The hours worked by each employee as reflected on the
completed clock cards are entered by an accounting department employee (or employees) on
the payroll sheet or payroll summary. All employees authorized for employment by the
personnel department are first listed on the payroll sheet. Hours and hourly rates are then
transferred from the clock cards, and total earnings are computed. Should a clock card for an
employee not listed on the payroll sheet be found, investigation of its propriety is required.
Likewise, there should be an explanation for any missing clock cards
Sunday, February 1, 2009
Time-Booking
The clock card is required, essentially, for the correct determination of the
amount of wages due to a worker on the basis of time he has put in the factory. It merely
records day by day and period by period the total time spent by each individual worker in the
factory. But it does not show how that time was put to use in the factory—how an individual
worker utilised his time in completing jobs entrusted to him and how long he was kept waiting
for one reason or another due to lack of work, lack of material and supplies, lack of
instructions, machine breakdowns, power failures and the like. These are all vital pieces of
information necessary for the proper collection of cost data and for effective controlling of
costs. For the collection of all such information, a separate record, generally known as Time
(or Job) card, is kept.
amount of wages due to a worker on the basis of time he has put in the factory. It merely
records day by day and period by period the total time spent by each individual worker in the
factory. But it does not show how that time was put to use in the factory—how an individual
worker utilised his time in completing jobs entrusted to him and how long he was kept waiting
for one reason or another due to lack of work, lack of material and supplies, lack of
instructions, machine breakdowns, power failures and the like. These are all vital pieces of
information necessary for the proper collection of cost data and for effective controlling of
costs. For the collection of all such information, a separate record, generally known as Time
(or Job) card, is kept.
Friday, January 2, 2009
Audit of Stores and Stocks
Audit of the accounts of stores and stocks has been developed as a part of expenditure audit with
reference to the duties and responsibilities entrusted to C&AG. Audit is conducted to ascertain whether
the Regulations governing purchase, receipt, and issue, custody, sale and stock taking of stores are
well - devised and properly carried out. The aim is also to bring to the notice of the government any deficiencies in quantities of stores held or any defects in the system of control. The audit of purchase of
stores is conducted in the same manner as audit of expenditure, namely, that these are properly
sanctioned, made economical and in accordance with the Rules for purchase laid down by the
competent authority. The auditor has to ensure that the prices paid are reasonable and are in
agreement with those shown in the contract for the supply of stores, and that the certificates of quality
and quantity are furnished by the inspecting and receiving units. Cases of uneconomical purchase of
stores and losses attributable to defective or inferior quality of stores are specifically brought by the
audit. Accounts of receipts, issues and balances are checked regarding accuracy, correctness and
reasonableness of balances in stocks with particular reference to the specified norms for level of
consumption of stock holding.
reference to the duties and responsibilities entrusted to C&AG. Audit is conducted to ascertain whether
the Regulations governing purchase, receipt, and issue, custody, sale and stock taking of stores are
well - devised and properly carried out. The aim is also to bring to the notice of the government any deficiencies in quantities of stores held or any defects in the system of control. The audit of purchase of
stores is conducted in the same manner as audit of expenditure, namely, that these are properly
sanctioned, made economical and in accordance with the Rules for purchase laid down by the
competent authority. The auditor has to ensure that the prices paid are reasonable and are in
agreement with those shown in the contract for the supply of stores, and that the certificates of quality
and quantity are furnished by the inspecting and receiving units. Cases of uneconomical purchase of
stores and losses attributable to defective or inferior quality of stores are specifically brought by the
audit. Accounts of receipts, issues and balances are checked regarding accuracy, correctness and
reasonableness of balances in stocks with particular reference to the specified norms for level of
consumption of stock holding.
Audit of Receipts
The audit of receipts is neither all pervasive or as old as audit of expenditure but has come to stay in
some countries. Such an audit provides for checking; (i) whether all revenues or other debts due to
government have been correctly assessed, realised and credit to government account by the
designated authorities; (ii) whether adequate regulations and procedures have been framed by the
department/agency concerned to secure an effective check on assessment, collection and proper
allocation of cases; (iii) whether such regulations and procedures are actually being carried out; (iv)
whether adequate checks are imposed to ensure the prompt detection and investigation of irregularities,
double refunds, fraudulent or forged refund vouchers or other loss of revenue through fraud or wilful
omission or negligence to levy or collect taxes or to issue refunds; and (v) review of systems and
procedures to see that the internal procedures adequately secure correct and regular accounting of
demands collection and refunds and pursuant of dues up to final settlement and to suggest
improvement. The basic principle of audit of receipts is that it is more important to look at the general
than on the particular, though individual cases of assessment, demand, collection, refund, etc. are
important within the area of test check. A review of the judicial decisions taken by tax authorities is done
to judge the effectiveness of the assessment procedure.
some countries. Such an audit provides for checking; (i) whether all revenues or other debts due to
government have been correctly assessed, realised and credit to government account by the
designated authorities; (ii) whether adequate regulations and procedures have been framed by the
department/agency concerned to secure an effective check on assessment, collection and proper
allocation of cases; (iii) whether such regulations and procedures are actually being carried out; (iv)
whether adequate checks are imposed to ensure the prompt detection and investigation of irregularities,
double refunds, fraudulent or forged refund vouchers or other loss of revenue through fraud or wilful
omission or negligence to levy or collect taxes or to issue refunds; and (v) review of systems and
procedures to see that the internal procedures adequately secure correct and regular accounting of
demands collection and refunds and pursuant of dues up to final settlement and to suggest
improvement. The basic principle of audit of receipts is that it is more important to look at the general
than on the particular, though individual cases of assessment, demand, collection, refund, etc. are
important within the area of test check. A review of the judicial decisions taken by tax authorities is done
to judge the effectiveness of the assessment procedure.
Monday, December 1, 2008
CLAIMS PROVISION AT DIVISIONAL OFFICES
The outstanding liability at the year-end is determined at the divisions/branches where the liability originates for outstanding claims. Thereafter, based on the total consolidated figure for all the divisions/branches, the Head Office considers a further provision in respect of outstanding claims. Every division prepares a claims statement in the format given on the next page. To cover the possibility of errors in judgement in estimation or in cases of under-estimation of liability (where full details are not available) as also for the possibility of liability not being considered for claims incurred but not reported due to the nature of risks being such (e.g., where communication is made after a considerable time lag or after the cut-off date for preparation of final accounts) the company at its head office makes an additional provision over and above that made by Divisions/Branches on the Divisional Auditors’ Reports. Such liability is presently being cushioned to the extent of 5.5% in respect of Fire, Marine and Miscellaneous business (excluding motor, engineering, aviation, hull and credit guarantee) and 10.5% for motor and engineering business. In view of the above, total of outstanding claims comprises the estimated liability recorded at the Divisions/Branches and the further provision made on this account at head office. This provision is subject to the amount to be adjusted for re-insurances, which are dealt with at head office.
FUNCTIONAL DIVISIONS AND BOOKS OF ACCOUNTS MAINTAINED THEREIN
Considering the nature and spread of the general insurance business, the four subsidiaries of the General Insurance Corporation operate through their Head Offices, Regional/Area Offices, Divisions and Branches attached thereto. The most important part of the business operations comprises the issuance of policies for risks assumed and to indemnify the insured for losses to the extent covered by such policies. In financial terms these operations get translated into— (a) the receipt/recording of premium income; and (b) the recording and settlement of claims for losses. The business operations stated above are essentially confined to the divisional offices and the branches attached to these divisions. The accounting for these operations in these offices involve recording of premium income and provisions and payments in respect of claims under policies. Transactions related to operations at the branches are communicated for accountingthereof at the divisions. Generally, separate bank accounts are maintained for premium collections and for disbursement of expenditure. Normally, collections are transmitted to the relevant controlling office and the concerned account is not normally operated upon for expenditure etc. The branches of the divisions submit adequate information and evidence of transactions relating to their operations. The returns from the branches will include all transactions by way of documents relating to premium received, claims provisions and payments and operation of bank accounts. The following books of account/records are normally maintained at a divisional office : (i) Cash Receipt Book. (ii) Cash Disbursement Book. (iii) Dishonoured Cheque Register. (iv) State Cheque Register. (v) Daily Cash Balance Book. (vi) Claims Disbursement Book. (vii) Premium Register. (viii) Bank Transfer Journal. (ix) Journal. (x) Summary Books for incorporation of Branch Returns (Cash Receipt Statements, Cash Disbursement Statements and Premium Register after these are duly checked). (xi) General Ledger. (xii) Sub-Ledgers. (xiii) Register for Analysis of Management Expenses. (xiv) Cash Receipts, Cash Disbursement Vouchers and Journal Vouchers. (xv) Remittances Received Register. (xvi) Salvage Register. (xvii) Claims Recovery Register. (xviii)Stationary Register. (xix) Trunk Call Register.(xx) Assets Register. (xxi) Policy Stamp Register. (xxii) Excess/Shortage Register. (xxiii)Co-insurers Register. Other major areas of accounting involve accounting for investments, reinsurance and other administrative matters which are dealt with at the Head Office.
Saturday, November 22, 2008
LIQUIDITY NORMS
Banking companies have to maintain sufficient liquid assets in the normal course of business. In order to safeguard the interest of depositors and to prevent banks from overextending their resources, liquidity norms have been settled and given statutory recognition. Every banking company has to maintain in cash, gold or unencumbered approved securities, an amount not less than 25% of its demand and time liabilities in India. However, this percentage is changed by the Reserve Bank of India from time to time considering the general economic conditions. This is in addition to the average daily balance which a scheduled bank is required to maintain under Section 42 of the Reserve Bank of India Act and in case of other banking companies, the cash reserve required to be maintained under Section 18 of the Banking Regulation Act.
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