Cinema Audit Services

The number of Cinema halls has increased in our country in recent years. The primary aim of a cinema hall is to provide entertainment to the public. The cinema halls in the current time are now not only providing the opportunity of watching movies but in some metropolitan cities, they also offer restaurant and bar facilities. Hence, it has become of prime importance to maintain proper accounts of cinema halls, and its regular audit must also be conducted regularly. Cinema halls basically earn revenue from the sale of tickets, distribution of movies, collection from canteen, advertisements, and rental income.

What must be verified by an Auditor in a Cinema Audit?

An auditor needs to verify the income from various sources in the following mentioned manner:

• He needs to verify the rules regarding rates for a different class of tickets, benefit shows, free passes, concessional tickets for booking made to groups of the student of schools and colleges, etc.
• n auditor during the cinema audit must ensure that each ticket must be serially numbered.
• Daily collection must be deposited in the bank.
• An auditor needs to verify the daily return for the sale of tickets for different shows and different classes from counterfoils of sold tickets.
• The auditor during the conduct of the cinema audit should verify the amount of Entertainment Tax that is collected on account of the sale of tickets.
• The auditor shall ensure that the Entertainment Tax that is collected on the sale of tickets must be deposited with the Government within the due time without any fail.
• The auditor needs to verify the rate of parking for each class of vehicle.
• Auditors during the cinema audit should verify the cash collection on account of parking from the issued slips.
• If parking and canteen are allotted to a contractor, an Auditor needs to examine the contract between clients and contractors.
• The payment that is received from the contractor during the cinema audit should be verified from the receipt book and the cash book.
• The payment that is received on account of advertisements should be verified and examined with a cash book and receipt book.
• The premises of the cinema or theatre may at times be let out on rent. An auditor should also verify the rent received from the rental agreement, receipt book and cash book.

What Points Must be Considered while Conducting Cinema Audit of Expenses?

While conducting Cinema Audit of expenses, the following points must be considered:

• An auditor must verify the film hire charges from the terms and conditions of the agreement.
• Accounting for the film purchased and the film hired must be done accordingly.
• Film purchased but not shown needs to be accounted for in a proper way.
• Operating expenses must be thoroughly checked.
• The outstanding liabilities must be duly provided in the books of accounts.
• Adequate depreciation must be provided on furniture & fixtures of cinemas and theatre. The rate of depreciation must be more than the normal reduction that is provided in other businesses.
• The stock of various items must be verified.
• Payment of revenue expenses such as salary and wages, electricity, stationery and printing, and purchase of various items that must be vouched with available supporting of vouchers.
• Revenue and capital expenditure shall be treated accordingly.
• All the books such as cashbook, petty cash book, and ledger accounts need to be examined appropriately.

What is the Purpose to Conduct Cinema Audit?

The purposes of conducting a cinema audit are as follows:

• Verifying the number of financial proceeds against the concluded investment and other contracts.
• Confirming accurate cash flows.
• Determining the exact balance of the film production account against the presented financial documentation.
• Compiling the records of concluded contracts or orders and the relevant issued bills and also the invoices that is related to the production of a film as at the audit date, specifying the invoice issuer, the invoice number, and the invoice issuing date, amount and title, and preparing records of bills and invoices issued without the prior conclusion of a contract or order, specifying the invoice issuer, invoice number, and the invoice issuing date, amount and title.
• Confirming correct accounting for grant funds obtained by the producer.
• Verifying whether any ordered corrective actions indicated by the Association of Indian Film Industry have been implemented.

What are the Areas Covered for Conducting Cinema Audit?

The following areas must be covered while conducting Cinema Audit:

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