I notice that they do not really have controls set in for the power plant. Maybe they will update their next year's annual report to take care of that. Another control not mentioned here is the check on raw material procurement price. After all, if mill procure at less than the State Advisory price, they may be legally liable for penalties. These instances do not seem captured but otherwise the controls do seem robust, and more than that, the company's confidence in disclosing that is to be commended.
These are done by any decent internal audit firm and include
- Checking of Accounts vouchers on test check basis
- Physical verification/analysis of inventory and of Surplus, Discarded and Non moving stock
- Checking of Store Ledger with respect to timely accounting of Receipts and Issues of Material
- Reporting on overdue debtors of Sugar, Molasses, Press Mud & Organic Manure
- Review of Statutory dues and timely filing of Returns
- Checking of Excise and Service Tax Reconciliationsfor timely availing input credit in eligible cases. Umpteen companies are mired in this litigation for credit. They are taking preemptive measures.
- Pre Audit of Purchase and Work orders issued from units & Post Audit at Corporate office Noida. It is good that they are following good capital budgeting practices of pre audits.
- Verification of system of recording all incoming materials including freight incurred thereon
- Review and reporting on material sent to outside parties for repair/ Jobwork
- Review of Inter unit and Inter Company Material in Transit cases
- Checking and reporting on Employee’s Imprest debit balances.
- Checking and reporting on Excess Interest chargedby Bank on OD/ CC Accounts
Sugar Industry Specific measure
- Reconciliation of Empty Sugar Bags-I guess this would be with the packaging material consumed
- Checking of Tools & Tackles issued to Employees &Contractors.
- Surprise checking of dispatch of Sugar, Molasses, Bagasse and Press Mud on Sample basis. Dispatch being Govt controlled, compliance with schedules are necessary
- Surprise check of Cane Centers, records maintained thereat and review of Cane control, checks & MIS reports. This guards against tendency to delay updation of records.
- Checking of Safety measures and civic conditions of Sugar Godowns at Units. This is not merely a quality/Production issue since it carried operational risk.