INDIAN INSTITUTE OF TECHNOLOGY ROPAR

AUDIT MANUAL

1. The Indian Institute of Technology Ropar (IIT Ropar), is an engineering and technology
higher education institute located in Rupnagar, Punjab, India. It is one of the eight new
Indian Institutes of Technology (IITs) established by the Ministry of Human Resource
Development, Government of India under, The Institutes of Technology (Amendment)
Act, 2012 which declares these eight IITs as well as the conversion of Institute of
Technology, Banaras Hindu University to IIT. The Act was passed in the Lok Sabha on
24 March 2011 and by the Rajya Sabha on 30 April 2012.

ROLE OF INTERNAL AUDIT

2. Internal auditing is an independent, objective assurance and consulting activity designed

to add value and improvement in an organization's operations. It helps an organization to
accomplish its objectives by bringing a systematic and disciplined approach to evaluate
and improve the effectiveness of risk management, control, and governance processes.
Internal auditing is a catalyst for improving an organization's effectiveness and efficiency
by providing insight and recommendations based on analyses and assessments of data
and business processes. With commitment to integrity and accountability, internal
auditing provides value to governing bodies and senior management as an objective
source of independent advice. The Internal Audit serves as a “THIRD EYE’ for the
management to control and watch the efficiency and working of various units under
them. The term ‘INTERNAL’ means work carried out by using one’s own employees.
The Internal Auditor is appointed by the management.

The scope of internal auditing within an organization is broad and may involve topics
such as the efficiency of operations, the reliability of financial reporting, deterring and
investigating fraud, safeguarding assets, and compliance with laws and regulations.

Internal auditing frequently involves measuring compliance with the entity's policies and
procedures. However, internal auditors are not responsible for the execution of institutes’

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 activities; they advise management and the Internal Audit enjoys reasonable freedom in
the discharge of its functions.

OBJECTIVES OF INTERNAL AUDIT

3. The appraisal of past transactions and happening probing into deviation from established
policies and procedures, detection and prevention of errors and frauds, proper utilization
of assets or safeguarding them and assessing the effective control in operations, to
preserve the entire organization against wasteful operations are included in the protective
functions of the internal audit.

The constructive appraisal of activities moves beyond the financial accounting aspects
into operational auditing. Appraisal of management methods and performances, whether
established policies and procedures are adequate for the attainment of objectives,
critically analysis and review of the soundness and adequacy of operating controls are
included in the constructive appraisal activities. They also include the review of
discharging of responsibilities and suggesting measures for streamlining the
organizational working.

The duties and responsibilities of an internal auditor are wide. It is difficult for an internal
auditor to ascertain the extent to which his appraisal should go and where his
responsibility ceases while appraising a particular operation. A conscientious internal
auditor with good imagination and practical experience can render valuable service to the
management.

The services of internal auditor will be utilized by all levels of management in the
investigation of any special problem/function, in addition to normal audit function; he
must be constantly alert to changing situation.

The internal auditor should function independently. Independence denote freedom from
conditions that threaten objectivity or the appearance of objectivity. Objectivity is an
unbiased mental attitude that allows internal auditors to perform engagements in such a
manner that they have an honest belief in their work product and that no significant
quality compromises are made. Objectivity requires internal auditors not to subordinate

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 their judgments on audit matters to that of others. Threats to objectivity should be
managed at the levels of the individual auditors, audit assignment, functional and
organizational level. He should not get himself involved in line function. He should act
independently without fear and favour or prejudice.

For the efficient discharge of his functions, the internal auditor should study and
understand the organizations plans, policy, procedures and objectives. He should give a
thoughtful approach to his work. In discharging his functions, he must be courageous and
critical, yet fair in his views and interpretations.

DUTIES OF INTERNAL AUDIT

4. Major duties and responsibilities of internal audit functions are summarized as below:

 Study of accounting procedures, including maintenance of records in the institute with a

view to ensuring that they are correct, adequate and free from any defects or lacunae;

 Reports risk management issues and internal controls deficiencies identified directly to
the audit committee and provides recommendations for improving the organization’s
operations, in terms of both efficient and effective performance;

 Provides support to the institute's anti-fraud programs;

 Watch over the implementation of the prescribed procedures and the orders issued from
time to time;

 Scrutiny and check of payments and accounting work of the accounting units;

 Investigation of important arrears in accounting and other connected records;

 Periodical review of all accounts including cash book, bank reconciliation statement and
store records as well as physical verification of stores;

 Pursuance/settlement of objections taken in test audit notes issued by statutory audit

offices and other matters relating to statutory audit;

 To examine and report on points or irregularities brought to its notice by the statutory
audit;

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  To examine the contracts and agreements executed by the institutes.

 Internal audit assignments should be performed with proficiency and the professional care.

ORGANISATIONAL SET UP

5. The organizational set of internal audit wing is as under:

DIRECTOR

REGISTRAR

Deputy Registrar
(Audit)

Assistant Registrar
(Audit)

Sr. Accounts Officer

(Audit)

Jr. Accounts Officer

(Audit)

N.B.: Audit Section will function directly under the Registrar and the Director.

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NORMS OF INTERNAL AUDIT

6. The norms for checking the record by the internal audit wing will be as under:

Sl. Function System of Post-Audit

No. Pre-audit (Random)
1 2 3 4

1. Retirement/ Superannuation Benefits

Checking of

a) New Pension Scheme (NPS) 100%

100% -
b) Leave Encashment
c) Group Insurance Scheme (GIS) 100%

d) Death-cum-Retirement Gratuity (DCRG) (if 100%

applicable)
e) Family Pension (if applicable) 100%

f) Pension Payment Orders (PPO) 100%

g) No Dues Certificate 100%

2. Establishment Section
a) Pay fixation of all employees 100%
b) Checking of Personal Files Yearly

c) Checking of Service Books including leave Yearly

accounts.
d) Leave Travel Concession 100%
e) Cumulative Professional Development 100%
Allowance/ Proposals for attending national/
International Conferences
f) Checking of Appointment Letters before 100%
issuance

g) Checking of appointment of Outsourcing 100%

Staff.
3. Transport Section
Log books of all vehicles Monthly

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Sl. Function Proposed System of Post-Audit
No. Pre-audit (Random)
1 2 3 4

4. Work & Estates

a) Award/work orders of all works Above Rs.1.00 Lac - 100% Below Rs. 1.00 Lac-
15%

b) Supply orders Above Rs.1.00 Lac - 100 % Below Rs. 1.0 Lac-
15%

c) Running Bills of minor/major works Above Rs.1.00 Lac - 100 % Below Rs. 1.00 Lac-
15%

d) Final Bills of supplier/Contractor Above Rs.1.00 Lac - 100 % Below Rs. 1.00 Lac-
15%

e) Govt. agencies bills incl.Electricity, Water & 100%

Property Tax

f) Cash Advances/Permanent Imprest Above Rs. 15000/- - 100 % Below Rs. 15000/-
15%

g) Outsourced Staff Salary 100%

5. Stores & Purchase

a) All purchase proposals except DGS&D, Above Rs.1.00 Lac - 100 % Below Rs. 1.00 Lac-
Annual Rate Contract (ARC) cases/ Repeat 15 %
Orders
b) Checking of Stock Registers- Consumables/ Monthly
Non Consumables

c) Checking of Purchase Orders (before Above Rs.2.00 Lac - 100 % Below Rs. 2.00 Lac-
issuance) 15 %

d) Checking of proposals of Annual Maintenance 100 %

Contracts/ ARC’s/ hiring of services

6. Guest House

Receipts Monthly

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Sl. Function Proposed System of Post-Audit
No. Pre-audit (Random)
1 2 3 4

7. Institute Accounts/ Project Accounts

a) Advance, Imprest & Adjustment Above Rs. 15000/- - 100% Below Rs. 15000/-
15%
b) Payments to vendors Above Rs.2.00 Lac - 100% Below Rs. 2.00 Lac-
15%
c) Library Bills in Foreign Currency 100%

d) Library bills in Indian Currency Above Rs.2.00 Lac - 100% Below Rs. 2.00 Lac-
15%
e) Liaison with Statutory Auditors and dealing Ongoing
with Audit/Inspection Report.

f) Certification of Cash Book Balances as on 31st Yearly

March
g) Certification of Investment/ encashment made Yearly

h) Verification of Investment Receipt/Cash Monthly

Balance
i) Receipt & Payment Account Yearly

j) Income & Expenditure Account Yearly

k) Balance Sheet Yearly

l) Bank Reconciliation Statement Quarterly

Student Affairs
8.
a) Cash Book, Trial Balance etc Monthly

b)Bank Reconciliation Statement Monthly

c) Payment Vouchers Above Rs.1.00 Lac - 100% Below Rs. 1.00 Lac-
15%
d) Refund of Caution money- Institute/ Hostel 100%

Examination of cases marked by

9. - Director 100%

- Registrar 100%

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PERIODICITY OF INTERNAL AUDIT

7. The record of all the Departments/Centers/Units/Sections is required to be checked by the

internal audit wing every year. The audit plan showing the period of audit of each unit is to
be got approved annually from the competent authority before 31st March each year. After
audit of each unit the inspection report of each unit showing the observations of audit along
with action taken on previous year’s observations, if any, is to be issued to the unit with the
approval of the competent authority. Each unit /department/ wing will attend to the
preliminary observations of internal audit wing promptly so that it may not be included in
the final inspection report. The each audit unit will give the reply to the inspection report
within a fortnight of its issue.
A list of auditable units is appended below:
A. Accounts

1. Salary Section Annually

2. Supplier Payments Section Annually
3. Scholarship Payments Annually
4. Project Accounts Annually

B. Administration

5. Establishment Annually
6. Store Purchase Section Annually
7. Transport Annually
8. Central Library Annually
8. Academics Annually
9. Security Annually
10. Hindi Cell Annually

C. Works

11. Maintenance Units (Civil & Electrical) Annually

12. D.G. Sets Annually
13. Electric Bills Annually
14. Horticulture & Sanitation Annually

D. Others
15. Day Care Center Annually
16. Hospital Annually
17. Guest Houses Annually
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E. Departments

Checking of Leave account of staff/ Stock Registers of Consumables & Non-

Consumables, Project Registers, Performance of various projects executed viz a viz expenditure
incurred there against etc.

1. Mechanical Engineering Annually

2. Computer Science and Engineering Annually
3. Electrical Engineering Annually
4. Chemistry Annually
5. Humanities & Social Science Annually
6. Mathematics Annually
7. Physics Annually

Any other unit/ work with the approval of the Director

CHECK LIST FOR STANDARDS ON INTERNAL AUDIT

8. The management of the Institute shall check the efficiency of the Internal audit as per
following Standards:
a) Planning of Internal Audit Unit.
b) Basic Principles Governing Internal Audit.
c) Internal Audit Documentation
d) Internal Audit Evidence.
e) Consideration of Fraud in an Internal Audit.
f) Internal Control Evaluation.
g) Communication with audited units
h) Reporting Standard

FOLLOW UP ACTION ON INSPECTION REPORTS

9 The internal audit wing will regularly pursue the inspection reports issued to each unit/
wing/ department till the necessary action is taken there against and the observation of audit
settled with the approval of the competent authority.

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