B. SUGAR INDUSTRY Auditing Help

AUDIT PROCEDURES

1. Verify cost of sugarcane procured.
2. Verify receipts and issues of process materials such as lime, sulphur, super – phosphate, caustic soda, filter cloth and other chemicals.
3. Compare wastage, spoilage, rejections of quantity and cost of sugarcane and other raw materials with previous year and inquire
into unusual fluctuations.
4. Verify production and sales oflby product. ‘.
5. Evaluate  accounting for cost of white sugar transferred to other units of the company for self-congumption.
6. Review, compare with previous years and investigate large fluctuations in duration of crushing period, quantity of each grade of sugar produced, percentage of sugar balance in case of mixed juice, press-mud, molasses and sugar
7. Verify following components of cost of mixed juice with supporting
documents.
(a) Raw material/process materials
Sugar cane

Gur

Water

(b) Direct salaries, wages and benefits
(c) Consumable stores
(d) Repairs and maintenance
(e) Insurance
(f) Steam
(g) Depreciation
(h) Other factory overheads

Less realizable value of baggage

 Total cost of mixed juice produced

8. Verify following components of cost of production of clarified juice.

(a) Raw materials

Cost of mixed juice as above
– Lime
– Filter

(b) Direct Salaries
(c) Consumables
(d) Repairs and maintenance
(e) Utilities
(f) Steam
(g) Insurance
(h) Depreciation
(i) Other factory overheads

Total cost

Less realizable value of press mud

Total cost of clarified juice produced

Verify following components of cost of production of Massecuite

(a) Raw materials

– Cost of clarified juice as above
– Process material

(b) Direct salaries
(c) Consumables
(d) Repairs and maintenance
(e) Utilities
(f) Steam
(g) Insurance
(h) Depreciation
(i) Other factory overheads

• Add work in process opening

• Less work in process closing

• Total cost of Massecuite transferred

10. Verify following components of cost of white-bagged sugar produced.

(a) Raw materials

– Cost of Massecuite
– Process materials

(b) Direct salaries and wages
(c) Consumables
(d) Repairs and maintenance
(e) Utilities
(f) Steam
(g) Insurance
(h) Depreciation
(i) Other factory overheads

Total cost
Less realizable value of molasses
Total cost of white sugar
Add work in process opening
Less work in process closing
Cost of white sugar
Add packing materials

Total cost of White Bagged Sugar

Excise duty on quantity produced
Less excise duty paid

Excise duty payable on finished goods

11. Where a company cultivates sugarcane on its own farm, verify profit / loss on own production of sugarcane. Obtain documentary
evidence for the following

(a) Seeds, fertilizers, herbicides
(b) Insecticides
(c) Abiana / Water charges
(d) Land preparation
(e) Plantation
(f) Operation of tractors
(g) Harvesting –
(h) Utilities
(i) Insurance
(j) Depreciation
(k) Rent of equipment

(1) Other cost

Total cost of own production

Sales value at controlled price

Profit / Loss on own production

12. Verify following elements of cost of sugarcane crushed.
(a) Total sugarcane purchased at Government fixed price
(b) Sugarcane produced from own farms as above
(c) Commission
(d) Quality premium
(e) Loading/unloading charges
(f) Cane development expenses
(g) Can cess / purchase tax
(h) Road cess
(i) Octroi
(j) Transport charges
(k) Salaries and wages

(1) Repairs and maintenance (m) Others

Total cost of sugarcane

13. Ensure that the company has maintained proper books and records as required by Sugar Industry (Cost accounting records) Order, 1995

Posted on November 4, 2015 in Audit of Specialized Industries

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