The special steps involved in its audit are stated below :
(1) Verify
- that entrance to the cinema-hall during show is only through printed tickets;
- that they are serially numbered and bound into books;
- that the number of tickets issued for each show and class, are different though the numbers of the same class for the show on the same day, each week, run serially;
- that for advance booking a separate series of tickets is issued; and
- that the stock of tickets is kept in the custody of a responsible official.
(2) Confirm that at the end of show, a statement of tickets sold is prepared and cash collected is agreed with it.
(3) Verify that a record is kept of the ‘free passes’ and that these are issued under proper authority.
(4) Reconcile the amount of Entertainment Tax collected with the total number of tickets issued for each class.
(5) Vouch the entries in the Cash Book in respect of cash collected on sale of tickets for different show on a reference to Daily Statements which have been test checked as aforementioned with record of tickets issued for the different shows held.
(6) Verify the charges collected for advertisement slides and shorts by reference to the Register of Slides and Shorts Exhibited kept at the cinema as well with the agreements, entered into with advertisers in this regard.
(7) Vouch the expenditure incurred on advertisement, repairs and maintenance. No part of such expenditure should be capitalised except the expenditure on extensive redecoration, and that should be adjusted as deferred revenue expenditure.
(8) Confirm that depreciation on machinery and furniture has been charged at an appropriate rate which are higher, as compared to those admissible in the case of other businesses, in respect of similar assets.
(9) Vouch payments on account of film hire with bills of distributors and in the process, the agreements concerned should be referred to.
(10) Examine unadjusted balance out of advance paid to the distributors against film hire contracts to see that they are good and recoverable. If any film in respect of which an advance was paid has already run, it should be enquire as to why the advance has not been adjusted. The management should be asked to make a provision in respect of advances that are considered irrecoverable.
(11) The arrangement for collection of the share in the restaurant income should be enquired into either a fixed sum or a fixed percentage of the taking may be receivable annually. In case the restaurant is run by the Cinema, its accounts should be checked. The audit should cover sale of various items of foodstuffs, purchase of foodstuffs, cold drink, cigarettes, etc. as in the case of club.
