1

INTRODUCTION TO BOOKS OF ACCOUNTS

Every company must maintain proper books of accounts of its affairs. The
following transactions must be entered in the books of accounts of the company
which must be kept at its registered office :-
a. all sums of money received and expended by the company and the matters
in respect of which the respect of which the receipt and expenditure took
place;
b. all sales and purchases of goods by the company; and
c. the assets and liabilities of the company.
d. in the case of a company engaged in production, processing,
manufacturing or mining activities, such particulars relating to utilisation
of material or other items of cost as may be prescribed relating to certain
class of companies as the Central Government may require.
The books of accounts must comply with the following conditions :-
1. The books must give a true and fair view of the state of affairs of the
company or the branch office, if any, and explain its transaction.
2. The books must be kept on accrual basis and according to double entry
system of accounting.
Every company must keep its books of account at its registered office. However,
some of the books of account may be kept at such other place in India as the Board
of Directors may decide, provided a notice in writing giving full address of that
other place alongwith requisite filing fee is filed with the Registrar of Companies
within seven of such decision.
If the company has a branch office, the books of account relating to transactions at
the branch office may be kept at that branch office, but proper summarized reports
and statements must be sent to the registered office or such other place where the
books are kept, at intervals of not more than three months. The books of account of
the branch must give a true and fair view of the affairs of the branch and clearly
explain its transactions.





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Preparation of Balance Sheet and Profit
and Loss Account
The company has to prepare its balance sheet and profit & loss account from the
books of account maintained by it. Every Balance Sheet of a company must give a
true and fair view of the state of affairs of the company as at the end of the financial
year and must be in the prescribed format. If the responsible for maintaining proper
books of account fails to take all reasonable steps to secure compliance by the
company with the requirement of law relating to the form and contents of the
balance sheet, he is liable for each offence to imprisonment for a term extending up
to six months or to fine up to Rs.1,000/- or to both.
Circulation of Balance Sheet and Auditors'
Report
A copy of every balance sheet, profit and loss account, auditors' report and every
other document required to be annexed or attached to the balance sheet must be sent
not less than twenty-one days before the general meeting to every member, to every
trustee for debenture holders, and to all other persons who are entitled to have a
notice of general meetings. In the case of a company not having a share capital, the
above documents need not be sent to a member, or debenture holder who is not
entitled to have notice of general meetings.
In case of listed companies, the company may keep the aforesaid documents
available for inspection at its registered office during working hours for a period of
twenty-one days before the meeting and send to every member and trustee for
debentureholders only a summarized statement containing the salient features of
these documents in the prescribed format.
Filing of Annual Accounts with the
Registrar
Every company must file with the Registrar within 30 days from the day on which
the annual accounts, auditors report and the directors report were presented at the
annual general meeting, three certified copies of these documents signed by the
managing director, manager or secretary of the company or if there be none of these
by a director of the company. These accounts may be inspected and copies thereof
may be obtained by any member of the public at the Registrar of Companies on
payment of the requisite fee. However, no person other than a member of the
company is entitled to inspect, tending up to six months or to fine up to Rs.1,000/-
or to both.


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Auditors of Other Companies
It is the duty of the auditor conduct the audit of the books of accounts of the
company and to make his report to the members of the company on the accounts
examined by him, and on every balance sheet, every profit and loss account and on
every other document declared by the Act to be part of or annexed to the balance-
sheet or profit and loss account and laid before the company in general meeting
during his tenure of office. The auditors report, besides other things necessary in
any particular case, must expressly state-
1. whether, in his opinion and to the best of his information and according to
explanation given to him, the accounts give the information required by the
Act and in the manner as required;
2. whether the balance-sheet gives a true and fair view of the company's
affairs as at the end of the financial year and the profit and loss account
gives a true and fair view of the profit or loss for the financial year;
3. whether he has obtained all the information and explanations required by
him for the purposes of his audit;
4. whether in his opinion, the profit & loss account and balance sheet refered
to in his report comply with the accounting standards recommended by the
I nstitute of Chartered Accountants of I ndia;
5. whether, in his opinion, proper books of account as required by law have
been kept by the company, and proper returns for the purposes of his audit
have been received from the branches not visited by him;
In case any of the above matters is answered in the negative or with a qualification,
the auditor's report must state the reason for the same. Where the auditor is unable
to express any opinion in answer to a particular question, his report shall indicate
such fact together with the reasons why it is not possible for him to give an answer
to such question. The Central Government is empowered to issue orders requiring
the auditor to include in his report a statement on such matters as may be specified.
In exercise of this power the Central Government has issued an order called "The
Manufacturing and other Companies (Auditor's Report) Order, 1975. It is the duty
of the auditor to comply with this order when making his report to the shareholders.
Only the person appointed as auditor of the company or where a firm of auditors is
so appointed, only a partner of that the firm practising in India, can sign the
auditor's report or sign or authenticate any other document of the company required
by law to be signed or authenticated by the auditor.



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Appointment

Section 252 throws light upon the appointment of an auditor:

Appointment of First Auditor by Directors
First Auditor
The co-operative law authority can appoint the first auditor of a company if the
company in the general meeting does not appoint the first auditor within 120 days
of the date of incorporation of a company.
Casual Vacancy
The board of directors is empowered to fill any casual vacancy in the office of an
auditor except one, which is caused by prior resignation.

Appointment By Shareholders
In case the board of directors fails to appoint the auditor, the company can appoint
the first auditor within 120 days of the date incorporation of the company.
Removal of an Auditor

According to Section 224(3)of the Companies Act, any auditor may be removed
from the office before the expiry of his term but it can be done only by the company
in its general meeting and with the previous approval of the control Government.
The auditor may be removed in the following cases.
The auditor can be removed by the members in the general meeting of the company.
It is immaterial whether the auditor has completed his term of appointment or not.
Another person can be appointed in place of first auditor in the general meeting.
Notice of nomination of such other person to be appointed as auditor must be given
at least 14 days prior to the general meeting.
Other than the member in the general meeting of the company prior approval of the
central Government to remove can remove the first auditor the auditor must be
obtained in that behalf.





5


Rights and Powers of an Auditor

Following are the important rights of the auditor :-

Access To Books
According to Section 227(1) the auditor of a company has a right of access, at all
items to the books and accounts and voucher of the company, whether kept at the
head office of the right of access to books etc is an absolute right and is not subject
to any restriction exception or qualification. This means that the auditor can
examine the books vouchers etc at any time during normal working hours.

Right of I nspection
It is a right of the auditor that he can inspect the record of the company at any time.
He can visit without any notice and verify the cash or any document.

Right of I nformation
According to Section 227(1) the auditor has the right to obtain any information and
explanation from the officers or directors of the company as he may think necessary
for the performance of his duties as an auditor. If any information or explanation is
refused on the ground that it is not necessary for the performance of his duties as
auditor. He may report to the members accordingly.

Access to Branches
According to Section 228(2) the auditor has a right to visit the branch office of the
company if any, if a duly qualified auditor has not audited the accounts of company
branch and if he deems it necessary to do so for the performance of his duties as
auditor.

Receiving Notices
According to Section 231 a company auditor has a right to receive all notices and
other communications relating to any general meeting of the company, which any
member of the company is either to have sent to him.




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Right of Attending the Meeting
According to Section 231 the auditor has a right to attend any general meeting and
to be heard there at any part of the business, which concerns him as auditor,
however, the right to attend a general meeting and to speak there at in not
mandatory.

Report to Member
According to Section 227(2) the auditor has a right to make a report to the members
on the account examined by him and to state whether the said account give the
information required by the companies act in the manner which is required.

Sign Audit Report
According to Section 229, the auditor has a right to sign the auditor's report or
authenticate any other document of the company.

Seek Legal and Technical Advice
The auditor has a right to seek opinions of experts in different fields whenever he
feels it necessary as he is not expert in all the areas.

Receive Remuneration
According to Section 224(8) the auditor has a right to receive remuneration for
auditing the accounts of the company after he has completed the work of audit even
if he is dismissed in the middle he has a right to get full remuneration of the year.

Speak
The auditor has a right that he can speak in the annual general meeting for the
explanation of some matters, which are related, with the accounts of business.

Present in Meeting
For the safeguard of his right the auditor has a right to remain present in the
meetings of the company. Sometimes the business accounts may not be presented
before the shareholders for the approval. In this time the auditor can protect
himself.
Opinion
The auditor has also a right to consult the experts for some matters. In order to clear
the doubt he may get the help of the technical services. So the auditor has also a
right of seek the opinion.


7



Correction
The auditor has also a right of correction. He can make correction in the written or
spoken matters. Even that he can make a revised statement if he founds any written
mistake in it.

Representation
The auditor has also a right to defend himself if he is asked to leave the office in the
meeting. So he can make the representation in meeting. He has a right to remain in
business for the full tenure.

Important Note
It is clear that the right of an auditor cannot be limited either by the articles of
association or by the resolution of the members.

















8


AUDITING OF HOSPITALS
To understand the concept of hospital audit in the Indian context we have to look at
the types of audits performed in India. There are two types of audits; internal audit,
which is conducted by the hospitals themselves, and external audit, which is
conducted by QCI (Quality Control of India).
An internal audit is usually conducted by an internal audit committee on the basis of
peer review and consists of senior doctors, nurses, infection control officers and
other medical professionals. It follows a calendar or routine and this differs from
hospital to hospital. But in case of any complain or emergency situation, department
wise audits are conducted.
And as for the external audit or third party audit, it is conducted by NABH
(National Accreditation Board for Hospitals and Healthcare Providers), which is a
part of QCI. The latter is a quasi-government organisation established in 1997,
which started its own accreditation format; NABH from 2005. Once a hospital
applies for an NABH accreditation NABH conducts a pre-assessment. Based on the
findings of pre-assessment, the hospital takes corrective action and applies for final
assessment. Once the accreditation is granted, a surveillance audit is conducted
within 18 months of accreditation. Thus, it is a continuous quality improvement tool
rather than one time exercise. Process audits, document audits, mortality and
morbidity audits, infection control and hand hygiene audits, medication safety
audits, clinical audits are requirements for NABH standard implementation.
And for few special chains of hospitals like Fortis or Apollo both the procedures are
followed.








9


Apollo group of Hospitals



It is often said that nothing happens, unless there is a dream first. At the genesis of
the Apollo story there was a dream. A dream so powerful, that it helped transform
the medical landscape in India.

Company Vision
Apollo's vision for the next phase of development is to 'Touch a Billion Lives'.

Mission Statement
"Our mission is to bring healthcare of I nternational standards within the reach of
every individual. We are committed to the achievement and maintenance of
excellence in education, research and healthcare for the benefit of humanity"



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The dream nurtured and grew within Dr. Prathap C Reddy, the founder Chairman of
Apollo Hospitals, until the point of inflection happened in 1983. A young man
succumbing to an ailing heart was what it took to ignite Dr. Reddy's vision into a
reality - a vision where quality healthcare was given, where the pursuit of clinical
excellence was daily endeavor, India a hub in the medical tourism map and where
the Apollo family touches and enriches lives every minute, every day.
Today, with over 8500 beds across 54 hospitals, and a significant presence at every
touch-point of the medical value chain, Apollo Hospitals is one of Asias largest
healthcare groups. Commenced as a 150 bed hospital, today the group has grown
exponentially both in India and overseas. Its growth is often said to be synonymous
with India emerging as a major hub in global healthcare.
Apollo Hospitals is driven by a single thrust, to provide the best standards of patient
care. It is this passion that has lead to the development of unique centers of
excellence across medical disciplines, within the Apollo Hospitals network. Apollo
Hospitals has JCI accreditations for 7 of its hospitals, the largest by any hospital
group in the region.
True to its founding principles, the group has made quality healthcare accessible to
the people of India, and even overseas. It has become an institution of trust, and a
beacon of hope to so many searching for a cure for their ailments.
The legacy of touching and enriching lives stems from the pillars of the Apollo
philosophy - experience, excellence, expertise and research. We pride ourselves for
constantly being on the cutting edge, and going the extra mile to stay relevant and
revolutionary.

The Apollo Hospitals Group is the pioneer of integrated healthcare delivery in
India. This vision led the group to earmark time and resources to strengthen each
vital cog in the process of healthcare delivery. As a result of these efforts, the group
today is in a unique position to exponentially increase its healthcare cover. This will
be critical in order to meet future requirements.
Apollo Hospitals Group, today, is an integrated healthcare organization with owned
and managed hospitals, diagnostic clinics, dispensing pharmacies and consultancy
services. In addition, the groups service offerings include healthcare at the patients
doorstep, clinical & diagnostic services, medical business process outsourcing, third
party administration services and health insurance. To enhance performance and
service to customers, the company also makes available the services to support
business, telemedicine services, education, training programs & research services
and a host of other non-profit projects.




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VERIFICATION OF BALANCE SHEET

SCHEDULE A- SHARE CAPI TAL
In the first year of existence of the company ,the auditor should examine the
Memorandum and Articles of the Association of the company and the prospectus
to ascertain the details of the capital.
The auditor should also check the cash book, pass book and minutes book of the
directors and find out the allotment of shares , calls made on shares.
In subsequent years, the auditor should see that there is any fresh issue of capital
or capital is redeemed or there is reduction in capital when the provision of
companies act are complied with.

SCHEDULE B- RESERVES & SURPLUS
The auditor should see that provisions of transfer of profit to reserves are
complied with and whether reserves are created out of the profits.
The auditor should see that reserves are created out of profit or on revaluation of
the assets or sale of asset or as per statutory requirements.
The auditor should see that the reserves created are properly utilized as per law.

SCHEDULE C AND D- SECURED AND UNSECURED LOAN
The auditor should ensure that provisions of company Act regarding maximum
amount of loan that a company can pay have been complied with in to the detail of
security given against loan.
Incase the loan is secured and such factor is disclosed in balance sheet, the
auditor should obtain a confirmation letter from the party and should verify that the
books of accounts and balance sheet agree with the statement and by the lender.
In case of debentures, the company should comply with SEBI guidelines.



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SCHEDULE E- CURRENT LI ABI LI TI ES AND PROVI SI ONS
The Auditor should obtain a schedule of Creditors and it should be checked with
ledger accounts
The Auditor should see that all the Outstanding Expenses have been provided for.
The Auditor should obtain a list showing the names of shareholders, amount of
dividend, year, etc.
The Auditor should see that the Provision for Taxation made in current year is
adequate and deductions and allowances if any are as per Income-Tax Act.

SCHEDULE F-FI XED ASSETS
The Auditor should check the various agreement, registration certificates and
respective schedule.
The Auditor should check for deprecation that the method of providing
deprecation is adopted and proper deprecation provions should be made. For
example plant and machinery the documents which are required to verify are plant
register, schedule of plant and machinery and evidence gathered in course of
vouching.

SCHEDULE G-I NVESTMENTS
The Auditor should check the accounting policies for determing the carrying
amount of investments.
The Auditor should also check the profit and loss statement for interest and
dividend received.
The Auditor should also see that the profit and loss on sale of investments is
properly recorded.





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SCHEDULE H- CURRENT ASSETS, LOANS AND ADVANCES

DEBTORS
Confirmation of balances to clients should be sent within 15 to 20 days of the
year ending day. After reply is received the same should be tallied with balance
shown in debtors ledger and difference if any should be reconciled.
Scrutiny of debtors individual account and test check technique can be applied.

CASH AND BANK BALANCES
According to the guidance note on audit of cash and bank balance issued by ICAI,
the auditor must follow the following procedures :-
1. Physically verify the cash on the date of balance sheet.
2. Obtain Information from the bankers, regarding the bank account.
3. Examine the Bank Reconciliation Statement.

LOAN & ADVANCES
It is very Important as an auditor to verify the amount of Loan & Advances given
To the Customers. This can be verified from the receipt given to the customers, and
Apollo Hospitals account in their book. The Auditor can also check the liability
side of the customers and verify the amount.








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VERIFICATION PROFIT & LOSS ACCOUNT

SCHEDULE 1
Schedule 1 includes all I ncomes like interest earned, dividend from current and
long term investments, income from treasury operations, profit on sale of
investments and others. The verification of the same can be done by checking the
bill book, bank statement and invoices.

SCHEDULE 2
This schedule includes Operating Expenses like power and fuel, house keeping
expenses and water charges.
The Operating Expenses have to be checked by the Auditor from cash book, and for
each item or expenditure incurred, he should check the receipts and voucher related
to that Expenses.

SCHEDULE 3
This Schedule includes Payments to and Provisions for Employees like :-
a. Salaries and Wages
b. Contribution to Provident Fund
c. Employee State Insurance
d. Employee Benefits
e. Staff Welfare Expenses
f. Staff Education and Training
g. Bonus
These items have to be checked by the Auditor from cash book, and for each
item or expenditure incurred, he should check the receipts and voucher related to
that Expenses.




15


SCHEDULE 4
This Schedule includes Administrative and Other Expenses like :-
a. Rent
b. Rates
c. Printing and Stationery
d. Postage and Telegram
e. Insurance
f. Directors Sitting Fees
g. Advertisement, Publicity and Marketing
h. Travelling and Conveyance
i. Subscriptions
j. Security Charges
k. Legal and Professional Fees
l. Continuing Medical Expenses and Hospitality Expenses
m. Hiring Charges
n. Seminar Charges
o. Telephone Expenses
p. Books and Periodicals
q. Miscellaneous Expenses
r. Provision for Bad Debts
s. Repairs and Maintainance of Equipment, Building and Vehicles
t. Outsourcing Expenses
These Expenses have to be checked by the Auditor from cash book, and for each
item or expenditure incurred, he should check the receipts and voucher related to
that Expenses.
SCHEDULE 5
This Schedule includes Financial Expenses like Interest on Loans and
Debentures, Bank Charges amd Brokerage and Commission.
The Financial Expenses have to be checked by the Auditor from cash book, and
for each item or expenditure incurred, he should check the receipts and voucher
related to that Expenses.



16


AUDITORS REPORT


1. We have audited the attached Balance Sheet of APOLLO HOSPI TALS
ENTERPRI SE LI MI TED as at 31st March 2011, the related Profit and Loss
Account and the Cash Flow statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally
accepted in India. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement(s). An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.

3. We have also considered the independent audit observations of the divisional
auditors for the Pharmacy Division, Projects Division, Hyderabad Division,
Bilaspur Division, Mysore Division, Vizag Division, Pune Division, Karim Nagar
Division and Mandya Division for forming an opinion on the accounts for the
respective Divisions.

4. As required by the Companies (Auditors Report) Order 2003, as amended by the
Companies (Auditors Report) (Amendment) Order 2004, issued by the Central
Government of India, in terms of sub-section (4A) of Section 227 of the Companies
Act, 1956, and on the basis of such checks of the books and records of the Company
as we considered appropriate and according to the information and explanations
given to us, we set out in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.

5. In the absence of any notification from the Central Government with respect to
the Cess payable under Section 441A of the Companies Act, 1956, no quantification
is made. Hence, no opinion is given on Cess unpaid or paid, as per the provisions of
Section 227(3) (g) of the Companies Act, 1956.







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6. Further to our comments in the Annexure referred to in paragraph 4 above, we
report that:

(i) We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by
the company so far as appears from our examination of those books;

(iii) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement
dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash
Flow Statement dealt with by this report comply with the Accounting Standards
specified by the Institute of Chartered Accountants of India, referred to in
subsection (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st
March 2011 and taken on record by the Board of Directors, we report that none of
the directors is disqualified as on 31st March 2011 from being appointed as a
director in terms of clause (g) of sub-section (1) of Section 274 of the Companies
Act, 1956, and

(vi) In our opinion and to the best of our information and according to the
explanations given to us, the said financial statements together with the notes
thereon and attached thereto , give the information required by the Companies Act,
1956, in the prescribed manner and also give a true and fair view in conformity with
the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st
March 2011;

(b) in the case of the Profit and Loss Account, of the PROFIT of the Company for
the year ended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for
the year ended on that date.








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CONCLUSION

The process of Hospital Audit is not completely flawless; it has certain areas that
need to be worked upon.
Some of the major loopholes are on the part of commitment, participation and
seriousness for the audits. Audits in Indian scenario are still more or less
considered as an obligation and are done only to fulfill the requirement of various
accreditation or other external agencies rather than for the improvement of hospital
processes and quality in actual. Low number of auditors is also a concern for
hospital audit in this country.
Hospital audits if utilised efficiently and rigorously help the hospital to perform
better both for itself and its patients, but until now they have never been
meticulously implemented in India. But the scene is changing with changing
attitude of both doctors and patients. It has just begun to gain momentum in India
and needs acceptability by the hospital systems and medical fraternity as an
improvement initiative rather than a fault finding mechanism.























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BIBLIOGRAPHY


AUDI TI NG & I TS PROCEDURE
-ICAI

AUDI TI NG
TY.BCOM TAXMAN

BASI C CONCEPT OF AUDI TI NG
-R.N.SHETTY

WEBLIOGRAPHY


WWW.GOOGLE.COM

WWW.I CAI .ORG

WWW.APOLLOHOSPI TALS.COM