## Audit of Educational Institutions

### Preliminary Steps

Examine the Trust Deed / Regulations governing the school or college
Refer to the relevant Act of Legislature and University Regulations (if applicable)
Understand restrictions on fund usage — especially the distinction between Capital Fund and Revenue Fund

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### Fees from Students (Very Important)

#### 1. Admission Fees

Check admission fees against admission slips
Confirm the amount is credited to Capital Fund (not revenue)
Admission slips must be signed by the Head of Institution

#### 2. Term/Monthly Fee Register

Check names in the Student Fees Register for each month/term
Cross-verify with class-wise attendance/roll registers
Verify that proper internal check exists — correct fees charged per student per class

#### 3. Fees Received — Receipt Book Check

Verify fees received against counterfoil of receipt book
Trace entries to the fees register — confirms revenue is properly accounted

#### 4. Fees Register Totals

Cast (total) all columns of the fees register
Fees paid in advance → verify properly carried forward (c/f) to next period (not treated as current income)

#### 5. Arrears and Fines

Item	Audit Check
Irrecoverable arrears	Written off only with proper approval from the competent authority
Fines for late payment	Collected by either Principal or authorised person — verify both that fines are levied and collected

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### Summary Checklist

```

1. Trust Deed / Act reviewed

2. Admission fees → Capital Fund (not Revenue)

3. Fees Register ↔ Class Register (cross-check)

4. Receipt counterfoils ↔ Fees Register entries

5. Advance fees → carried forward correctly

6. Arrears → written off with approval

7. Fines → levied and collected properly

```

Worked example

### Example 1

Example 1 — Admission Fees Classification

A school collected Rs 2,00,000 as admission fees from 40 new students. The auditor checks 40 admission slips (each signed by the Principal), traces Rs 2,00,000 to the Capital Fund account in the balance sheet, and confirms it is NOT included in the Income & Expenditure account. If any amount is credited to I&E instead of Capital Fund, it overstates revenue for the year.

### Example 2

Example 2 — Fees Register vs Class Register

Auditor selects Class X (Section A) for April. The class register shows 35 students enrolled. The fees register shows only 32 students paid fees. The 3 missing students are investigated: 2 are on scholarship (fees waived — verify approval), 1 has an arrear (check whether it's in the arrears register and whether a fine has been levied for late payment).

### Example 3

Example 3 — Advance Fees Carry-Forward

In March, 10 students pay fees for April in advance (Rs 500 each = Rs 5,000). The auditor verifies that Rs 5,000 appears as 'Fees Received in Advance' under current liabilities on March 31 balance sheet, NOT as income for the year ended March 31. If included in income, revenue is overstated.

⚠️ Common exam mistakes

Crediting admission fees to Income & Expenditure account instead of Capital Fund — a very common error and a frequent exam point
Not cross-checking the fees register with class/roll registers — students on roll but not in fee records indicate either fee waiver (needs approval) or missed collection
Treating fees received in advance as current year income instead of carrying them forward as a liability
Allowing irrecoverable arrears to remain on the balance sheet without proper write-off approval from the competent authority
Not verifying whether fines for late payment are actually being levied and collected — institutions sometimes waive fines informally without authorisation

Reference:

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