Cinema Audit |

Audit Services for Cinema

In recent years, the number of movie theatres have expanded in our nation. The main goal of a movie theatre is to entertain the general population. These days, movie theatres offer more than just the chance to watch movies; in some metropolitan cities, they also feature food and bar facilities. Therefore, keeping accurate records of movie theatre finances and conducting regular audits of them have become crucial. The primary sources of income for movie theatres are the selling of tickets, the distribution of films, the money collected from the canteen, ads, and rental income.

Services for Insurance Audits

An Indian insurance company gets registered under and as per the norms of Companies Act 2013. A foreign company must not possess more than 26% of the paid-up equity capital of this insurance company in total equity shares, whether directly or through subsidiaries or nominees. An Indian insurance company's main goal is to operate a life insurance, general insurance, or reinsurance business.

The policy and liability procedures, tax records, risk assessments, and other financial records of insurance are all subject to examination by insurance auditors during insurance audits. This is done to make sure that the insurance businesses adhere to regulatory regulations and that suitable insurance rates and premiums are applied. Claims and commissions are a couple of the main things that need to be checked during insurance audits. The insurance auditors must also uphold the policyholders' and insurance companies' quality control.

What aspects of a cinema audit must an auditor verify?

The income from diverse sources must be verified by an auditor in the manners stated below-

He must confirm the regulations governing ticket prices for various classes, benefit performances, free passes, discounted tickets for reservations made by school and college student groups, etc.

Each ticket needs to be serially numbered; an auditor must make sure of it during the movie audit.

Deposits into the bank must be made on a daily basis.

An auditor must confirm the daily return for the sale of tickets for various performances and classes using counterfoils from previously sold tickets.

The auditor should check the amount of entertainment tax that is collected from ticket sales while conducting the cinema audit.

The auditor is responsible for making sure that the Entertainment Tax, which is derived from the sale of tickets, is consistently and on-time deposited with the government.

The auditor must confirm the parking rates for different vehicles.

Auditors should check the money collected for parking from the issued slips during the cinema audit.

An auditor must review the contract between clients and contractors if parking and a canteen are given to a contractor.

The receipt book and the cash book should be used to confirm the payment made to the contractor during the audit of the movie theatre.

A cash book and receipt book should be used to verify and check the amount of money paid for advertising.

The cinema or movie theatre's space may occasionally be rented out. Additionally, an auditor should confirm the rent paid using the lease agreement, the receipt book, and the cash register.

What aspects must be taken into account when conducting a cinema expense audit?

The following factors need to be taken into account when performing a cost audit for cinemas-

An auditor must confirm the film hire fees against the contract's terms and conditions agreed upon.

It is necessary to account for both the films that were bought and the films that were rented.

Film that has been bought but not seen must be properly accounted for.

Operating costs need to be carefully examined.

The books of accounts must accurately reflect the outstanding liabilities.

The theatre and cinema furnishings and fixtures must be given adequate depreciation. Depreciation must occur at a rate greater than the typical decrease offered by other businesses.

Verifying the inventory of various things is necessary.

Paying for revenue expenses including salaries and wages, electricity, office supplies and printing, and the purchase of various things that require supporting documentation in the form of vouchers.

Capital expenditures and revenue must be handled appropriately.

The appropriate review of all the books, including the ledger accounts, cashbook, and petty cash book, is required.

Why is a cinema audit being conducted?

The following are the goals of doing a cinema audit

Comparing the total amount of financial gains to the finalized investments and other contracts.

Verifying precise cash flows.

Comparing the account's precise balance to the financial records that have been supplied.

The preparation of records of bills and invoices issued without the prior conclusion of a contract or order, specifying the invoice issuer, invoice number, invoice issuing date, amount, and title, as well as the compilation of records of concluded contracts or orders, relevant issued bills, as well as invoices, that are related to the production of a film as of the audit date.

Confirming accurate accounting for grant money the producer received.

Checking to see whether any corrective actions that were mandated and suggested by the Association of Indian Film Industry have been carried out.

What are the categories included in a Cinema Audit?

When conducting a cinema audit, the following categories must be covered-
1.Audit of daily show collections receipts

The following actions must be taken in order to audit daily show collections for the purpose of a cinema audit-

Verify

That only tickets in print are accepted for entry into the theatre.

Tickets are bound into the volumes and serially numbered.

That the number of tickets released for each performance and class varies.

A unique series of tickets is given for the purpose of advance reservation.

Typically, the inventory of tickets is recorded in the appropriate vouchers. If the tickets are issued using a computer audit, every effort is made to assure the accuracy and validity of the data it produces.

A system should be put in place so that the money collected at the end of each event can be added up and a suitable statement prepared.

Referencing daily accounts that include a record of tickets issued for the various concerts held, attest to the entries in the cash book regarding the money received from the sale of tickets for various performances.

Depending on the bank facility available, the money collected must be placed in banks partially that day and the remainder the following day.

Check to make sure the right records are kept for free passes and that they are distributed legally.

Compare the total number of tickets distributed for each class to the entertainment tax collected.

2. Income from advertising

Refer to the Registrar of Slides to confirm the fees that were charged for commercial slides and shorts. Additionally, it covers shorts with agreements with sponsors and those held at the theatre for viewing.

3.Restaurant earnings

A fixed amount or fixed percentage of the taking may be payable annually under the arrangement for a part in the restaurant income.

If the restaurant is managed by a theatre, its finances must unquestionably be examined.

Check the foundation for other sources of income, such as parking for cars and motorcycles, display windows, etc.

4. Expenditure

Provide proof of the money spent on advertising, upkeep, and repairs. This kind of expense can in no way be monetized in any way.

Attest to the cost of power and photo publicity, among other things.

Verify that the depreciation on the furniture and machinery is being charged at suitable rates that are higher than those that apply to similar assets in the case of other firms.

In accordance with the distributor's or producer's agreement, vouch for the payment of the film hire.

Check that all the unadjusted balances from the distributors' advances are good and recoverable by comparing them to the film hire agreements. If a movie for which an advance was paid has already begun production, it will ask why the advance was not arranged. With regard to advancements that are thought to be irrecoverable, the management needs to be requested to make a provision.

What receipts must be verified for a cinema audit?

In a cinema audit, the following listed movie hall receipts must be verified-

Money received from the ticket sales.

Fees that are gathered for the production of slides, short films, and ads.

Receipts for lease rent payments that are gathered by third parties from the numerous stalls.

Funds raised by the sale of food products at a restaurant owned by a theatre.

What function does an auditor performs in a cinema audit?

The following particulars need to be confirmed by the auditor-

Regarding Ticket Sales

The tickets have a serial number and are bound.

For every performance during the week, a ticket from the same class is always issued in a sequential order.

Tickets that are issued as a result of advance purchase have a unique serial number.

For each performance and each class of tickets, an unsold stock of tickets is created, and the paid entertainment tax is then compared to it.

Only tickets with a valid barcode will be accepted for entry into each performance.

Free passes, discounted tickets, and concessions are only given out with the proper authority.

The entries made in the cash book are attested to by the daily accounts that are created for the sale of tickets.

As you check the receipts using adverts

The auditor must look over the contracts with the advertisers while confirming the receipts from advertisements. Verify the amount collected and the cost associated with advertising. Any expensive advertising-related expenses can be written off as deferred revenue expenditures.

While confirming the receipts from eateries

The auditor must confirm whether the cinema owns the restaurant when examining the collection via restaurants. Additionally, he may verify the acquisition and sale of different food items and assess the effectiveness of the internal audit in the operation of the restaurant. The auditor may review the terms of the contract and certify for the receipts if a predetermined sum or a percentage of collection is received annually in accordance with the terms of agreements with third parties for operating the restaurant.

While examining the distributor payments

The conditions of the agreements with the distributors must be examined by the auditor during the verification of payments to distributors. They may also attest to the payments made in relation to the distributors' bills.

In general, the auditor must make sure that any advance payments made to distributors for a film are either deducted from the money they are owed or have been refunded by them after the film has been released. The auditor must confirm that the amounts due are excellent and recoverable if they are to be received, and if not, a provision must be established for the amount that is thought to be irrecoverable.

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Our Blog

Services for Insurance AuditsWhat aspects of a cinema audit must an auditor verify?

What aspects must be taken into account when conducting a cinema expense audit?

Why is a cinema audit being conducted?

What are the categories included in a Cinema Audit?
What receipts must be verified for a cinema audit?
What function does an auditor performs in a cinema audit?

How you can contact Estabizz?blog