draft audit report jan'14 to march'14

PremArun Jain& Co. 1 Chartered Accountants

SLV SECURITY SERVICES PRIVATE LIMITED

“Draft” Internal Audit Report for the period January 1, 2014 to March 31, 2014

P R E F A C E

1.0 M/S Prem Arun Jain & Co, Chartered Accountants performed Interim

Audit for the period Jan 1, 2014 to March 31, 2014. The Report is based on

our observations made during our visit to the office and the information and

explanations provided by the concerned officials. The objective of audit was

to highlight areas of control weakness and report on non-compliance of

policies, procedures of the organization.

2.0 Enclosed are the detailed observations based on the basis of “Test Check”

of records provided for audit purposes.

3.0 Areas covered for the period from January 1, 2014 to March 31, 2014 are as

under:

1. Revenue

2. Expenditures

3. Review of existing practices and procedures

4. Supplementary records maintained

5. Statutory Compliances


PHYSICAL VERFICATION

CASH: -During the course of audit our representative undertook physical

verification of cash on June,04,2014 at 1:00 PM with Mrs. Mathew, group

cashier and physically verified cash in hand of Rs 3,49,248/-

BANK ACCOUNTS: - The Company is maintaining below Bank accounts

balance as on 31st March 2014.Which are duly reconciled with records.

Bank Name Bank balance as per Tally(Rs.)

PNB ACCOUNT 4542002100001306 1,88,651.76

AXIS BANK 707010200000806 2,63,702.13

HDFC BANK LIMITED 04858300000014 17,504.82

SCB (BANK OD) 531-0-5010639 18,99,76,916.28(CR.)

KOTAK MAHINDRA BANK LIMITED 9711167057 55,28,718.59

ORIENTAL BANK OF COMMERCE 52251131001777 1,36,73,967.25

STATE BANK OF INDIA 30343706716 9,06,124.80

SYNDICATE BANK 91111010001790 7,63,570.90

CENTRAL BANK OF INDIA (DIVIDEND BANK A/C 2004) 3,000.00

INDUSIND BANK 200012972722 1,80,288.27

CENTRAL BANK OF INDIA 2736 47,506.03

HDFC BANK 00908640000098 28,27,974.77

ICICI BANK 165105000240 58,35,935.62


REVIEW OF MARGIN:-

On basis of review of monthly billing for Jan. 2014 to March 2014 and salary

/wages booked for Jan 2014 to March 2014 it has been observed as under:-

MONTHS BILLING

(RS. IN CR)

DIRECT COST

(RS IN CR.)

MARGIN

(RS IN CR.)

MARGIN %

January 2014 14.29 11.24 3.05 21.34

February 2014 14.38 11.45 2.93 20.38

March 2014 14.39 12.19 2.2 15.29

Total 43.06 34.88 8.18

Direct cost = Wages +Testing wages +Employer Contribution

There has been decline in December, 13 margin as compared to

October/November 13 margin mainly due to increased direct cost. The monthly

billing has shown decreasing trend.

Further , it has been observed that there has been decline in billing during this

quarter as compare to Rs.43.11cr.during quarter ending September 2013 . The

overall margin has also shown a decline in this quarter as compare to 22.85%

during quarter ending September 2013.

STATUTORY COMPLIANCE:-

TDS PAYABLE: -It has been observed that the Company has been regular

in deposit of its monthly tax dues.

o 192 - SALARY

o 194J- PROFESSIONAL

o 194C-CONTRACTOR

o 194I – RENT

PF PAYABLE: - It has been observed that there had been delay in deposit

of monthly PF contribution in below case as per details below.


MONTH

CHALLAN AMOUNT (RS.)

DUE DATE CHALLAN DATE

December 2014 81,573.00 20.01.2014 13.02.2014

March 2014 23,052.00 20.04.2014 28.04.2014

ESI PAYABLE: - It has been observed that there had been delay in deposit of

monthly ESI contribution in below cases as per details below.

ESI CODE NO SITE MONTH CHALLAN AMOUNT

(Rs.)

DUE DATE CHALLAN

DATE

52690278550011018 HYD March 2014 73,336 21.04.2014 23.04.2014

14690278550011018 PUBJAB March 2014 30,801 21.04.2014 23.04.2014

44690278550011018 ODISHA March 2014 1,06,781 21.04.2014 23.04.2014

44690278550011018 ODISHA March 2014 55,841 21.04.2014 23.04.2014

30130278550011018 LUCKNOW March 2014 20,810 21.04.2014 23.04.2014

47690278550011018 COCHIN March 2014 18,409 21.04.2014 23.04.2014

53690278550011018 BANGLORE March 2014 1,01,958 21.04.2014 23.04.2014

51130278550011018 CHENNAI March 2014 2,65,648 21.04.2014 23.04.2014

18690278550011018 Indore March 2014 9,217 21.04.2014 23.04.2014

15690278550011018 Jaipur March 2014 18,695 21.04.2014 23.04.2014


69000278550001018 NCR March 2014 49,72,086 21.04.2014 23.04.2014

61130278550011018 HARDIWAR

12690278550011018 Mohali March 2014 23,439 21.04.2014 23.04.2014

15690278550011018 Jaipur March 2014 1,08,880 21.04.2014 23.04.2014

40690278550011018 Kolkata March 2014 66,643 21.04.2014 23.04.2014

35690278550011018 Mumbai March 2014 59,495 21.04.2014 23.04.2014

In our view the Co. should ensure timely deposit of statutory dues in order to avoid

penal consequences.

Further there is need to reconcile PF/ ESI deposited as per challans vis – a-vis

records and ensure that PF /ESI contribution as per salary / wages sheet duly

reconcile with challan figures.

LABOUR WELFARE FUND: - It has been observed that there had been

deposit of Quarterly/half yearly LWF contribution as per details below.

STATE PERIOD AMOUNT (RS.) DUE DATE DATE OF

DEPOSIT

Haryana Quarterly 8,51,250.00 15th of next

month 13/04/2014

It has been observed that the Company paid LWF in Haryana on Quarterly basis

but in this case company has option to pay on annual basis. Action on last quarter

reply.

If approved by management LWF be deposited on annual basis and not on

Quarterly so that funds are not unnecessarily blocked.

Income Tax Assessment:

Assessment Year: 2011-12 – Observed that Return of income filed on 30/09/2011

seeking refund of Rs. 13, 10,005 /- however as per order dt. 16/02/2012 u/s 143 (1)

a of the Income tax act refund of Rs. 3,73,241/- determined resulting in short

refund of Rs. 9,36,704/- Further refund of Rs. 1,61,948/- only received on


08/06/2013 after adjustment of demand of Rs. 2,11,293/- per taming to 2009-10

(order passed u/s 143(3) dt. 27/12/2011) . The company has submitted rectification

request u/s 154 of the income tax Act on 27/09/2013 which is pending Need to

follow up refund due under rule.

ADVANCE TO SUPPLIERS: During course of Audit in below cases it has been

observed that Debit balances are appearing pending adjustment.

Name of Party Amount (Rs.) Remarks

Inder Sen Singh 14115.00 Amount deducted against

DFMD (DFMD received

11 nos. from store but

delivered 10 nos. on site,

Reported in last quarter

report also)

Amount Recoverable: Mr.Mahipal Singh (A0434)

It has been observed that Mr.Mahipal Singh Field Officer (A0434) left job on 28th

February 2013. A sum of Rs.8847/- was due from him. It need to be ascertained as

to how his full & Final or releave order had been issued without recovery of

amount due from him. Action taken on our last report.

We had reported this issue in our earlier report also.

Fooding Expenses: ORISSA

It has been observed that Rs. 196.17 Lac has been incurred towards fooding

expenses at ORISSA during April 2013 to December 2013 thru Amitaben

Bhadoria whose agreement stands expired since May 2013 and has not been

further renewed. Further in our view there should be explicit understanding that the

food contractor would be solely responsible for meeting all food safety

requirements and seek all necessary approvals under food adulteration Act. The

chef/cook deployed at the site should be agency employee and he be registered as

designated chef/cook. Further that wages of the cooks is being by the company this

entails liability on the company for any mishap. Action taken on our last report.

This issue had been observed in our last quarter report and auditee comments on

this issue awaited.


Suspense Accounts: Observed credit balance of Rs. 1,99,023.00 which needs to be

adjusted in accounts.

Rent Payable Vishal Swara : Observed that no provision for rent in respect of A -

22 Vasant Vihar New Delhi and Carterpuri office has been provided in terms of the

lease agreement.

Last year provisions remaining unpaid: Observed that provisions made in last

year are remaining unpaid as per the records. These cases be reviewed as to the

reason for nonpayment and in case these amounts are not payable excess provision

made be written back.

Head of Account Amount(Rs.)

Washing allowance 19,43,935.00

Conveyance payable 7,12,223.60

Mobile expenses payable 2,30,363.00

Bonus payable 3,81,32,006.00

Earned leave payable 18,642.00

Salary payable 7,10,426.00

Staff Imprest (Others) : Observed staff imprest lying un adjusted as on 31st

December 2013.

Name Amount

(Rs.)

Remarks

CHETAN (W)

1,25,88,291.

00

Cash paid thru senior

supervisor pending

adjustment. Need to adjust

wages paid on regular basis

Imprest-Om Prakash Mahto(W)

3410.00

Since last Year

Imprest - Sujan Singh DD

1,41,16,591.

30

Since last Year

Imprest Surat Singh(DD) 1,17,99,600. Since last Year


73

IMPREST GOVIND SHARMA (W)

2,32,43,886.

00

Cash paid thru senior

supervisor pending

adjustment. Need to adjust

wages paid on regular basis

Total

6,17,51,779.

03

Imprest (Local - Expenses): Old Balance lying unadjusted as on 31st Deember

2013.Action taken on last report.

Name Amount (Rs.) Remarks

Imprest Abhey Singh (Dlf Area

F/o)

32786.00

Since last Year

Imprest Dharmender Kumar -

Gm(Exp.) 2457.00

Since last Year

Imprest Gulfan Khan (Exp.)

3000.00

Cash paid thru Site Control

Room Exp. During April to

September 2013(Pending

Adjustment)

Imprest Hemant Pandey (Exp.)

14826.00

Since last Year

Imprest Jaibhagwan (Exp.)

35169.00

Since last Year

Imprest Pappu Sharma (Exp.)

158827.00

Cash paid thru Magnolia

fire NOC During April to


Adjustment)

Imprest Ramel Katoch (Exp.)

24000.00

Since last Year

Imprest - Ram Kumar

(M.S.)(Exp.)

7750.00

Cash paid thru

accommodation of SGS


During April to September

2013(Pending Adjustment)

Imprest - Ratan Lal-Exp.

56719.00

Since last Year

Imprest Sardar Singh (Exp.)

13598.00

Cash paid thru Khandsa

Office Exp. during April to


Adjustment

Imprest Surat Singh(Exp.)

307440.00

Since last Year

TOTAL 656572.00

Related party transaction:

Observed debit balances in below cases where amount paid to related parties-group

companies pending refund/adjustment.

Name of party Amount(Rs.) Remarks

SGR Estates Pvt.Ltd 8,75,062.00 VSR Infrastructure Pvt.Ltd 19,61,860.00 Sams Facilities Management

Pvt.Ltd(F&B) 6,00,000.00

Sams Facilities Management

Pvt.Ltd(L) 56,902.00

SLV Assets Management

Services 43,14,936.87

SLV Training (Branch

Account) 63,56,910.00

Further observed in below cases credit balances pertaining to related parties/group

companies outstanding as on 31st December’2013.

Name of party Amount(Rs.) Remarks

Ruchi Swara 34,94,473.00

Vishal Swara 1,15,00,000.00


SVR Realtors Pvt.Ltd. 1,13,50,000.00

Vishal Swara(HUF) 6,50,000.00

In our view and if approved by management there is a need to settle terms &

conditions of loans/advances given/taken by way of formal board resolution.

Compliance to provisions of Section-2(22)e of the Income Tax Act’1961 covering

deemed dividend and Sec-370 of the Companies Act’1956 and Sec----------of the

Companies Act’2013 need to be taken care of in respect of above transactions.

Sundry balances written off:

Observed Rs.75,56,671.89(Net) has been written off in the accounts being amount

due from customers. Formal approval of competent authority should be obtained

and placed on records. We could verify only approval for Rs. 20,000 (JVTAOA).

The possibility of adjustment of Service Tax liability discharged on these amount

be considered on basis of permissible service tax rules after obtaining opinion of

service tax consultant on this issue.

Realization of dues from customers:

Observed during course of audit during Febrauary’2014 in below cases that client

has discontinued their business and the amount recoverable appears to be doubtful

of recovery. In our view and if approved by management below issues be

considered:

1. Provision for doubtful debts be made in the accounts.

2. Possibility of initiating legal action for recovery.

3. The possibility of adjustment of Service Tax liability discharged on this

amount be considered on basis of permissible service tax rules after

obtaining opinion of service tax consultant on this issue.

Sundry Debtors(Group) Outstanding

Amount(Rs.)

Remarks


discontinued sites

Col. Bakshi 28,74,457.56 For details please refer

Annexure-1

Col. M.S.Gulia 20,18,198.08 Annexure-2

Lt.Col. Mahender Singh 4,02,171.20 Annexure-3

Mr.Anil Sehgal 5,80,926.05 Annexure-4

Mr.Mithlesh Srivastava 8,77,677.00 Annexure-5

Col.Prabhakar 21,10,553.00 Annexure-6

JLLM Group 4,77,256.16 Annexure-7

MP Gaur 7,44,916.14 Annexure-8

Mr.Amrit Pal Singh 8,00,788.00 Annexure-9

Mr.Atul Sharma 4,20,119.52 Annexure-10

Mr.D.P.Jayraj 2,31,504.00 Annexure-11

Mr.MPS Dhillon 27,87,859.00 Annexure-12

Mr.Vinod Kaushik 18,09,650.00 Annexure-13

Mr.Vinod Pratap Singh 6,33,723.00 Annexure-14

Rupak Thakur 4,80,223.00 Annexure-15

Mr.Amit Kumar Singh 1,44,270.00 Annexure-16

Total 1,73,94,290.89

TDS Recoverable :

It has been observed that certificate u/s 197 of the Income Tax Act towards

deduction of TDS at rates lower then the prescribed rates for F.Y 2013-14 has been

obtained from DCIT,TDS Circle 51(1) New Delhi. However, entry pertaining to

TDS recoverable in the accounts has been made in clients account not as per the

certificate. There is a need to reconcile TDS recoverable account in terms of

certificate issued by the department and amount of TDS reflected in the Form-

26AS for F.Y 2013-14. As any excess amount reflected as TDS recoverable should

be debited to client account.

Further this exercise is pertinent in order to deposit advance tax if any applicable in

terms of estimated taxable income for A.Y 2014-15.


Maintenance and updation of Fixed Asset Register:

Need to update entries of addition to fixed assets during F.Y 2013-14 in the Fixed

Assets Register pursuant to the CARO rules as applicable under Companies Act

2013. Also shortage/excess if any determined during course of physical

verification by management be given effect in the records.

Seeking refund of Earnest Money Deposit:

It has been observed that EMD has been paid in below cases. In case the tender has

been finalized and not awarded to the company, steps be taken in obtaining refund

of EMD paid or amount be written off after taking management approval.

Cases of lease deed pending “renewal “ as at 31/03/2014

Observed that in cases as per detail in annexure – lease agreement stand expired

or will be expiring on 31/03/2014. The same cases need to be looked into and lease

agreement be renewed .

S.No Site Name Period

1 Alwar 28/02/2014

2 Badshahpur 31/12/2013

Name of party Amount(Rs) Remarks

SUDA, U.P 30,000.00 Final Closure order from

DM Banda not yet

obtained

Gurukul Kangri

Vishvidyalya

10,000.00 Rs. 2,00,000/- received

during July 2013 against

Rs.2,10,000/- Paid

Director SUDA 2,00,000.00 Final Closure order from

DM Banda not yet

obtained

Total 2,40,000.00


3 Chandigard 28/02/2014

4 Chennai-II 31/01/2014

5 Chennai-III 31/01/2014

6 Gaya 10/11/2013

7 Gwal Pahadi 31/01/2014

8 Hyderabad 31/06/2013

9 Indore 31/01/2014

10 Jharsa-I 28/02/2014

11 Jharsa-II 31/03/2014

12 Kerela 05/10/2013

13 Noida 07/03/2014

14 Odisha-II 31/03/2014

15 Puna 07/05/2012

16 Vasant Kunj 31/01/2014

Availing Credit Facility from Indiabulls Housing Finance ltd:

Observed that company has availed LAP (Loan against property ) in terms of

sanction letter dt. 31/12/2013 for Rs. 1.75 cr. The said facility has to be utilised for

Camellia Property as per the terms of sanction. however the said amount has been

utilised for reduction of OD limit with Standard Charted Bank. Also no Noc from

Standard charted Bank has been obtained before availing this facility.

The end use utilization of financial assistance availed need to be in accordance

with the terms of sanction

draft audit report jan'14 to march'14

Education

bank balance

indusind bank

syndicate bank

axis bank

icici bank

hdfc bank limited

state bank of india

bank accounts balance