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.5,g EEI Policy on Stock Audit and Empanelrnent of Stock Auditors

Annexure l-C
STOCK AUDIT REPORT

DATE OF VISIT AT BRANCH

DATE OF VISIT AT UNIT
DATE OF SUBMISSION OF REPORT

Name of the Name of CA firm

Account Membership No.

Name of the person

Constitution who inspected the
account

Name of the branch Name of the person

from the branch who
accompanied CA

Name of Borrower
PAN NO OF borrower
CIN NO OF borrower
GST NO OF borrower
LEI of borrower
RO/FGMO/ZO Name of the
Category of branch person /s contacted
at borrowers site:
Duration of audit
ADDRESS :
Office

Factory

Category of borrower Asset Ctassification

lf account is under SMA 0/1t2 Reasons for stress:

Stress
Whether "Hotding on
operation" is
attowed. lf yes brief
comment.
Nature of activity /
85R Code

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ts ret Potcy on Stock Audit and Em panelment of Stock Auditors

Date of last renewat Regutar/ lf review for

shorter period give
vatidity period of
timit
Banking arrangement Sote / Muttipte / Name of Lead Bank
Our Bank's share Consortium
Date of last
consortium meeting
hetd

Name/ Date/ Rating

of ExternaI Credit
Rating Agency
P s T oN IF A c C U U N T A S o N TH E D AT E F I S T I

Natu re of Limit O/s as Vatue of Margin Rate of *Turnover for

facitity sanctioned on security lnterest [ast one year
(1st Aprit to
31st March)

Debit C redit
A.FUND BASED
i) Working
Ca itaI

ii) Term Loan

B. NON FUND
BASED

Limit vis-e-vis turnover under muttipte/consortium finance arrangements. Limits

with alt the member Banks shou(d be compared with the totat ro & sates of the
corresponding period.

INSPECTION OF ACCOU NT AT BRANCH

TERMS AND COND tTtoNs

Ascertain whether atl terms and: yes / No

Conditions of sanction are comptied
with

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$g EEI Policy on Stock Audit and Empanelment of Stock Auditors

lf no, the terms and conditions : a)

Which are yet to be complied with
b)

c)

d)
2. DOCUMENTATION

i) Whether proper documents Yes / No

Obtained. lf not, give detaits

Date of Documents

Date of last Debit Batance

Confirmation (DBC)

ii) Whether the documents have : Yes / No

been vetted by advocate/LegaI
Dept. as per the norms of the Bank

ijj ) Whether Credit Process Audit Yes / No

(CPA) of the a/c has been
completed before disbursement
of the [oan

iv) Whether equitabte/Simpte : Yes / No

mortgage of property created,
if not, nature of deficiency

v) Whether stamps of adequate :Yes/No

vatue affixed on documents
and atso for creating equitabte
mortgage of property. lf not,
give detai[s

vi) Date of registration of EM with SRO:

vii) Whether charge on assets : Yes / No

property created (inctuding
first charge/second charge/
pari passu charge) lf not, reasons
for non-creation of charge

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,* Policy on Stock Audit and Empanelnent of Stock Auditors

viii) Detaits of the registration of charge including modification / enhancements:

Wherever Date of Date of certificate Value of charge

required, whether registration of
charge registered charges
with ROC within
prescribed time
(Form 8 & 13 fited
or not)

lf charge is not yet registered, the

reasons therefore:
ix) The Prime security by way of
stock & book debts & Cottaterat
securities offered by way of Land
&Btdg are registered under CERSAI
(CentraI Registry of Securitisation
Asset Reconstruction &
Security lnterest of lndia)

x) Any other irregutarity observed

in respect of documentation

xi) ln appticabte case any other charge /

payment of any guarantee fees etc
to be verified.

3. Operations/ Performance of th e A/c at branch (Please see operations of accounts

for FY from to

i) Whether the account is being

Regutarty/actively operated

ii) Whether sates are being routed

Through the account

ii-a) Whether cash withdrawats are regutarty

a[owed, the reasons of al[owing cash
withdrawat. Whether in your opinion
such cash withdrawats are warranted or not.

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$s reffil Policy on Stock Audit and Empanelrlrent of Stock Auditors

ii i) No. of cheques returned for

financiaI reasons
iv) Detailed observations as regards any
targe transaction of Rs.5.00 tacs and
above be commented upon
v) Average daity balance (debit as wett
as credit)
vi) Whether the utilization of the timit
is more than 907o or not?
Credit/Debit summations in relation
to utitization of the limit and the
sales projection?
vii) whether the interest has been
serviced within 10 days?
Number of times the account
remained overdrawn

Whether the excesses have been Yes/ No

a[lowed
Continuousty or occasionatty or
rarety
Average time taken for adjustment
of Excess:
Ascertain reasons for such
overdrawaIs
Whether excesses allowed have Yes/No
been reported regutarty to higher
authority:
Whether excesses have been Yes/ No
confirmed or not? lf not confirmed
action taken for adjustment of
excess
iv) Whether PC is adjusted timety? Yes/No
lf not give the fotlowing detaits
v) S no Amount Last date of
Shipment Since when overdue

Whether extension of time has been

taken/applied for to ECGC and upto
which date it is vatid (in case of
overdue PC)
Whether PC is adjusted by
apptication of [oca[ Rupee
fund /export proceeds?

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iiffi Policy on Stock Audit and Empanelment of Stock Auditors

v) Whether bitts foreign /intand are Yes/No

being reatized as per tenor/terms
vi) Detaits of overdue bitts, both
in[and/forei
vii) Detaits of bitts returned un id
viii) Buyer wise ECGC coverage obtained
as per terms of sanction or not
ix) ls there any devotvement of LlC, if
yes, number of L/Cs devotved,
amount and the date of
devotvement
Reasons of devotvement of L/C be
given in brief
x) Whether any guarantee invoked? lf
yes, number, date and amount.
Reasons of invocation of L/G be
given in brief
xi) No. of guarantees expired but st'itt
outstanding.
xii) Whether interest is being serviced
regutarty or not. lf not detai[s upto
which the interest has been repaid
and the amount of overdue interest.
xiii) ln case of term [oan, whether:
repayment of instatment is regutar,
if not detajts upto which the
instalments have been repaid and
the amount of overdue instatments
3a Profitabitity for relationship(TotaI
earning of the Bank with the
retationshi be mentioned)
4 Submission of statements
i) Whether stock statements are being Yes/No
submitted re utart
i-a) Whether book debts statements are Yes/No
being submitted regutarty Date of
[ast stock statement
ii) ether DP is being catcutated Yes/ No
Check DP register. lf not Maintained,
ive remarks
iii)a) Wheth er QPR statements submitted QPR-I QPR-il QPR-ilr QPR.IV
as per terms of sanction. (Details to
be iven)
b) Wheth er operating limits are fixed
a5 r QPR?

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c) Whether the information submitted

in QPR statement. ls as per the
books of account of the party?
(anatyticat view)
d) Whether monitoring reports is being Yes / No
submitted regutarty? lf not
submitted give detaits when it was
tast submitted.
iv) Detaits of insurance poticy
a) Name of insurance company Amount of the poticy
b) Vatidity: from to
c) lnsu rance coverage
d) Comments on any discrepancy in the
poticy like the address of
the
godown /shop/ unit, type of goods
insured and inadequacy etc.
B Unit/Visit
Name of the person contacted at Amount of the poticy
u nit

1a Whether party's name board has Yes/ No

been prominentty disptayed?
Whether notice of hypothecation of Yes/ No
Bank/s has been prominently
disptayed
1b Whether Free Access to stock kept
in premises, not owned by the
borrower.
1C Whether appticabte statutory
approval are in ptaced and verified.
2 Production capacity of the unit Last year This year
i) Licensed capacity
ii) lnstatted capacity
iii) ActuaI capacity
iv) PLF since 31't March of Preceding
year Monthty in appticable cases
3a Method of valuation of stock
i) Raw materiaI
ii) Stocks in process
iii) Finished goods
lf not in order give detaits

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3b Comments on the discrepancies

observed in 3 above particutarty the
effect of change in the method of
valuation of stocks on vatue of
stocks

4 Stock Posjtion of hypothecated stock as on and position of

receivabtes and sund creditors of same date.

A. PHYSICAL INVENTORY: (Stocks)

Rs in lacs)
Particutars TotaI vatue
Vatue of stocks as shown in stocks statement as of
l Raw Material
ii)Stock in rocess
iii Stores and spares
iv)Finished stocks
Totat
Add purchases (from the date of stocks statement ttt[
the date of in ection)
Less Materiat consumed/ reduction on account of sates
from the date of stocks tit[ the date of ins ection)
Add stocks iven on job work
TotaI
Less stocks received on ob work
Less stocks belonging to sister concerns for which no
ment has been made.
Total Vatue of Stocks

Gross sates minus returns shoutd resent net sales durin the eriod

Total vatue of stocks must tatl t h th e boo ks o t accounts m a I n t a l ned by the rt

ln case of excisabte items , the excise ister shoutd be checked to find out stock ition.
ot h e se S t o c k re gr s t e r
o ri gi n a n vol ce be ch eck ed t o rec ord t h e s t oc k position. S toc k
rec el ved U n d e r L c or go o d s r ec e VE d u n d e I bitts, n r e spec t o t ch t h e co mpa ny has n ot
re t re d t h e bi S should be d ed u cte d e c a c U a t n g t h e d ra n powe r

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Poucy on Stock Audit and Empanelment of Stock Auditors

The entire stocks to be bifurcated value-wise into three categories A,B and C depending
upon the high/medium/tow cost items. White high cost items to be verified at teast 80%,
medium and low cost items may be verified at random covering about 40% and 30% of the
total value of stocks dectared

B. Age-wise details of stock

i) Vatue of the stocks as on the date of inspection

ii) Value of stock upto 3 months

iii) Vatue of stock otder than 3 months, upto 6 months
iv) Vatue of stock otder than 6 months

C. Book Debts
Sr. No Particutars Amount
1 i)
Vatue of the book debts as on the date of
inspection

2 ii) Vatue of book debts upto 3 months

3. iii) Vatue of book debts older than 3 months,
upto 6 months
4 1v) Vatue of book debts otder than 6 months

D. Verification of Book Debts / Others

a Coltect age wise and party wise break up of
book debts and party wise
b Whether receivabtes are routed through the
account?
c- Comments and comparison with past trend of
with working capital cycte (debtor hotding
period, creditor hotding period, inventory
hotding period) of the firm and whether it is
at par with the industry.
d Overall observations as to quality of book
debts?
e Verify GST Records /Verify GST appticabte
returns ( otd excise records/sales tax
returns/assessment orders of sates tax if
required)
f ln case of EPC contractors, bit[ raised,
unbitled revenue, amount of loan raised from
Bank against the bit[ amount of the company,
is to be commented

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o Comment that in case of Power producer /

generator the advances paid for suppty of
coat is included for catcutation of Drawing
Power or not.
E. Composition of value of stocks and book debts as on the Batance Sheet date shoutd
be compared with value of stocks as on the date of inspection

5. Stocks sent for job work to other processors:

a) Whether letter of lien and letter of free access is obtained?

b) Detaits of the stocks sent on job work:

Nature of Vatue of To whom Date of Proof of Remarks

stocks Stocks sent dispatch dispatch

c) White checking the movement of stock, a counter check could be made of records
pertaining to excise duties and Sates tax wherever appticabte, in the form of challans
and registers.

6) Stocks received for job work or stocks betonging to sister concern/attied concerns:

Nature of From whom Date of Va[ue of Proof of Whether such

stocks received receipt stocks receipt stocks are
segregated&
kept apart from
the stocks Hyp to
the Bank

7. Whether the vatue of the stocks as reveated from the books of the party and
actuatty lying at the site of the party as arrived at above tallies with each other? lf
not the variation if any to be anatysed and reported.
8. Whether inventory levets accepted have been fottowed by the company? lf not the
reasons to be anatysed and reported here.

9. Reasons of any sudden increase in the raw material/stores and spares, if any:

'l0.Reasons of any abnormat increase in the finished goods, if any:

Whether the finished goods inctude the fottowing:-
i) Goods returned by the buyers.
ii) Left over or otd batches.
iii) Non sateabte items being sub standard or obsolete items of stocks
iv) With regard to finished goods which have a shetf [ife, the auditors to verify how
many reached within six months of the expiry date and such goods should not rank
for drawing power.

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11. Whether in your opinion the company is fottowing the correct stocking pattern?
Give comments.

12.a. Whether proper internal control of verification of the stocks exists?

1-2.b..Whether proper books of accounts have been maintained by the party?
(stock Register/excise register/ sates tax records/ purchase register/ production
register/sales register/work in process/ register for consumabtes &ipares etc.)
12'c. Any variance in stock declared under monthty stock statement & epR submitted
to the Bank.
12.d. Comments on MSOD statement submitted to Bank:
'12.e. Any variation of audited stock against dectared
stock to the Bank is to be
commented.
12.f. Comments on paid stock in transit, if any

13. Details of obsolete stocks:

a) Obsotete stock
!) Slock as stiputated in the sanction advice should not rank drawing power.
l4.-whether the factory has been closed due to lock out/strike or t-he production has
suffered due to
labour unrest during the year? Give detaits atbng with the
observation.

l5.whether branch officiats have conducted the inspection of the stocks/unit

regularty, if yes dates of visits and the major irregutarities observed. nny materiai
deviations/variances to be commented upon.

16. Verification of the ptant and machinery .in case of term loan.
a . Verify invoices/bitts
b . Whether the end use of the Bank finance is proper?
c . Whether the ptant is in working condition?
d . ln case of project finance of the projects having tong gestation period
C ost overrun if any, the reasons be ascertained ant
the means of financing
17. lrregutarities pointed out in tas t RBI inspections/ Statutory lnspection / lnternal
Audit Concurrent Audit regarding th e verification of the stocks/book
debts and the
ste s taken the branch for its veri fication
lrregularities Ste take n for rectification
a)
b)
c
d)

18' Check whether the books of accounts are property

maintained and ascertain the
vatued of sundry creditors for goods and services ir"i
ro,. production on the date of
last stock statement submitted to the branch ura ilpoii
oirr"rences, if any. To atso
comment whether they are Banking with any ottrer gank.

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Policy on Stock Audit and Empanelment of Stock Auditors

19. Whether goods purchased under Usance Letter of Credit prior to the date of last
stock statement are inctuded in the stock statement? lf so to deduct the amount for
the purpose of catcutating drawing power'

20. Reasons, if any, existing or foreseen, which indicates that the continuation of the
relationship with the party witt not be beneficial for Bank, be commented upon so as
to ptan for timety exit from the a/c.

21. Comments, if any made by statutory auditor of the borrowing entity on Stock /
Book Debts:

22. Steps adopted by the Subject Company / firm for ensuring safety of stock.

23. Detaited comments about your overall observation in the account.

24. ltWe confirm that the report is based on impartia[ professional assessment and
l/We have no Direct/lndirect interest in the unit.

25. l/We confirm that no audit assignment has been undertaken for the subject client
or any of its group or associated companies for the past 3 years.

ENCLOSURES Signature of the Chartered Accountant/Cost Accountant

with seal with FRN No.
1

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Name:
Designation:
Add ress:

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