confirmation certificate.
Author’s Note
Key Words – Will help you recall the answer

Pay in slip --- Ledger Account---Bank Statement ---Ledger Balancing---Bank Reconciliation Statement-
-- subsequent period bank statement --- balance confirmation certificate

QNO Audit of Hotel- Old Course --
ADE.30 Bhaskar CNO - ADE.060 (P16M/N17R/SM20/SM21/M22R/N22M/M23M)
New Course—(SM25/M24R)
What special steps will you take into consideration in auditing the accounts of a hotel?
OR
As an auditor, what would be your areas of consideration while auditing the element of ROOM SALES
during the audit of a 5-Star Hotel.
OR
Pilfering is one of the greatest problems in any hotel and the importance of internal control cannot be
undermined. Explain.
➢ Law& Internal Control System–Internal Control
• Internal Controls –
Pilferage is Problem – ICS Important – Responsibility of Management – Success if Regular
preparation of trading & detailed investigation – if weak controls then use gross margin – if
discrepancy unexplained qualify

Pilfering is one of the greatest problems in any hotel and the importance of internal control
cannot be undermined. It is the responsibility of management to introduce controls which
will minimize the leakage as far as possible. Evidence of their success is provided by the
preparation of regular perhaps weekly, trading accounts for each sales point and a detailed
scrutiny of the resulting profit percentages, with any deviation from the anticipated form
being investigated. The auditor should obtain these regular trading accounts for the period
under review, examine them and obtain explanations for any apparent deviations.

If the internal control in a hotel is weak or perhaps breaks down, then a very serious problem
exists for the auditor. As a result of the transient nature of many of his clients’ records, the
auditor must rely to a very large extent on the gross margin shown by the accounts. As a
result, the scope of his audit tests will necessarily be increased and, in the event of a material
margin discrepancy being unexplained, he will have to consider qualifying his audit report.

➢ Major Income – Room Sales/Occupancy in Progress/Hall Booking / KOTs
• Room Sales –

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