Audit of Cinema | Role of Auditor | Receipts to verify

Receipts to verify in Cinema Audit

The following are the receipts for a cinema hall:

1. Cash collected through sale of tickets.
2. Charges collected for advertisements, slides and short films.
3. Receipts of lease rents from the various stalls taken by third parties.
4. Collections through sale of food items in the restaurant run by the cinema.

Role of Auditor in Cinema Auditing

The auditor has to verify,

1. With regard to sale of tickets, an auditor has to verify if,

• The tickets are bound and serially numbered.
• The tickets belonging to same class is always issued serially, for all the shows, throughout the week.
• The tickets issued through advance booking bear a different serial number.
• The unsold stock of tickets is prepared for each show, for each class of tickets and is reconciled with the Entertainment Tax paid.
• The entrance to each show is allowed only through the tickets.
• The complimentary tickets or free passes are issued only under due authorization.
• The daily statements prepared for sale of tickets are vouched to verify the entries made in the cash book.

2. While Verifying the receipts through advertisements,  the auditor has to examine the agreements with the advertisers. Vouch the collection made and the expenditure incurred on advertisements. If any expenditure relating to advertisement is expensive, the same may be treated as deferred revenue expenditure.

3. While verifying the collections through restaurants, the auditor has to verify if the restaurant is run by the cinema, the auditor may verify the purchase and sale of various food items and evaluate the efficiency of internal check, in running the restaurant. If a fixed sum, or a percentage on collection is received annually as per the agreement with third parties for running the restaurant, the auditor may examine the terms of agreement and vouch the receipts.

4. While verifying the payments to distributors, the auditor has to examine terms of the agreements with the distributors and vouch the payments made against the bills raised by the distributors.

The auditor has to ensure that the advance paid to the distributors for a film is either adjusted against the amount due to them or returned by them after running of the film. If the amount to be received remains outstanding for a long period, the auditor has to verify that they are good and recoverable, if not, a provision is to be made for the amount which is considered irrecoverable.

The auditor may apply the usual procedures to audit the other areas.