Lucky Textile Mills Limited

Draft Internal Audit Plan 2015-16

S. No Business Processes Audit Month Audit Month

1 Production, warehousing and inventory management September 2015 to December 2015 In process To 31-March-2016

2 Procurement to Payments January 2016 to February 2016 1-April-2016 To 30-April-2016

3 Accounting and Finance Processes February 2016 to March 2016 1-May-2016 To 31-May-2016

4 Sales, Receivables Management and Distribution April 2016 to May 2016 1-Jun-2016 To 30-Jun-2016

5 Capital Expenditure Jun-16 1-Jul-2016 To 31-Jul-2016

6 HR & Payroll Management July to August 2016 1-Aug-2016 To 31-Aug-2016

Lucky Textile Mills Limited
Draft Internal Audit Plan 2015 - 2016

Business Process

1. Production, warehousing and inventory management

Production and demand planning,
Issuance of raw and packing materials to manufacturing facilities (spinning, weaving,
dyeing and stitching etc),
Issuance of non-inventory items (stitching accessories, loose tools etc) from stores to
manufacturing facilities for maintaining the plant & equipment
Conversion process from raw and packing materials to finished goods at the
manufacturing facilities (spinning, weaving, dyeing and stitching etc),
Monitoring of production losses at manufacturing facilities,
Production quality assurance,
Physical counting of stock and matching with quantities as per the records (on a sample
basis),
Costing and valuation of raw / packing materials, semi finished and finished goods. This
sub process will be tested on quarterly basis.
Review of IT application controls related to process including access control list

2. Procurement to Payments
Procurement budgeting and planning,
Supplier management (selection & evaluation),
Bidding / negotiation of purchase prices,
Issuance and authorization of purchase requisition and purchase order,
Receipts and quality inspection of inventory and non-inventory items,
Recording of liability against goods and services,
Goods return,
Accounts payable processing and payment including cash disbursement,
Payment to contractors for supply of contractual labor,
Reconciliation of supplier wise payment with the purchases made,
Claims lodged with supplier or insurance company for defected or damaged goods
received, and
Review of IT application controls related to process including access control list
Recording of taxes and duties on purchases.

3. Accounting and finance process

Planning and budgeting
Financial statements closing process
Taxation accruals and payment
Treasury and funds management
General ledger maintenance
Financial reporting (including management reporting, if any)
Delegation of authority matrix
Review of IT application controls related to process including access control list
Petty cash management

4. Sales, receivables management and distribution

Sales planning and forecast,

Customer selection, and evaluation for local and export,
Product pricing, discounts and commission,
Order processing and invoicing to customers,
Sale / Product returns,
Customers billing, credit & debit notes,
Cut-off / revenue recognition controls,
Export sales,
Credit management: credit policy, credit risk evaluation, aging analysis and provisions
against doubtful debts,
Lucky Textile Mills Limited
Draft Internal Audit Plan 2015 - 2016

Business Process

Accounts receivable management,

Marketing
Freight and transportation expenses, and
Review of IT application controls related to process including access control list
Access controls over customer master file and price file.

5. Capital expenditure
Capital expenditure approval and budgeting process,
Monitoring of budgeted capital expenditure with actual expense incurred,
Purchasing and recording,
Capitalization of assets in accordance with the company policy,
Capital work in progress,
Controls over fixed assets, including reconciliation of general ledger with fixed assets
register,
Physical security and safety of fixed assets,
Receiving and inspection of fixed assets,
Fixed asset disposals, and
Review of IT application controls related to process including access control list
Asset utilization, depreciation, amortization and impairment.

6. Payroll management
Employee leaves and attendance management
Annual increments, bonuses and leave encashment
Statutory compliance (minimum salary requirements, deductions, etc.)
Overtime payments, approval and recording,
Access controls over master payroll file
Additions, transfer and removal from payroll
Payroll processing and approval process,
Disbursement of loans and advances to employees against salary,
Payment to temporary and contractual employees.
Review of IT application controls related to process including access control list
 Manuals to be covered Audit period

Weaving SOP
Gate Pass SOP (LTM I , II and III)
Processing Manual
September 2015 to December 2015
Gate Pass SOP (LTM IV)
Apparel Stitching SOP
TMU Stitching Final SOPs (including LTM IV stitching)

Yarn Procurement SOP

General and Accessories SOP January 2016 to February 2016
Dyes and Chemicals Procurement SOPs

Accounting Manual February 2016 to March 2016

Marketing Manual
April 2016 to May 2016
Export Manual
 Marketing Manual
April 2016 to May 2016
Export Manual

Manuals to be covered Audit period

CAPEX Manual June-16

HR & Payroll Management Manual July to August 2016