Textile Mill is a manufacturing concern where raw-material is purchased and finished product in the form of yarn and cloth etc is obtained. From Auditor’s point view so many important aspects will require special consideration. These may be as under:
1- System of internal check / internal control should be studied in order to ensure that it is satisfactory and is serving the best interest of the organization.
2- Considerable amount is spent on the procuring raw cotton which is purchased either directly from farmers or contractors. Proper record in this behalf must be maintained. Quantity and quality of stock is to be checked and the rates etc, verified.
3- Although an auditor is not supposed to be an expert to check the quality of raw material, but he is supposed to be pay special visits to the Mill to the quality of stock physically maintained and as shown in the books.
4- Proper accounting system must be followed by the Mill Factory Accountant will be responsible for properly maintaining the work in process, material, factory overhead and finished goods etc. Other accounts are to be maintained by the Head Office Accountant.
5- Waste of cotton may be a by-product and its proper accounting is required. So income from such items are to be properly ascertained and ensured that these incomes have been accounted for correctly.
6- Considerable amount of stock of raw material and other spare parts etc, is to be carried by a manufacturing concern. Physical stock-taking is necessarily required in order toe ensure that figures of physical stock taking tally with the figures as shown by the books.
7- Considerable expenses are incurred on the transportation of raw material and the finished goods. Such carriage expenses may be paid on the purchase of raw material and the dispatch of finished goods. CIF and other terms should be checked to make clear the expenses of insurance, freight etc.
8- Considerable quantity of manufactured good may be exported. Hence it is required to check the various important documents with regard to export and import. Letter of credit and other sale and purchase agreements will be inspected in order to ascertain exact quantity sold, rate per unit and number of shipments to purchaser.
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