REPORT ON

INTERNAL AUDIT FOR THE PERIOD FROM

APRIL 2017 TO SEPTEMBER 2017

Manubhai & Shah LLP

Chartered Accountants

G-4 Capstone, Opp. Chirag Motors,

Sheth Mangaldas road
Ellisbridge, Ahmedabad – 380 006
Phone: 91-79-26470000, Fax: 91-79-26470050
Email: gaurav.parmar@msglobal.co.in
Website: www.msglobal.co.in
Manubhai & Shah LLP
Chartered Accountants

PANDIT DEENDAYAL PETROLEUM UNIVERSITY

DRAFT INTERNAL AUDIT REPORT FOR THE PERIOD FROM APRIL 2017 TO SEPTEMBER 2017

1. PREAMBLE:
1.1 We have carried out Internal Audit of Pandit Deendayal Petroleum University (University or PDPU) for the period from April 2017to September 2017
in terms of scope of work.
1.2 We submit our report containing observations noticed during the audit along with management response.

2. AUDIT APPROACH:

2.1 Our audit approach was to:

i) Review procedures and systems with a view to understanding the nature of activities, areas of operations and records maintained.

ii) Review internal control systems with a view to assessing the efficiency of the system to see that chances of frauds and errors are minimized as
well as the system ensures effective checking of transactions at various levels.

iii) Gain understanding about the working environment and the internal controls system adopted in that relation.

iv) Verify documents i.e. bills, vouchers and records to satisfy that the established system is followed.

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2.2 We have kept in background following broad criteria while ascertaining risk rating of the observations in the attached report:

SCALE FINANCIAL COMPLIANCE OPERATIONAL

High – Requiring immediate action More than Rs 3 Lakhs More than Rs 1 Lakhs Absence of Standard Processes

Impact of more than Rs 1 Lakh More than Rs 50,000 & Loopholes / area for improvement in
Medium – Requiring corrective action
up to Rs 3 Lakhs up to Rs 1 Lakh Standard Processes

Low – Opportunities for improvement Impact of Up to Rs 1 Lakh Up to Rs 50,000 Non-adherence to the Standard Processes

3. AUDIT METHODOLOGY:

3.1 The audit has been carried out in accordance with Auditing and Assurance Standards as well as Standards on Internal Audit prescribed by Institute of
Chartered Accountants of India.

3.2 The audit team consisted of following members:

· C.A. Gaurav Parmar - B.Com, FCA, CISA, Partner

· C.A. Milan Shah - B.Com, FCA, Audit Manager
· Mr. Neel Mehta - Audit Assistant
· Mr. Kumarpal Jain - Audit Assistant
· Mr. Abhishek Patel - Audit Assistant
· Mr. Jinil Gandhi - Audit Assistant
· Mr. Dheeraj Soni - Audit Assistant

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Chartered Accountants

4. AUDIT SCOPE & COVERAGE:

4.1 As per Internal Audit Plan, following areas were covered by this report:

AREAS OF OPERATIONS SCOPE OF INTERNAL AUDIT

Student Process Flow – Verification of adequacy and accounting treatment of the following:
Primary Source of (a) Security Deposit/ Caution Money
Revenue (b) Levy of various types of Fees as per the Fees Chart
(c) Student Fee Matrix (Grade-Wise and Student-Wise)
(d) Collection/ Dues/ Penalty/ Fines levied from time to time
(e) Promotion of Student may involve change of Fee Structure
(f) Hostel Fees collection and Electricity charges to students
Banking Transactions / Verification of adequacy or other-wise with respect to the following:
Cash Transactions (a) Bank Reconciliation Statement on monthly basis
(b) Debits made by the bank are checked for correctness as per the terms and conditions of the sanction letter
Travel (a) Are all required travel authorization obtained for out-of-state travel from the traveler’s supervisory authority prior
to committing any funds?
(b) Are all Travel Expense Vouchers submitted for all reimbursable expenses in accordance with institution policy?
(c) Are all traveling reimbursement authorized with signatures of the traveler, financial manager, and supervisory
authority?
Accounting (a) Review of accounting policies adopted
(b) Review of Accounting Entries passed along with the adequate supporting for the period from April 2017 to
September 2017.

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Chartered Accountants

7. OBSERVATIONS RELATED TO AUDIT OF OTHER AREAS IN SCOPE OF WORK:

Observations in the Audit Areas covered during Audit from April 2017 to September 2017:
1. UNDER RECOVERY OF ACADEMIC FEES:

Observations Risk Category High Risk Type: Financial

Based on the fees reconciliation of student’s data as per the administration Root Cause
department and fees collected record by accounts department, we have
noted short receipt of fees worth Rs. 35,85,100/- from students. (The status - Lack of adequate follow up and absence of strict implementation of
on 20/11/2017) penal provision.

The student wise recovery of fees is mentioned in Annexure-7. Possible Impact

School wise summary of fees recovery is mentioned hereunder: - Possibility of income leakage.
- Non-availability of outstanding details.
School Amount in Rs.
Recommendations
SLS 4,30,100
SPT 6,44,500 - For recovery of fees from the students who had not paid Fee, PDPU
SPM 12,42,500 should involve admin department and also impose penalty for
delayed payment.
SOT 12,68,000
Total 35,85,100 Management Response

- The matter is discussed in the meeting chaired by the Director

General and attended by all the Schools Directors & Registrar along
with CFO and AO. A policy shall be announced covering disciplinary
and penalty for such cases. A nodal officer shall be appointed by each
School to coordinate with Accounts Department.

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Chartered Accountants

2. NON RECOVERY OF ACADEMIC FEES FOR PRIOR YEARS:

Observations Risk Category High Risk Type: Financial

Apart from the recovery of current year fees, we have verified the fees Root Cause
recovery from the students from whom fees for last year was not received
and reported by us. The Recovery of Rs. 20,92,600 /- is still pending from - Absence of proper follow up procedure of students for the recovery
30 students. List of such students has been given in Annexure-8 along with of pending fees.
the management response for non-recovery of fees. (Status as on
27/11/2017). Possible Impact

- Chances of fees remaining outstanding for a long period of time

affecting revenue of the university.
- The possibility of increase in the amount of bad debts because of
liberal policy for recovery of fees.

Recommendations

- There should be regular co-ordination between admin department

and accounts department for sharing the status of outstanding fees.
- Penal provisions should be followed in order to reduce the
transactions of outstanding fees.

Management Response

- The matter is discussed in the meeting chaired by the Director

General and attended by all the Schools Directors & Registrar along
with CFO and AO. A policy shall be announced covering disciplinary
and penalty for such cases. A nodal officer shall be appointed by each
School to coordinate with Accounts Department.

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Chartered Accountants

3. PROCESS OF PURCHASE ORDERS AND WORK ORDERS:

Observations Risk Category Low Risk Type: Operational

- The procedure of preparing purchase order has been established and Root Cause
followed in majority of the purchase transactions. However,in
following 2 instances purchase order has not been prepared as - Lack of awareness among the concerned departments regarding
follows: importance of following these procedures.

Date of Expense Party Amount Description of Possible Impact

entry head involved goods
10/08/ Furniture & White board, - Possibility of vendor charging differential rates which may result into
Om Crafts 1,49,576
2017 Fixtures Sliding channel paying excess amount to such vendor.
28/09/ Admission Jay Jute bags - Ambiguity in work orders identification when frequent work orders
1,93,200 are issued to a specific party.
2017 Exps Exporters Quantity:2000

- There is absence of central recording and monitoring of the PO / WO Recommendations

this has resulted in following gaps in audit trails:
- All department issues PO/ WO on their own. Hence there is - All the transactions should be routed through the said procedure to
inconstancy in format of PO/ WO despite there is standard format the extent possible in order avoid ambiguity and bring transparency
adopted by PDPU. in the purchase process.
- PO / WO are not serially numbered in all cases
- Difficulties arise in tracking the status of the PO / WO Management Response
- Chances of duplicate payments against same invoices if not
serially numbered. - Noted and shall take due care in such instances. Post implementation
of TCS ion the centralized issuance of PO shall be done.

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4. PROCEDURE FOR CAPITALISATION AND BILL PROCESSING:

Observations Risk Category Medium Risk Type: Operational

- The purchase of LED monitor of Rs.14,500/- is expensed out instead Root Cause
of capitalizing it. It is booked as expense under head Computer Tools,
Spares Exps. - Delay caused by vendor in sending the copy of invoice relating to the
fixed asset purchased and further delay in receipt of invoice by
- Purchase of audio equipment for auditorium worth Rs. 8,45,000/- has accounts department.
been done from M/s Audio Vision without inviting quotations from
multiple parties and making comparative analysis. Possible Impact

- Purchase of RO System of Rs. 3,12,500/- has been done from A One - Delay in capitalization has a direct impact on the amount of
Engineering Corporation on 05/07/2017 but installation certificate depreciation charged against the asset.
has not been found for installation of such system at High rise hostel - Benefit of availability of same asset from other vendor is foregone if
C block. comparative analysis is not done.

- It has been found that there has been substantial delay in Recommendations
capitalization of fixed assets purchased even after obtaining
installation certificate of the specific assets. - The assets should be capitalized when it gets ready for the intended
use.
- Purchase of assets involving substantial amount should be done by
Some of the instances where such delay in capitalization has been inviting quotations from 3 parties and comparative analysis should be
noticed are depicted inAnnexure-9. done before finalizing vendor.

Management Response

- The corrective accounting entries have been passed.

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5. EXCESS PAYMENT MADE:

Observations Risk Category High Risk Type: Financial

- During the course of audit, we have identified following 2 cases in Root Cause
which booking and payment of expenses has been done twice against
the same bill: - Payment against copy of invoice
- Absence of Work Order / Purchase Order processing system
Date of entry Name of the party Amount excess - Delay in receiving invoices from the parties.
in books booked - Absence of policy to entertain the Bills of Vendor received after
Techno Gas Systems Pvt substantial time period
26/07/2017 3,35,720
Ltd
Possible Impact
- Under IEP for Sacred Heart University, visa charges has been charged
by Vagabond Holidays 30 students and 2 faculties. In total payment of - Excess payment to vendors
Rs. 4,69,200 has been made for 32 persons whereas 27 students and 2 - The payment made to vendor without services being availed.
faculties have attended the visit. This has resulted into excess payment - Blockage of funds due to excess payments made.
of Rs. 46,519 for 2 persons.

Management Response Recommendations

- Due compliance have been done. - The payment should be released only after the receipt of the original
copy of invoice from the concerned vendor.

For, Manubhai & Shah LLP

Chartered Accountants
Firm Registration No. 106041W/W100136

Place: Ahmedabad (G. R. Parmar)

Partner
Date: 12/01/2018 Membership No. 121462

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