Sample / Template / Example of a Manufacturing Company Audit Programme for Internal Audit /
External Audit / Statuary Audit form Depot / Marketing & Sales Department in India in
PART – “I”
AUDIT PROGRAMME FOR MARKETING OFFICES / DEPOTS:
1. Time Limit / Frequency: - The approximate time which the team of an External System / Internal
Auditor (appointed by HO) is expected to spend on a depot is minimum 03 days per visit. The
audit may be conducted twice a year or at least once in a year, preferably in 1st and IVth Quarter
of the year.
2. Objective:- A complete analysis of the working of the depot, preparation of the system, working
out the lacuna in the present working and suggestions to overcome the same, comments of the
direct financial losses incurred by the depot during the year, comments on the complete
physical stocks maintained by the depot and its comparison with the book stock (Color Code-
wise), analysis of the outstanding, comment on the overdue status, co-ordination of the depot
with the accounting / stock entries made at HO level and their approval, to check whether the
depot is fulfilling the Statutory requirements, and to comment on the other procedures to be
followed by the depot as per the Marketing Guidelines.
3. Specimen Audit Programme:-
i) Physical verification of Stocks:
a) To comment on the pattern of taking physical verification of the stocks by the
Regional Accountant / Internal Auditor under the payroll of the Company, and
suggest improvements if any.
b) To take physical verification of the stock, lying in various godowns of the depot and
report short / excess and undelivered goods if any with reason thereof, if the
physical verification done by the depot personnel / RA was not found satisfactory.
c) To check and take comments of the depot on lowest moving / non-moving items.
d) To check and take the details of the damaged goods lying in the godown, take
comments on the cause of the damages and the saleable position of these goods.
e) To check and take comment on whether any scrap or waste material are lying in
godown, the reason behind the same and comment on their consumption / transfer
to other depots.
f) To check whether FIFO method is applied during incoming and outward movement
g) To prepare a report on the sale / transfer of less saleable / slow moving items in
consultation with the depot in-charge, and give necessary suggestions either to sale
these items or to transfer the same to some depots having the demand of these
items, so that the items can be prevented of becoming obsolete.
h) To check that no transfer of stock shall be made to other depots without prior
approval (as decided by the Guidelines).
i) To check the stock made at HO regarding the depot, and comment as to whether all
the internal control measure are taken care off while passing such entries. The
comment should be given as to whether the entries passed are duly approved, and
simultaneous affect is taken in the books / stocks maintained at the depot.
ii) Inward Movement of the Stocks:-
The inward movement of the goods from factory to depot is to be checked thoroughly.
A comment should be given as to the stocks were entered in the books Color Code -wise
strictly as per the challan accompanied with the respective vehicle with which the goods
iii) Dealers and their Appointment:-
a. To comment on each dealer’s working with the depot based on his past
performance. This may include his credibility, pattern of making payments against
the sale, overdue status, frequency of cheques dishonor, etc.
b. To work out whether the papers regarding the appointment of the dealers are
complete in all respect.
iv) Billing & Delivery :-
a. To test check whether the invoices are signed by the authorized personnel. Also, the
invoices are made on the company’s printed invoices.
b. To check that the goods are delivered to the dealers and no goods are pending for
a. Items more than allowable period with ageing analysis as on the date of the audit.
b. To check whether there is any case, where suit has been filed for recovery, status
thereof i.e., continuing since when and the circumstances involved and comment on
the possibility of recovery in his opinion with the consultation of the depot in-
c. To comment on the un-operative amounts lying in credit at the account of the
d. To check that accounts are being reconciled periodically and the confirmation of
account statement are obtained in writing from all the dealers on quarterly basis.
e. To check the Money Receipt, PIF, Pay-In-Slips with Bank Book.
f. To check the Bank Reconciliation Statement and report on the un-cleared cheques.
vi) Safety Measures for Stocks:-
a. To comment whether there is a sufficient and suitable environment for preservation
of the stock.
b. To find out whether the stocks are safeguarded against theft or misuse by any
person at any time.
c. To find out whether the stocks are safeguarded against fire, flood, natural
calamities, termite attacks, etc.
d. Stock must be kept in the premises, which should be free from water leakages.
e. Fire fighting equipments must be installed in stock premises and these should be
vii) Insurance of stock:
a. Check whether the insurance policies covers the below mentioned risks:
ii) Natural Calamities.
b. It should be ensured that the sum insured is sufficient to cover the amount of the
stocks at any point of time.
viii) Checking of the Credit / Debit Notes:-
To check the credit / debit notes prepared by the depot in favor of the dealer and to
comment whether the same are fully supported and issued correctly.
ix) Statutory Dues:-
a) To check that the applicable taxes are deposited in time.
b) To check that the tax returns are filed on due dates.
c) To check that the tax assessments are completed and details of pending
x) Comment on the Previous Audit Report and Suggestions:-
a) To comment on the status of the observations found in the last/previous audit
report(s) of RA/Internal Auditor.
b) To comment on the status of the observations found in the previous audit report of
the External Auditor.
xi) Management Information System:-
To check and comment that the information to be given to the Management as per the
guidelines are in consonance with the actual and the same are sent in the required
xii) Strategy for Growth:-
A discussion is to be conducted with the Depot-in-charge / Management of the depot
regarding the problems they are facing in their areas and the strategy for growth of
sales is to be devised incorporating the views of the persons involved.
xiii) Compliance of the Previous Audit Reports:-
To check whether the compliance of the Regional Auditor’s Report / Internal Auditor’s
Report and the External Auditor’s Report has been made by the Depot Management and
confirm the same.
The findings of External Auditor must be incorporated on a Draft Audit Report which is
required to be signed by himself and the depot-in-charge, with one copy to be kept by
him, one to be sent to HO and one another to be kept at the depot.