2. The auditor should inspect the Minutes of the Board of Management to ascertain from them any resolution specially passed in respect of accounts. He should confirm how far such resolutions have been complied with.
3. He should examine the internal check system and ensure how far it is satisfactory.
The sources of income of an educational institution are fees from students, grants from the Government or the local authorities, subscriptions and donations, income from investments, etc. The auditor should note the following points.
4. He should check the cash receipts on account of fees by reference to the counterfoils of the Fee Receipt Books used and, if necessary, the Students’ Register should also be inspected. For free studentship, he should see that it is duly authorized by a responsible officer.
5. Admission Fee or Examination Fee received ordinarily once a year should be vouched by reference to the proper documentary evidence. He should ensure that all such fees have been properly recorded in the relevant books and registers.
6. If there is a part of fees which is totally recoverable, he should see that it is written off by the person duly authorized for it. If he comes across something unfair, he should make the fact known to the committee of Management.
7. He should see that the fees unpaid for a part of the academic year but exempted to that extent have been properly accounted for or adjusted.
8. It should be seen that the fees paid in advance have been duly carried forward and adjusted in the accounts subsequently.
9. He should vouch the Grant received from the Government or a local body with the help of correspondence or any other documentary evidence.
10. Receipts from donations and subscriptions, etc. should be verified with the Statements in the Annual Report. Such receipts should be checked with the counterfoils of receipts issued in this respect.
The Cash Book should also be checked. The auditor should ascertain that such receipts are being utilized for purposes for which they have actually been received.
11. If the institution has some landed property, endowments and securities, etc., the income there from should be verified by reference to proper vouchers. Investments may be vouched by reference to the Bank’s Certificate.
12 Any other income should similarly be vouched with the help of proper vouchers.
13. The auditor should vouch all items of capital expenditure and ensure that such expenditure is duly sanctioned. In case of some abnormal expenditure, its checking should be done very carefully. He should confirm that distinction between capital and revenue has been clearly made.
Sanction of increases in the salary of the staff should be checked by reference to the Minutes of the Committee of Management.
He should examine the internal check system with regard to the purchases of materials etc. for the boarders. Proper control has to be exercised on the purchase, issue and preservation of such provisions.
He should verify the stock of provisions, furniture, Stationery, etc., and see that it is properly preserved.
He should confirm that an adequate reserve is being maintained for contingencies.
He should ascertain that all outstanding assets and liabilities have been taken into account.
He should further see that the provident fund money of the staff is being regularly invested outside in proper securities. Such fund is to appear separately on the liabilities side and investment on the assets side of the Balance Sheet.
He should see that all taxes which are deducted at source are properly refunded. Educational institutions are not subject to Income tax payment.