sumit kumar nanda

8/7/2019 sumit kumar nanda

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A STUDY ON

CORPORATE GOVERNANCE WITH

SPECIAL REFERENCE TO INTERNAL

AUDIT

AT URANIUM CORPORATION OF INDIA

LIMITED

A project report

Submitted by

MANOJ KUMAR PATRO

In partial fulfillment of the degree of

Post Graduate Diploma in Business

Management

Under the guidance ofProf. G.V.K. KASTURI

Integral Institute of Advanced Management


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ACKNOWLEDGEMENT

The exclusivity of this project cant be claimed as singular efforts for

several persons have contributed shared accomplishment of this

project report .I offer my profound gratitude as without their

generous assistance this work would never have recorded completion.

As it is impossible to include all the names are recognized at

appropriate places.

I wish to express my deep sense of gratitude to my Honorable Prof.

K. Kasthuri of INTEGRAL INSTIUTE OF ADVANCE

MANAGEMENT, VISAKHAPATNAM for her guidance and

consultancy.

I am very much thankful to UCIL management especially to Mr.

P.K.SAHOO Manager (Accounts) for his kind co-operation and keen

interest shown by him for the preparation of this report.

Collection of data and information was one of the most difficult tasks

in the preparation of this study. I owe my gratitude to the staff of

UCIL library for providing me every information I demanded thank s

them all for their kind assistance.

Last but not the least; I wouldnt be able to complete my reportwithout the blessings of my parents and the co-operation of all those

persons who have directly or indirectly helped me for preparation of

this report.

MANOJ KUMAR PATRO


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DECLARATION

I, the undersigned hereby solemnly declare that this project, titled A

Study on Corporate Governance With Special Reference to Internal

Audit is a genuine profound work done by me under the auspiciousproject guide and concerned executives. All the information collected

is authentic and to the best of my knowledge. The journal, annual

report and books and relevant information handout bears the

testimony to the genuineness of the work done.

MANOJ KUMAR PATRO


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CONTENTS

Chapter 1: INTRODUCTION Page No.

Needs

Objectives

Research methodology

CHAPTER 2:INDUSTRY AND COMPANY PROFILE

Industry profile

Company profile

CHAPTER 3:CONCEPTUAL FRAMEWORK

CHAPTER4:FINDINGS SUGGESTIONS AND CONCLUSION

SUMMARY

BIBILIOGRAPHY


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CHAPTER 1

INTRODUCTION

INTRODUCTION


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CORPORATE GOVERNANCE: Corporate Governance implies that the

company should manage its affairs with diligence, transparency,

responsibility, accountability and would maximize shareholder wealth.

Hence it is required to design system, processes, procedures, structures

and take decision to augment its financial performance and stakeholdervalue in the long run.

INTERNAL AUDIT: Internal audit is the independent appraisal of activity

within an organization for the review of accounting, financial and other

business practices as a protective and constructive arm of the

management.


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INDUSTRY PROFILE

Mining has provided the answer to the manufacturing andenergyneeds of the humanityinthe past century.Mining community around the world has contributed to theenrichment ofthe world through industrial development.Minerals are valuablenatural resources being

finite andnon-renewable. They constitute the vital raw materials for manybasic industriesand are a major resourcefordevelopment.

Demandfor minerals is expected to grow veryfast, due to increasing levels ofconsumption,infrastructuredevelopment, andgrowth oftheeconomy.Management ofmineral resourceshas, therefore, to be closelyintegrated with the overall strategy ofdevelopment andexploitation ofminerals is to beguidedby long-term national goals and perspectives.

In India, 80% ofminingis in coal and thebalance20% is in various metals and other rawmaterials such as gold, copper, iron, lead, bauxite, zinc anduranium. India with diverse andsignificant mineral resources is the leading producer ofsome of the minerals. India is notendowed with all the requisite mineral resources. Of the 89 minerals producedin India, 4 arefuel minerals, 11 metallic, 52non-metallic and22 minor minerals.

India is the largest producer ofmica blocks and mica splittings; ranks thirdin the productionofcoal & lignite, barytes and chromite; 4th iniron ore, 6th inbauxite and manganese ore,10th in aluminium and 11th in crude steel. Iron-ore, copper-ore, chromite and or zincconcentrates, gold, manganese ore, bauxite, lead concentrates, and silver account for theentire metallic production. Limestone, magnesite, dolomite, barytes, kaolin, gypsum, apatite& phosphorite, steatite andfluorite account for 92 percent ofnon-metallic minerals. The

index ofmineral production, excludingfuel and atomic minerals, (baseyear 1993-94=100)for theyear2005-06is expected to be 154.23 as compared to 153.48 in2004-05.


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Life Indices: Important non-fuel Minerals

Mineral/ Ore/ Metal Recoverable reserves

estimated as on 1.4.2000

(Based on exploration/

prospecting) Figure in

million tonnes unless

otherwise specified

Life Index (years)

(m.tonnes)

Bauxite 2462* 211

Copper metal (tonnes) 5297,000 80

Lead metal (tonnes)) 2381,000 45

Zinc metal (tonnes) 9707,000 45

Gold metal (tonnex) 68* Not Estimated

Iron ore 13460* 131

Chromite Ore 97 46

Magnesite 245* 542

Manganese Ore 167* 47

Limestone 75679* 254

Phosphorite (Rock

Phosphate)

142 79

Sillimanite 516* Very large

Garnet 52* 90

Kyanite ( tonnes) 2817000* 265

Dolomite 4387* 438

Diamond ( Thousand

carats)

982* 19

* Recoverable reserves

estimated as on 1.4.1995.

Regulation of Minerals

Management ofmineral resources in India is the responsibility of the Central Governmentand the State Governments in terms ofEntry54 of the Union List (List I) and Entry23 of theState List (List II) of the Seventh Schedule of the Constitution of India. The CentralGovernment in consultation with the State Governments, formulates the legal measures forthe regulation ofmines and thedevelopment ofmineral resources to ensurebasic uniformityin mineral administration and to ensure that thedevelopment ofmineral resources keepspace, andis in consonance with thenational policygoals. The regulation ofmines and

development ofmineral resources in accordance with thenational goals and priorities is theresponsibility of the Central and State Governments.

The role to be playedby the Central and State Governments in regard to mineraldevelopment has beenextensivelydealt in theMines andMinerals (Regulation andDevelopment) Act, 1957 and rules madeunder the Act by the Central Government and theState Governments in their respectivedomains. The provisions of the Act and the Rules arereviewedfrom time to time and harmonised with the policies governingindustrial and socio-

economic developments in India.


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TheMines andMinerals (Regulation and Development) Act, 1957 lays down the legal frame-work for the regulation ofmines anddevelopment ofall minerals other than petroleum andnatural gas. The Central Government has framed theMineral Concession Rules 1960 forregulatinggrant ofprospecting licences and mining leases in respect ofall minerals otherthan atomic minerals and minor minerals. The State Governments haveframed the rules inregard to minor minerals. The Central Government has also framed theMineralConservation and Development Rules, 1988 for conservation and systematic development of

minerals. These are applicable to all minerals except coal, atomic minerals and minorminerals.

National Mineral Policy

A national mineral policy has evolved over theyears in India. The policyemphasizes theneedfor conservation and judicious exploitation offinite mineral resources through scientificmethods ofmining, beneficiation andeconomic utilisation. Simultaneously, it keeps in viewthe present & futureneeds ofdefence anddevelopment of India and strives to ensureindigenous availability ofbasic and strategic minerals to avoiddisruption ofcoreindustrialproductionin times ofinternational strife.

Thebasic objectives of the mineral policyin respect ofminerals are:

(a) to exploreforidentification ofmineral wealth in the land andin off-shore areas;

(b) to develop mineral resources takinginto account thenational and strategicconsiderations and to ensure their adequate supply andbest use keepingin view the presentneeds andfuture requirements;

(c) to promotenecessary linkages for smooth anduninterrupteddevelopment of the mineral

industry to meet theneeds of India;

(d) to promote research anddevelopment in minerals;

(e) to ensureestablishment ofappropriateeducational and trainingfacilities for humanresources development to meet the manpower requirements of the mineral industry;

(f) to minimise adverseeffects ofmineral development on theforest, environment andecology through appropriate protective measures; and

(g) to ensure conduct ofmining operations with due regard to safety and health ofallconcerned.

According to the policy, induction offoreign technology andforeign participationinexploration and miningfor high value and scarce minerals shall be pursued. Foreignequityinvestment in joint ventures in mining promotedby Indian companies wouldbeencouraged.Whileforeigninvestment inequity wouldnormallybe limited to 50%, this limitation wouldnotapply to captive mines ofany mineral processingindustry. Enhancedequity holding can alsobe considered on a case to casebasis. In respect of joint venture mining projects ofminerals

& metals in which India is deficient ordoes not haveexportable surplus, a stipulated share ofproduction would have to be made available to meet theneeds of thedomestic marketbeforeexports from such projects are allowed. In case ofores whose known reserves arenot abundant, preference will begiven to those who propose to takeup their miningfor

captiveuse.

The policy also addresses certain aspects andelements like mineral explorationin the sea-bed, development ofproperinventory, proper linkagebetweenexploitation ofminerals anddevelopment ofmineral industry, protection offorest, preference to members of thescheduled tribes fordevelopment ofsmall deposits in scheduled areas, environment and


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ecologyfrom the adverseeffects ofmining, enforcement ofmining planfor adoption ofproper mining methods and optimum utilisation ofminerals, export ofminerals in valueaddedform and recycling ofmetallic scrap & mineral waste.


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COMPANY PROFILE

URANIUM CORPORATION OF INDIA LTD.

LOCATION:

Uranium Corporation of India Ltd. a public sector undertaking under

administrative control of the department of atomic energy with its

headquarter at Jaduguda is located at30 km. away from Tatanagar

Railway Station and 5 km. from Rakhamines Railway Station of South


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Eastern Railway in the East Singhbhum district of Jharkhand. Jaduguda is

a mode habitat with all civic amenities like well laid houses, bank with

ATM facility, Post Office, Tele communication system with cellular

networking, community center, large play ground, School, Hospital,

Shopping center, co-operative stores uninterrupted power supply, rail androad communication systems and perennial supply of treated water etc.

HISTORICAL GROWTH:

Occurrence of Uranium minerals in the famous Singhbhum copper belt

was known since1937. In 1950, a team of Geologist was assigned specific

task of closely examining the 160km. Long Singhbhum copper belt to

locate the presence of Uranium mineralization and other radioactiveminerals. The team after conducting extensive exploration work located

several Uranium occurrences. One of these occurrences was at Jaduguda.

It was discovered in 1951. The Uranium deposit at Jaduguda eventually

turned out to be a major one. It is located almost in the ce nter of

Singhbhum copper belt. After the discovery of the deposit, detail

prospecting and exploratory mining was done by Atomic Minerals

division of the Department of Atomic Energy. Prospecting and

Investigation works were going on simultaneously and to speed up the

mining work, Jaduguda mines project was separated from the AtomicMineral Division of the country on 8

thDecember 1961. Subsequently in

order to process the Uranium Ore extracted from Jaduguda, the Atomic

Energy commission of the government of India decided to set up a

processing plant at Jaduguda. The work for installation of the processing

plant was entrusted to M/s Indian Rare Earths Limited. A detailed project

report was prepared in September 1962 and the construction of process

plant (Mill) was undertaken by Jaduguda Uranium Mill Project in

February 1963.The flow sheet and design of Uranium Processing Plant

was prepared by engineers and scientists of Bhabha Atomic ResearchCenter, Bombay which was commissioned in May1968. It was capable of

processing a thousand tones of Uranium Ore per day. Subsequently a

public sector in the name of UCIL was formed on 4th October 1967 after

amalgamation of Jaduguda mines project and Jaduguda Uranium mill

project. The Uranium processing mill commenced commerci al production

in May 1968. After Uranium Corporation of India Limited came to stay


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and on the basis of experience gained and researches made a decision was

taken to set up Uranium recovery plant to develop and establish the

technology in recovering low Uranium values from the copper tailing of

the copper concentrating plant of M/s Indian Copper Complex /

Hindustan Copper Limited on the southern bank Subarnarekha river.Earlier, the waste known as tailings was disposed in the river by M/s ICC.

The Surda Uranium recovery plant was set up and minerals concentrate

was deposited to Jaduguda Uranium mill for further processing. But with

the closure of various units of Hindustan Copper Ltd. and inadequate

recovery of copper tailing from its plant the above recovery plant had to

be abandoned. Uranium Ore of Jaduguda contains small amount of

copper, nickel, molybdenum, magnetite, Ilmenite, Mortile,Vraninite,

tutile,Chalcopyrite, Pyrrhotile, Marcasite, Pyrite, Machinawite ,

Pentlandite , Viotarite ,Tellurbuismuth , Tet radymite , Cubanite , andMolybdenite . Studies made by UCIL and Bhabha Atomic Research

Center (BARC) explored the possibilities of recovering This Material as

by-product without affecting Uranium recovery. The recovered by-

product having marketability are disposed off in the open market. In

addition to the Mines and Mills division the corporation also runs various

other technical and non-technical Department viz. Control Research and

Development Department, Stores and Purchase Department, Personnel

and Administration Department. There are no separate sales departments

in the organization as because the ultimate product of the company isMagnesium Di-Urinate (U3O8) is totally acquired by government of

India and cannot be sold in open market as per the stipul ation led down in

the Atomic Energy Act. Thus, the Uranium Corporation of India Ltd.

Jaduguda is strategically an important at the forefront of nuclear energy

programme of the government. In other words, It can be said that UCIL is

a sub agency undertaking commercial scale exploitation of countrys

Uranium resources.

REQUIREMENT OF NUCLEAR ENERGY IN INDIAS

CONTEXT:

Electricity is the most predictable requirement for development in todays

industrial world, particularly in India, which is the largest democracy

with nearly one-sixth of world Population with low per capita income.

Our per capita consumption of electricity is a mere 487 units compared to

compounding figure of about 10,000 units in OECD countries. The


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central electric authority of India, which undertakes periodic projections

of energy requirement, has estimated that energy needs of the country

will record a steep increase from 529,014 millions units in 2001-02 to

1,317,644 millions units in 2016-17. The installed capacity on 31st

March

2001 is a mere101,150 Mwe. Energy is the engine for empowerment andgrowth. Availability of energy leads to enhance livelih ood and better

amenities. With the issue of sustainability in mind, is possible only if the

energy supply becomes abundant and within the reach of all. It is

appropriate to quote Dr. Bhabhas Famous expression No power is

expensive than no power.

This calls for a close examination of fuel resource positions for energy in

our country. India has a reasonable coal reserve, which is concentrated

north central of the country, whereas load centers are spread all over.

Considering the major role to be played by coal fired thermal stations incoming year to meet the established need of the electricity for the

projected growth of the population, the coal reserves is expected to last

about 75 years. Besides the problem of transportation of large amount of

coal to different parts of the country, environmental problems related to

disposal of ash, emission of greenhouse gases and acid rain complicate

the scenario. Similarly, the inadequate reserves of oil and gas in our

country have very limited scope to meet the long -term energy

requirement. Importing oil on a sustainable basis to generate electricity is

also not very encouraging because of complex geo-political regions.

Tapping the potential of hydropower is limited to geographically suitable

sites and entirely depends on good rainfall of year after year. The social

problems related to the replacement of vast population to construct a

large catchments area of the water reservoirs are not very encouraging

too. Non- conventional sources like solar, biomass and wind do pla y

useful role as distributed source to meet the demand at small load points.

But these, at the present level of technological development cannot be

conceived as noteworthy source of energy especially there is a significant

demographic shift continual growth of urban population. The importance

of Uranium as a source of energy can be realized on the fact that the

single gram of U235 or complete fission releases energy of One

megawatt per day is equivalent to about 1,40,000 tons of coal. Therefore,

to ensure long-term availability of energy, India has to look for other

sources. It is worth to consider the power of the atom. The enormous


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potential of generating electricity from the atomic minerals like Uranium

and Thorium holds the promise for the future of our country. India has a

modest reserve for Uranium and abundant reserve of Thorium. In order to

tap this vast potential of Thorium to generate electricity on a sustainable

basis, nuclear power programme of our country is very strategicallyformulated. In its noble mission to serve the country, the Department of

Atomic Energy has gone far ahead in demonstrating scientific and

technological superiority over many advance countries. The department

now enters into its glorious 50th

year and its service to the nation in

different fronts like Power, healthcare, water management, Food

preservation, `Environmental protection, National security, Technology

Development, Industry etc. has made every Indian proud in all corners of

the world.

UCILS OPERATION:

JADUGUDA MINES:

It has the destination of being the first Uranium Mine of the country

where mining operation began in 1967 and was established withcommissioning of a shift with tower mounded friction winder a technical

mile stove for the mining industry in India. The mine is accessed by a 5m

diameter vertical shaft with a total depth of 640m. The shift is through set

concrete lined and has a cage and a skip with their counterweights. The

cage accommodates 50 people and the skip has a capacity of hosting 5

tones of ore at a time. This shaft also is the main ventilation intake

besides it provide service lines such as compared air and water pipe lines,

communication and power cables etc. Mine is well ventilated by

boundary ventilation layout. Horizontal cut and fill method is followedfor stopping. The ore is transferred to the adjacent process plant by

conveyor and the mill tailing is used conveyor and the mill tailing is used

as fill. The main shaft caters up to a depth of 555M and an auxiliary shaft

up to 950M depths was sunk to mines ore from deeper level. This mine

was the first in terms of Technology development and absorption from

across the globe. It has created a large skill base for mining industry in


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general and Uranium mining in particular. There were total 1148

manpower employed in this time.

BHATIN MINES:

It is located at a distance of 5 km. From Jaduguda and shares much of

infrastructure of Jaduguda. Mining of this small deposit illustrates

UCILs commitment to optimally utilize countrys source minimum

resources. Bhatin mine was commissioned during the year 1987 and has

been plant up to a dept of 250m. The total manpower in this mine is 239.

NARWAPAHAR MINES:

It is another addition to UCILs operating mines and was commissioned

in April 1995. This is the most modern mine in the country with a decline

access to underground and ramp access to the stripes. This permits use of

large diesel power underground equipment to be used giving high

productivity eliminating fatigue workers and providing a good working

environment unparallel in Indian mining industry. Total manpower

employed in this mine is 1184.

TURAMDIH MINE:

It is about 23 km. West to Jaduguda and one body is lenticular in shape

occurring as several discrete lenses. The mine was commissioned in 30th

September 2003. The total manpower employed is 283.

BAGJATA MINE:

It is located about 7 km. West of Musabani and it is the latest UCILs

Uranium mine. The work is under construction. The mine has depth

30metres decline at present. Uranium is not yield from mine. At present

there are 74 workers in this mine.

BANDHU HURANG MINE:


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It is located around 7 km. south to Tatanagar Railway Station. It is one of

the latest Uranium mine of UCIL. It is an open cast mine. The work is

under construction and there are 39 workers at present

MANPOWER STRENGTH FOR THE MONTH OF MARCH 2008

Sl.No. Name of the department. No. of workers

01 Jaduguda Mines 1058

02 Jaduguda Mill 786

03 C.R.&D. 63

04 Jaduguda Administration 226

05 Jaduguda Accounts 52

06 Jaduguda Store 40

07 Jaduguda Purchase 19

08 Others 14

09 Narwapahar Mines 1169

10 Turamdih Mines 426

11 Bagjata Mines 74

12 Bhatin Mines 233

13 Bandhu Hurang 39

TOTAL 4209

PROCESSING PLANT (MILL):

The Ore mined from Narwapahar , Jaduguda, Bhatin and Turamdih mines

is presently processed in the centralized processing plant (mill) located

close to Jaduguda mines. Uranium is extracted from ore in the Jaduguda

mill by hydro-metallurgical process. This mill has been expended twice

since its commissioning in 1968 to process additional ore from Bhatin


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and Narwapahar mines. The original installed capacity of this mill was

1000 ton/day and was subsequently enhanced to 1300 ton/day. This mill

was further expanded during the year 1996 to process 2090 ton/day. The

total workforce developed for this purpose is 827.

TAILINGS TREATMENT & DISPOSAL:

Two types of wastes are generated in Uranium ore processing. Liquor

depleted in Uranium from ion exchange unit after uranium recovery

&filtered solids depleted in Uranium from filtration of leached slurry.

Both are neutralized with lime stone and lime slurry to precipitate

remaining radionuclide along with heavy metals like Manganese Ore,

Copper etc. The neutralized slurry is classified & course fractions are

pumped back to the mines for back filling the voids. The fine particles are

pimped to telling pond, where slime settles and clear liquor is sent to

effluent treatment plant for further re-treatment.

EFFLUENT RE-TREATMENT &TECLAMATION:

UCIL has implemented a composite scheme for reclamation of water &

effluent re-treatment to make the final discharged effluent

environmentally begin.

CONTROL RESEARCH AND DEVELOPMENT LABORATORTY

A full fledged control, research and development laboratory with sound

infrastructure monitors the process parameters for the recovery ofUranium and by-products from Uranium ore. Efforts continue to improve

further process efficiency. It caters the testing requirement of raw

material maintaining of loco exhaust in the mine air.

PILOT PLANT:

A technology demonstration pilot plant has been commissioned in

Nov.2002 at Jaduguda Mill premises. This plant has the comprehensive

facility for uranium ore processing, mechanized crusher house grinding

classification circuit, acid/ alkali leaching tanks, ion -exchange/solvent

extraction activities, tailings neutralization & disposal system with the

provision to study the recovery of by-products, with the commissioning

of this pilot plant, it is now possible to optimize various process

paramete4rs & establish the techno-economic feasibility.

BY PRODUCT PLANTS:


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The company has always kept mineral conservation as its prime

consideration. It has put in lot of research & development efforts to

recover the small quantities of Cu, Ni, Mo, Sulphides present in the

Jaduguda Ore. To recover the magnetite

contained in the ore, a Magnetite plant was commissi oned in the yr. 1974.The magnetite recovered is supplied to coal washeries for benefaction of

coal.

RADIOLOGICAL & ENVIRONMENTAL SAFETY:

Health Physics Unit-Cum-Environmental surveillance laboratory of

environmental Assessment Division Bhabha Atomic Research Centre

carries out-in-plant &environmental surveillance of all the UCIL units to

evaluate & ensure overall safety in accordance with the standards

prescribed by the national & international regulatory bodies.NEW PROJECTS:

In order to meet the increased demand of nuclear energy of the country

UCIL being the sole producer of U3O8 , has undertaken following plans

to expand its activities in Singhbhum East District of Jharkhand.

1. Opening an open cast Uranium Mine at Bandhu Hurang in

Singhbhum East District of Jharkhand.

2. Contraction of a processing plant at Turamdih in Singhbhum EastDistrict of Jharkhand.

3. Opening an underground mine at Bagjata in Singhbhum EastDistrict of Jharkhand.

4. Opening an underground Mine at Mohuldih in the Saraikela-kharsawan district of Jharkhand.

In addition to the above projects, the corporation has also taken up

following few sites in other parts of the country for construction of

Uranium Mines &processing plants.


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1. Underground Uranium Mine and Ore processing plant at LambapurPeddagatter in Nalgonda district of Andhra Pradesh.

2. Open cast Uranium mine and Ore processing plant at Domiasiat inKlest Khasi hill district of Meghalaya.

3. Underground Uranium mine at Gogi in Gulberga district of

Karnataka.4. Underground Uranium mine at Rohi Ghateshwar in Rajasthan.

With the UCIL in expansion made it is evident that UCIL is poised for a

massive growth with technological scientific excellence aspiring to

progressively achieve the capability of meeting the ent ire fuel

requirement of the rearrested generation of nuclear power.

ISO CERTIFICATION:

With the introduction of the international standard of working practices

and their strict Compliance, UCIL has now been awarded with the

prestigious ISO 9001:2000 & ISO KI001 certificates for its quality

management system & environmental management system respectively.

Company is also reported to have initiated steps for obtaining ISO

18001 certification for its occupational.

UNIONS OF UCIL:


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SL

.

N

O.

NAME

OF THE

UNION

AFFILIA

TED TO

REGISTRA

TIO-N NO.

PRESIDEN

T

GENERAL

SECRETA

RY

01. URANIU

M

MAZDOO

R SANGH

BHARTI

YA

MAZDOO

R SANGH

2621 SHRI

OMPRAK

ASH AGI

SHRI RAM

NARESH

KUMAR

02. JADUGU

DA

LABOUR

UNION

INDIAN

NATION

AL

TRADE

UNION

923 SHRI. P.K.

BALMUC

HU

SHRI B. N.

CHAUDH

ARY

03. SINGHBH

UM

URANIU

M

MAZDOO

R UNION

3430 SHRI

CHAMPAI

SOREN

SHRI P.K.

BHAGAT

04. URANIUM

KAMGAR

UNION

IFTU 2315 SHRI H.M.UPADHY

AY

SHRIRAMRAT

AN SINGH

MINES DIVISION


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INTRODUCTION:

Mining is the process of obtaining mineral from the earth crust and

include both underground excavations and surface working. Prospecting

work of Uranium ore at Jaduguda was started on 4th

November 1957 by

the Atomic energy. Prospective work gave a good result and feasibility ofthe mineral was ascertained. The work of mining in the prospecting stage

included the deep drilling of bore hole from the surface and the deep of

the presence of mineral was also determined. Consequent to the decision

of exploiting the Uranium loads on a commercial scale. It was then

decided to sink a circular shaft 635 meters deep after preliminary survey

for local size. Winding capacities and other technical planning first stage

of shaft sinking now the depth of the mine in 605 meters and finished

diameter of the shaft is 5 meter and is completely lined. Mines division of

the corporation is headed by the superintendent (Mines) and assisted by

mines manager and a team of technically qualified Personnel/Scientists

like mines surveyor, geologist, physicists, mining mechanical and

electrical engineers. Superintendent (mine) is directly reporting to the

Chairman and Managing Director and other to the Superintendent

(mines). Mining work comprises the under-mentioned processes.

1. Survey, Planning and Development.2. Drilling.

3. Blasting.

4. Timbering.

5. Track Laying.

6. Pipe Fitting.

7. Mucking.


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ORGANISATION CHART (UPTO SUPERVISOR RANK)

MINES DIVISION


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MILL DIVISION

INTRODUCTION :

The Atomic Energy Commission decided in March 1960 to set up a mill

at Jaduguda to concentrate the Uranium ore.The design and floor sheet of

mill was prepared by the Engineers and Scientists of Bhabha Atomic

Research center (B.A.R.C.) , Bombay. The work of setting up the mill

was entrusted to the Indian Rare Earth Limited after construction, the mill

was handed over to the Uranium Corporation of India ltd. The capacity of

the mill is to treat 1000 metric tons per day and was commissioned for

commercial production in May 1968. Mill Division is headed by the

Superintendent (Mill) and assisted by Assistant Superintendent (Mill).

Mill Division follows Mechanical, Electrical and team of technically

qualified persons. The following processes are followed by Mill

Department. They are :-

A. PROCESSING1. Crushing of ore.2. Milling Process.

3. Leaching Process.4. Filtration.

i. Drum Filter Side.ii. Pre-coat Filter Side.

iii. Ion enchance.

iv. Precipitation.v. Press Filter.

vi. Driving Plant.vii. Tailing Disposal

B. MAGNETITE RECOVERY PLANT.C. SULPHURIC ACID PLANT.D. WATER TREATMENT PLANT.E. SEAWAGE TREATMENT PLANT.F. OUTSIDE CAMPUS PLANT.G. MAINTENANCE AND CIVIL.


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DEPARTMENT OF FINANCE AND ACCOUNTS:

INTRODUCTION:

All business organization owns their liabilities to the propreitor or the

share holder . It is the basic duty of finance department to safeguards the

facility of the shareholders by whose contribution exist. Every business

unit must earn a fair rate of return on investment, which is essential not

only from shareholders point of view but also for the benefits of the

society as a whole. If it is unable to achieve this then it will become an

other adverse affect will follow. So primarily the accounts department is

concerned with the recording of all the transactions as and when they take

place. This traditional accounting practices and is known as Financial

Accounting.

In addition to this it assists the management in decision making by

furnishing them with the required data. This accounting system is known

as Management Accounting. Frequently reports are furnished to the

management to draw its attention to important aspects. The same or iginal

data is used for both financial accounting and management accounting on

their representation differs. The staffs working in the financial accounts

department are well conversant with the rules, order and instruction

issued by the company, for smooth function of the department and

account manual has been drawn up and outmost care is taken to ensure

that :-

1. The dues of the company are correctly assessed and promptlyrealised.

2. The appropriate authorities sanction the expenditure of thecompany for various activities.

3. The classification of receipts and expenditura are correctly madeand,

4. All the accounts records are maintained properly.


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FUNCTIONS OF ACCOUNTS DEPARTMENT:

Besides compilation of accounts of all receipts and expenditure of the

company and maintenance of account record of the finance and accounts

department exercise the following check.

1. To check with reference to rules or orders of all transactionsaffecting the receipts and expenditure of the company.

2. To check prompt settlement of proper claim against the company.3. To see that there are no financial irregularities in the transaction.4. To ensure timely and correct preparation of financial reports

statistical data etc.

MAIN DIVISION OF WORKS

The work in the accounts department are distributed to and carried out in

folowing sections :-

1. SALARY AND ESTABLISHMENT SECTION.

2. PURCHASE ACCOUNT SECTION.3. WORKS ACCOUNT SECTION.

4. PRICED STORES LEDGER SECTION.5. BUDGET AND COST SECTION.6. CASH SECTION.7. DATA PROCESSING SECTION.8. GENERAL ACCOUNT SECTION.9. CONTRIBUTORY PROVIDENT FUND AND GRATUITY

SECTION.10.INTERNAL AUDIT SECTION.


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SALARY AND ESTABLISHMENT SECTION

The Salary and Establishment section deals with all matters connected

with pay and allowances of all employees various recoverable advancesother related matter connected with the payment of these deal to the

employees and recovery of dues to the company.

The monthly pay bill and supplementary pay bill are prepared in data

processing center to which all inputs are furnished by the Sal ary &

Establishment section wherever necessary by obtaining same time from

other department section concerned. For all these purpose of preparation

of Wages/Salary bill the attendence of each employee is furnished by

Time section base on actual attendence from 1

st

to 20

th

of the every monthfor assumed attendence for remaining days. Attendence sheet is used in

Data Processing Center. Salary and Establishment section obtain every

month from Data Processing Center a printed attendence sheet showing

Serial No. , Department Code No. , Name , Designation and Basic pay

and send these to the Time office , Mill , Mines for furnishing attendence

of each employee. Time office return the attendence sheet indicating the

information under Attendence leave and total column to the Account

Department (salary and establishment section).

PURCHASE ACCOUNT SECTION:

This section primarily deals with payment of suppliers bill as per

purchase order issued by the purchase department and accounting of the

related expenditure through material receipt voucher. All purchase issued

by Purchase department are kept in this section in chronological series.

After receipt of material receipt voucher from the Store Department

suppliers bill are processed and note of Receipt Voucher (RV) No. and

bill reference etc. is kept to avoid double payment. Bill are passed after

the proper scrutiny with reference to the terms of Purchase Order and sent

to the cash section for issue of cheques to the suppliers.

The various phases of work dealt within this section are as under : -


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1. Audit and Payment of suppliers bill for Stores etc. purchased bythe corporation.

2. Payment of advance along with Purchase Order where specificallystipulated.

3. Payment for imported materials including allied works such asOpening of letter of credit, correspondence with Clearing agent ,

Customs and Banks etc.4. Adjustment of debit advice sent by companys banker on account

of value of stores being imported.5. Adjustment of expenses incurred on account of Custom duty, Port -

handling charges paid to the Custom Authorities and Port

Authorities against the deposit account opened with them by thecorporation.

6. Maintenance of Ledgers and Registers.7. Reconciliation of advances and sundry creditor account.8. Issue of Bihar sales tax declaration for payment of Sales Tax at

concessional rate.

WORK ACCOUNT SECTION:

This section is entrusted with checking the estimates tender, documents.

Bills and other allied record pertaining to work / job done departmentally

or by outside agencies. The works pertaining to the following are also

done in this section.

Bills of Transport Contract.

1. Telephone / Telex bill.

2. Bills for advertisement issued by the company.

3. Miscellaneous Bill.4. Advance to private agencies and other against collection of

material and job orders and consignment note for clearance ofmaterial from outstation.

5. Temporary advance to the other department, Offices for emergentpurchase and job.


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6. Reimbursement of imprest accounts held by different departmentsof the company.

7. Payment of Road Tax Premium on Vehicles etc.

8. Director sitting fees.

BUDGET AND COST SECTION:

BUDGET SECTION

This section is headed by Deputy Manager (cost) and assisted by

Assistant Account Officer and other Staffs. A Performance Budget is

prepared by the company to indicate in advance the Income and

Expenditure anticipated in ensuing year based on the level of Production

and other activities planned during the financial year. The Budgetdocuments are prepared separately for Revenue Receipt and Expenditure

and that for Capital Expenditure. Approved programmed of Production

and related information are obtained from the head of Mines, Mill and

Other Departments to prepare revised estimates for the current year and

budget estimates for the following year. Revised and Estimate Budget are

submitted to Board of Directors for approval together with Explanatory

notes of variation etc. Relevant Budget estimates are approved by the

board and sent to the head of the Department for guidance and executive.

COST SECTION

Monthly Cost Sheet of Ore raised in Mines Division, U3O8 produced in

Mill division, by-products, Uranium recovery from Copper tailings etc.

This section is entrusted with the works of preparation of monthly cost

sheet for main product and Sulphuric acid produced by the company

master chart of the account head are integrated. The activities of the

company are divided into eleven functions and each function is again

subdivided into a number of cost centers. The cost center is represented

by the last four digit of ten-digit account code. The first digit represents

the financial code and the next two digits represent the function code.

Each cost center is consisting of one or more cost code. This section is

also entrusted with the following task: -


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1.

2. Cost of Production of Sulphuric acid and maintenance of cost auditrecords.

3. Maintenance of subsidiary Ledger of cost accounts.

4. Compilation of physical and financial production data for costcontrol and statistical purpose.

5. Fixation of rate of services etc. rendered on chargeable basis.

6. Valuation of Stock at the end of each quarter.

7. Annual Cost Sheet for closing of accounts.

8. Checking of cost code in the issue voucher.

CASH SECTION

All receipt of dues to the company and disbursement on behalf of the

company except payment through authorized imprest holder hand led in

cash section. This section is headed by Assistant Manager (Accounts) and

assisted by Cashier and as Assistant Cashier. All

transactions are recorded in the respective cashbook duly supported by

Receipt and Disbursement Vouchers, which are kept in safe custody of

cash section for proper accounts and audit purpose. Cash section receives

Voucher with supporting bills etc. from different section of Finance andAccounts Department and pay to the payees as mentioned in the

respective voucher. All Vouchers for receipt and payment are numbered

in the cashbook and filed kept chronologically. Bank cashbook is

maintained by the Cashier and imprest payment voucher are sent daily to

E.D.P. center for the preparation of imprest cashbook. Monthly

reconciliation of bank cashbook with bank statement is done and

reconciled. The duties performed by cash section are: -

1. Safe custody of records, documents and valuables.

2. Operation of safes in cash section and safe custody of Keys.

3. Maintenance of primary account of receip ts and disbursements.

4. Custody of Chequebook.

5. Writing of Cheques and dispatch.


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6. Monthly reconciliation of bank statement.

PRICED STORE LEDGER SECTION:

An Assistant Accounts officer manages this section Priced Store Ledger

Section (PSL) is mainly responsible for pricing of receipt and vouchers

as per bill passed by the PAS, giving correct financial account code on

each issue voucher before it is passed to the cost section for checking of

correctness of cost code center. Primary work of this section is to

maintain the ledger for receipt and consumption of store and equipment

and balance their receipt and issue voucher are sent to E.D.P. center for

preparation of priced store ledger. Summary of material issue, cost wise

allocation of consumption of material as well as detailed statement of allissues for capital work.

E.D.P. CENTER:

This section is entrusted with the work of preparation of salary Statement

of the employees, monthly statement and salary summary. Financial code

wise and cost center wise. Sundry creditor, Registers and Ledgers

monthly material abstract register. Monthly consumption of store and

spares, financial and cost code wise, annual inventory of the company,maintenance of Provident Fund account ledger, Imprest cashbook,

Monthly

Imprest cash summary (Cost / Financial Code Wise). Calculations of Ex-

Gratia leave. Ex-Gratia payment and control of festival advance cycle and

Motorcycle allowances, Food and Draught advance of the corporation.

All the above work is done on the basis of master information supplied by

the section concerned.

GENERAL ACCOUNT SECTION:

This section is entrusted with the compilation of the company and

preparation of annual accounts at the close of the financial year, which is


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from 1st

April to 31st

March of every year. In addition to the above

realization of compensation due on the main product. Sale proceeds of the

products and other charges from Non-UCIL employees. Payment of

Electricity Bill, Sales Tax, Excise duty, Royalty, Investment of Surplus

Fund of the company maintenance of register for loan receive fromgovernment payment of interest there on etc. are also dealt in this section.

For Compilation of Trading Profit and Loss account and Balance Sheet

Main and Subsidiary book are maintained in this section. For the

Compilation of Trading Profit and Loss account and Balance Sheet, two

Ledgers Main and Subsidiary are maintained in this section. Proper

positioning to each accounts head are recoded on the basis of Analysis

book for cash transaction and from material abstract register for material

Consumption as well as for other Income and Expenditure from Journal

voucher after making entries in the ledger account are reconcile andquarter as well as annual Profit and Loss account and Balance Sheet are

prepare, audited and placed to the Board of Director for approval.

The duties performed by General Account section are: -

1. Realization of Compensation due on the main product of the companyand sales proceed by the company etc.

2. Realization of Rental charges from Non-UCIL employee.

3. Realization of other receipt (Guest House, Hospital, and School etc.)

4. Payment of Electricity bills, Sales Tax, Excise duty, Royalty, Sales,Duty on Electricity and submission on returns therefore to appropriateauthorities.

5. Payment of C.I.S.F. bills, Insurance Premium and Reimbursement ofPost Expenses.

6. All other works allied and related to compilation of account and theirwork mentioned above.

7. Investment of Surplus fund of the corporation.

8. Maintenance of Registers for Loans received from government,

Payment of Interest and Repayment of Principal.9. Preparation of monthly Cash analysis statement.

10.Quick estimates of working results for each quarter and quarterlyfinancial report.

INTERNAL AUDIT:-


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This section primarily deals with the review of accounting and financial

matter and also deal with the matter related to operation and

performances. The main objective of the internal audit is to verify the

accuracy and integrity of the financial record and ascertain that the

policies, plan and accounting procedure laid down by the organization isfaithfully implemented. Also that there have been proper section for

acquisition, retirement and disposal of assets of the company to prevent

and detect fraud and verify that the expenditure are sanctioned and

financial decisions are taken according to the power to the various

authorizes in the organization.

FUND SECTION:

This section is under the charge of an account officer an assisted by an

Assistance Account Officer. The contributory provident fund of the

employees and gratuity fund of the corporation are managed and

administrated by truest in accordance with the rules framed and truest

deed executed. The fund section renders all services to the trust and

maintains relevant records as per provision and respective rules. Both

they are-

1. UCIL employees contributory provident fund truest.

2. Gratuity fund

DEPARTMENT OF PERSONNEL AND ADMINISTRATION

INTRODUTION:

Deputy General Manager heads the departmental of personnel and chiefpersonnel manager heads the industrial relation. He is directly responsible

to the director technical. He is not looking after the work of personnel

and administration, but also entrusted with the welfare amenities of the

worker to run the organization efficiently a good labor manager

relationship is require. In these circumstances. Personnel management

plays a vital role. This department is responsible for making relationship


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between labour and management. The main area of work of personnel can

be studied as under:-

1. MANPOWER:-

Man power is very important for each an every company. Manpower may be in the from of worker, executives, officer and manager. Without

manpower company cannot run each and every from of manpower play a

important role in the company .

2. RECRUITMENT:-

Personnel department is responsible for initiating the process of

recruitment in regard to the vacancies occurred as per policy of the

corporation. All the vacancies are advertised in the newspaper. Selection

is basically responsibility of the department head under whom thecandidate has to work. The screening of application receive against open

advertisement is done by the concerned head of the department selected

candidate are called for the personnel department.

3. MEDICAL DEPARTMENT:-

Before accepting the joining report of the selected candidate, he has to

go for medical examination by the medical officer of the company. No

person is employed until fitness is obtained from the companys medical

officer or such medical officer as may be appointed by the company for

the purpose.

4. TRAINING:-

After requirement internal training facilities are provided to the new

candidate selected for the job in the company. After requirement officer

are also given training in the workshop of the different willing andsuitable workers specially in the mines are also given training in other

trades and after getting satisfactory training report they are considered for

higher post.

5. PROMOTION POLICY AND REQUIREMENT:-


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When a permanent worker retire resign or death the vacanc y is filled up

from the junior grade workman consequent or resignation promotion

creation of post and separation the vacancy occurs which is directly dealt

in the central personnel department of the corporation.

6. LEAVE PROCEDURE:-

All the employees of the company is entitled for annual leave are allowed

to the employees -

Eared leave Sick leave Casual leave

7

. COMPENSATION:-

Compensation is also paid to the employees as per the Compensation Act

1923.

8. GENERAL:

The function of the personnel and department is also to maintain service

book and family record of the employee, leave, increment and

establishment matter like disciplinary action and handling of grievances

of the employee of the company.

9. INDUSTRIAL RELATIONSHIP:-

Regarding industrial relation the company seen to have manage well.

There four union for employees.

10. SECURITY ARRANGEMENT:-

For the protection of the company property of as well as colony, Central

Industrial Security Force (C.S.I.F.) of the ministry is inducted in the

company. Along with company has its own security officer, who is

responsible to the manager (personnel and administration) with sufficient

number of security guards. Now the company has private security guard

who looks after the company colony.


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11. WELFARE ACTIVITIES:-

The company is providing both obligatory as well as non -obligatory

facilities to its employees. The company is sending adequately on welfare

amenities of the employees. The major welfare facilities provided by the

company to its employees are -

Schooling Hospital Housing Canteen Guesthouse etc.

DEPARTMENT OF PURCHASE AND STORE

INTRODUTION

Purchase and store department of the company is headed by Controller of

Stores and Purchase and assisted by deputy controller of store and

Purchase. The main objective of purchases department is to provide right

quality of good and equipment at right price. It is difficult to locate right

supplier who can supply the material with:-

i. Of right quality as orderedii. In right quantity as orderediii.At the right time at which the purchase department has asked for the

supply

iv.At an agreed price andv. Should be able to honor the commitment without much follow up

After ensuring the business reputation financial stability, credit

worthiness, value of business and service, facilities, their name are

registered in the company permanent record of the per purchase

department which is consulted off on for procurement of requirement

.Store section is functioning under the supervision of deputy controller of

store. The major function of the store department is to receive the

material supply by the supplier for the use in the organization. Keep them


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in safe custody, issue them to the user section, keep a close watch on

inventory, forward back the rejected material to the concerned supplier

and release the claim for losses of goods in transit and arrange dispatch

of main and by-product of the company.

CHAPTER 3

CONCEPTUAL FRAMEWORK


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CORPORATE GOVERNANCE:

Corporate governance is the set of processes, customs, policies, laws andinstitutions affecting the way a corporation is directed, administered orcontrolled. Corporate governance also includes the relationships among

the many stakeholders involved and the goals for which the corporation isgoverned. The principal stakeholders are the shareholders, management

and the board of directors. Other stakeholders include employees,suppliers, customers, banks and other lenders, regulators, the environmentand the community at large.

Corporate governance is a multi-faceted subject. An important theme of

corporate governance is to ensure the accountability of certain individualsin an organization through mechanisms that try to red uce or eliminate the

principal-agent problem. A related but separate thread of discussions

focus on the impact of a corporate governance system in economicefficiency, with a strong emphasis on shareholders welfare. There are yet

other aspects to the corporate governance subject, such as the stakeholderview and the corporate governance models around the world (see section9 below).

There has been renewed interest in the corporate governance practices of

modern corporations since 2001, particularly due to t he high-profilecollapses of a number of large U.S. firms such as Enron Corporation and

WorldCom. In 2002, the US federal government passed the Sarbanes -

Oxley Act, intending to restore public confidence in corporategovernance.

DEFINITION

In A Board Culture of Corporate Governance business author GabrielleO'Donovan defines corporate governance as 'an internal system

encompassing policies, processes and people, which serves the needs ofshareholders and other stakeholders, by directing and controllingmanagement activities with good business savvy, objectivity and

integrity. Sound corporate governance is reliant on external marketplace

commitment and legislation, plus a healthy board culture which

safeguards policies and processes'.

O'Donovan goes on to say that 'the perceived quality of a company's

corporate governance can influence its share price as well as the cost of


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raising capital. Quality is determined by the financial markets, legislation

and other external market forces plus the i nternational organizationalenvironment; how policies and processes are implemented and howpeople are led. External forces are, to a large extent, outside the circle of

control of any board. The internal environment is quite a different matter,

and offers companies the opportunity to differentiate from competitorsthrough their board culture. To date, too much of corporate governance

debate has centered on legislative policy, to deter fraudulent activities andtransparency policy which misleads executives to treat the symptoms and

not the cause.

It is a system of structuring, operating and controlling a company with a

view to achieve long term strategic goals to satisfy shareholders,creditors, employees, customers and suppliers, and complying with the

legal and regulatory requirements, apart from meeting environmental and

local community needs.

Report of SEBI committee (India) on Corporate Governance definescorporate governance as the acceptance by management of the inalienable

rights of shareholders as the true owners of the corporation and of theirown role as trustees on behalf of the shareholders. It is about commitment

to values, about ethical business conduct and about making a distinctionbetween personal & corporate funds in the management of a comp any.The definition is drawn from the Gandhian principle of trusteeship and

the Directive Principles of the Indian Constitution. Corporate Governanceis viewed as ethics and a moral duty.

HISTORY

In the 19th century, State Corporation lawless enhanced th e rights ofcorporate boards to govern without unanimous consent of shareholders inexchange for statutory benefits like appraisal rights, to make corporate

governance more efficient. Since that time, and because most large publicly traded corporations in the US are incorporated under corporate

administration friendly Delaware law, and because the US's wealth has been increasingly securitized into various corporate entities and

institutions, the rights of individual owners and shareholders have become increasingly derivative and dissipated. The concerns ofshareholders over administration pay and stock losses periodically has led

to more frequent calls for corporate governance reforms.

In the 20th century in the immediate aftermath of the Wall Street Crash o f

1929 legal scholars such as Adolf Augustus Berle, Edwin Dodd, andGardiner C. Means pondered on the changing role of the modern


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corporation in society. Berle and Means' monograph "The Modern

Corporation and Private Property" (1932, Macmillan) continues t o have a profound influence on the conception of corporate governance inscholarly debates today.

Since the late 1970s, corporate governance has been the subject ofsignificant debate in the U.S. and around the globe. Bold, broad efforts to

reform corporate governance have been driven, in part, by the needs anddesires of shareowners to exercise their rights of corporate ownership and

to increase the value of their shares and, therefore, wealth. Over the pastthree decades, corporate directors duties have expanded greatly beyondtheir traditional legal responsibility of duty of loyalty to the corporation

and its shareowners.

In the first half of the 1990s, the issue of corporate governance in the U.S.

received considerable press attention due to the wave o f CEO dismissals(e.g.: IBM, Kodak, Honeywell) by their boards. CALPERS led a wave of

institutional shareholder activism (something only very rarely seenbefore), as a way of ensuring that corporate value would not be destroyed

by the now traditionally cozy relationships between the CEO and theboard of directors (e.g., by the unrestrained issuance of stock options, not

infrequently back dated).

IMPACT OF CORPORATE GOVERNANCE

The positive effect of good corporate governance on different

stakeholders ultimately is a strengthened economy, and hence goodcorporate governance is a tool for socio -economic development. AfterEast Asian economies collapsed in the late 20th century, the World

Bank's president warned those countries, that for sustainabledevelopment, corporate governance has to be good. Economic health of anation depends substantially on how sound and ethical businesses are.

PARTIES TO CORPORATE GOVERNANCE

Parties involved in corporate governance include the regulatory body

(e.g. the Chief Executive Officer, the board of directors, management andshareholders). Other stakeholders who take part include suppliers,employees, creditors, customers and the community at large.

In corporations, the shareholder delegates decision rights to the managerto act in the principal's best interests. This separation of ownership from

control implies a loss of effective control by shareholders overmanagerial decisions. Partly as a result of this separation between the two


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parties, a system of corporate governance cont rols is implemented to

assist in aligning the incentives of managers with those of shareholders.With the significant increase in equity holdings of investors, there has been an opportunity for a reversal of the separation of ownership and

control problems because ownership is not so diffuse.

A board of directors often plays a key role in corporate governance. It is

their responsibility to endorse the organizations strategy, developdirectional policy, appoint, supervise and remunerate senior executives

and to ensure accountability of the organization to its owners andauthorities.

The Company Secretary, known as a Corporate Secretary in the US and

often referred to as a Chartered Secretary if qualified by the Institute of

Chartered Secretaries and Administrators (ICSA), is a high ranking

professional who is trained to uphold the highest standards of corporategovernance, effective operations, compliance and administration.

All parties to corporate governance have an interest, whether direct orindirect, in the effective performance of the organization. Directors,

workers and management receive salaries, benefits and reputation, whileshareholders receive capital return. Customers receive goods and

services; suppliers receive compensation for their goods or services. Inreturn these individuals provide value in the form of natural, human,

social and other forms of capital.

A key factor in an individual's decision to participate in an organization

e.g. through providing financial capital and trust that they wi ll receive a

fair share of the organizational returns. If some parties are receiving morethan their fair return then participants may choose to not continue

participating leading to organizational collapse.

PRINCIPLES:

Key elements of good corporate governance principles include honesty,trust and integrity, openness, performance orientation, responsibility andaccountability, mutual respect, and commitment to the organization.

Of importance is how directors and management develop a model ofgovernance that aligns the values of the corporate participants and thenevaluate this model periodically for its effectiveness. In particular, seniorexecutives should conduct themselves honestly and ethically, especially


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concerning actual or apparent conflicts of inte rest, and disclosure in

financial reports.

Commonly accepted principles of corporate governance include :

Rights and equitable treatment of shareholders: Organizations shouldrespect the rights of shareholders and help shareholders to exercise those

rights. They can help shareholders exercise their rights by effectivelycommunicating information that is understandable and accessible and

encouraging shareholders to participate in general meetings.

Interests of other stakeholders: Organizations should recognize that

they have legal and other obligations to all legitimate stakeholders.

Role and responsibilities of the board : The board needs a range of skills

and understanding to be able to deal with various business issues and

have the ability to review and challenge management performance. It

needs to be of sufficient size and have an appropriate level of

commitment to fulfill its responsibilities and duties. There are issues

about the appropriate mix of executive and non-executive directors. The

key roles of chairperson and CEO should not be held by the same

person.

Integrity and ethical behaviour : Ethical and responsible decision

making is not only important for public relations, but it is also a

necessary element in risk management and avoiding lawsuits.Organizations should develop a code of conduct for their directors and

executives that promotes ethical and responsible decision making. It is

important to understand, though, that reliance by a company on the

integrity and ethics of individuals is bound to eventual failure. Because

of this, many organizations establish Compliance and Ethics Programs to

minimize the risk that the firm steps outside of ethical and legal

boundaries.

Disclosure and transparency: Organizations should clarify and make

publicly known the roles and responsibilities of board and managementto provide shareholders with a level of accountability. They should also

implement procedures to independently verify and safeguard the

integrity of the company's financial reporting. Disclosure of material

matters concerning the organization should be timely and balanced to

ensure that all investors have access to clear, factual information.


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Issues involving corporate governance principles include:

y Oversight of the preparation of the entity's financial statements.

y Internal controls and the independence of the entity's auditors.

y Review of the compensation arrangements for the chief executive

officer and other senior executives .y The way in which individuals are nominated for positions on the

board.

y The resources made available to directors in carrying out their

duties.

y Oversight and management of risk.

y Dividend policy.

INTERNAL CORPORATE GOVERNANCE CONTROL

Internal corporate governance controls monitor activities and then take

corrective action to accomplish organizational goals. Examples include:

1. Monitoring by the board of directors: The board of directors,

with its legal authority to hire, fire and compensate top

management, safeguards invested capital. Regular board

meetings allow potential problems to be identified, discussed

and avoided. Whilst non-executive directors are thought to be

more independent, they may not always result in more

effective corporate governance and may not increaseperformance. Different board structures are optimal for

different firms. Moreover, the ability of the board to monitor

the firm's executives is a function of its access to information.

Executive directors possess superior knowledge of the

decision-making process and therefore evaluate top

management on the basis of the quality of its decisions that

lead to financial performance outcomes, ex ante. It could be

argued, therefore, that executive directors look beyond the

financial criteria.

2. Remuneration: Performance-based remuneration is designedto relate some proportion of salary to individual performance.

It may be in the form of cash or non-cash payments such as

shares and share options, superannuation or other benefits.

Such incentive schemes, however, are reactive in the sense

that they provide no mechanism for preventing mistakes or

opportunistic behaviour, and can elicit myopic behaviour.


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EXTERNAL CORPORATE GOVERNANCE CONTROL

External corporate governance controls encompass the controls external

stakeholders exercise over the organization. Examples include:

1. Demand for and assessment of performance information

(especially financial statements)

2. Debt covenants

3. Government regulations

4. Media pressure

5. Takeovers

6. Competition7. Managerial labour market

8. Telephone tapping

SYSTEMATICPROBLEMSOFCORPORATE GOVERNANCE:-

Supply of accounting information: Financial accounts form a crucial link

in enabling providers of finance to monitor directors. Imperfections in

the financial reporting process will cause imperfections in theeffectiveness of corporate governance. This should, ideally, be corrected

by the working of the external auditing process.

Demand for information: A barrier to shareholders using good

information is the cost of processing it, especially to a small shareholder.

The traditional answer to this problem is the efficient market hypothesis

(in finance, the efficient market hypothesis (EMH) asserts that financial

markets are efficient), which suggests that the shareholder will free ride

on the judgments of larger professional investors.

Monitoring costs: In order to influence the directors, the shareholders

must combine with others to form a significant voting group which can

pose a real threat of carrying resolutions or appointing directors at a

general meetings


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AUDITING

ORIGIN OF AUDITING

The origin of audit may be traced to middle ages, but the audit in the

present sense can be traced after the introduction of large scale

production, in consequence of Industrial Revolution, during the 18

th

century. Before this era, goods were produced by individuals, on small

scale. There was not much capital. The individual, who invested the

capital, usually himself maintained the account and, therefore, there

was no necessity of checking them.

But stabilized governments, expansion of banking facilities and new means of

communication, have widened the scope of investment and business. The

investor would naturally like to see that his investment is safe. For this

purpose, the accounts must be checked and audited, especially in the case of

joint stock companies, where the shareholders are drawn from far off places,

and who have no hand in the actual running of the business. In such a case,

therefore, it is essential to get the accounts audited, in order to assure them

that their investment is safe and that the Directors and the Managing

Directors, etc. who handle the capital and accounts, have presented true and

correct accounts. As it is not possible for the shareholders to check the

accounts of the company, they appoint a person who would audit the accounts

on their behalf. Formerly, such a person used to be one of the shareholders,

who might not have technical knowledge of accountancy. To have an effective

check, the custom to appoint professional accountants began to develop.


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DEFINITION OF AUDITING

The word audit is derived from the Latin word Audire whish means to

hear.In olden times, whenever the owner of a business suspected fraud,

they appointed certain persons to check the accounts. Such person sent for

the accountants andheard whatever they had to say in connection with the

accounts. It was an Italian, who first published his treatise on double entry

system of book-keeping for the first time in 1494. He mentioned and

described the duties and responsibilities of an auditor. Since then, there have

been lot of changes in the scope and definition of an audit and the dut ies and

responsibilities of an auditor.

The original object of an audit was principally to see whether the accounting

party has properly accounted for the receipts and payment of cash. In other

words, the object of audit was to find out whether cash has been embezzled

and, if so, who embezzled it and what amount was involved. The principal

object of an audit is to see whether the Balance sheet exhibits a true and fair

view of the state of affairs of a company and whether it is drawn up

according to the Companies Act, in the case of the audit of the company.

SPICER AND PEGLER, have defined Audit as such as examination of the

books, accounts and vouchers of a business, as will enable the auditor to

satisfy himself that the balance sheet is properly drawn up, so as to give a

true and fair view of the state of the affairs of the business, and whether the

Profit and Loss account gives a true and fair view of profit and loss for the

financial period, according to the best of his information and the

explanations given to him and as shown by the books, and if not, in what

respect he is not satisfied.


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F.R.M. DE PAULA, an English authority on auditing literature, describe

auditing as the examination of a balance sheet and Profit and Loss account

prepared by others, together with the books, accounts, and vouchers relating

thereto in such a manner that the auditor may be able to satisfy himself and

honestly report that, in his opinion, such Balance sheet is properly drawn up

so as to exhibit a true and correct view of the state of affairs of the particular

concern, according to the information and explanations given to him, and as

shown by the books.

J. R. BATLIBOI, a renowned authority on accounting an auditing defines

auditing as an intelligent and a critical scrutiny of the books of accounts of a

business with the documents and vouchers from which they are written up,

for the purpose of ascertaining whether the working results for a particular

period, as shown by the Profit and Loss

account, as also the exact financial condition of that business, as reflected in

the balance sheet are truly determined and presented by those responsible

for their compilation.

ADVANTAGES OF AN AUDIT:

On account of the following advantages people get their accounts audited

especially in case where audit is not compulsory.

1. Errors and Frauds are located at an early date and in future no attempt

is made to commit such frauds or one is rather careful not to commit anerror or a fraud as the accounts are subject to regular audit.

2. The auditing of accounts keeps the accounts clerks regular and vigilant

as they know that the auditors would complain against them if the

accounts are not prepared up-to-date or if there is any irregularity.


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3. In case of fire, the insurance company may settle the claim on the basis

of the audited accounts of the previous years.

4. Money can be borrowed easily on the basis of previous audited balance

sheet.

5.If the business is to be sold as going concern , there will not be much

difficulty regarding valuation of the assets and goodwill as the accounts

have already been subject to audit by an independent person

6.income tax authority generally accepts the profit and loss account

which have been prepared by a qualified auditor and they do not go into

the details of the accounts 7.the

management may consult the auditor and seek his advice on certain

technical points although it is not the duty of an auditor to give advice .

8.If the accounts have been prepared on a uniform basis , accounts of one

year can be compared with other years and if there is any discrepancy, the

cause may be enquired into .

9. Audited accounts are considered more or less correct by the sales tax

authorities.

10. It would facilitate the settlement of accoun ts of the deceased partner.

INTERNAL CONTROL MEANING & IMPORTANCE:

SPICR AND PEGLAR, a famous authorities on auditing literature, defines the

system of Internal control as Internal control is best regarded as the whole


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system of controls, financial and otherwise, established by the management in

the conduct of a business including Internal check, Internal audit and other

forms of control.

This definition implies the following:-

(A) The Internal control is a system of controls.

(B) Controls are established over financial and non-financial areas.

(C) The mechanism of controls may manifest itself in the forms of Internal

check or Internal audit or other forms.

The statement on Auditing practices (SAP-6) of the Institute of Chartered

Accountants of India describes Internal control as the plan of organization and

all the methods and procedures adopted by the management of an entity to

assist in achieving managements objective of ensuring, as far s possible, the

orderly and efficient conduct of its business, including adherence to

management policies, the safeguarding of its assets, prevention and detection

of fraud and error, the accuracy and completeness of the accounting records

and timely preparation of reliable financial information. The s ystem of Internal

control extends beyond those matters which relate to the functions of

accounting system.

The Internal control, according to this definition, implies the following:

Internal control is a prescription and practice of a system by management. The

system encompasses plan, methods and procedures prescribed for and

practiced by the internal constituents of an entity.

INTERNAL CONTROL ACCOUNTING, ADMINISTRATIVE CONTROLS:


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The Internal control areas spread over accounting and non -accounting spheres.

Internal control, as it applied to accounting system, implies control over

accounting system with the aim of achieving the following objectives:

(A) Efficient and Orderly conduct of accounting transactions.

(B) Safeguarding the assets in adherence to management policy.

(C) Prevention of error, Detection of error.

(D) Prevention of fraud, Detection of fraud.

On the other hand administrative controls seek to achieve the aims of

management in efficient and orderly conduct of transaction, in non accounting

areas. It seeks to ensure the adherence to management policy in various areas

of business operations.

An auditor is mainly concerned with good accounting control of internal control

system. If good Internal controls system exists in accounting system, an auditor

can put greater reliance on the financial data generated in the system with test

checking of selected items. If the Internal control is not strong, the auditor may

have to resort to detailed checking of transaction, events, and practices in the

accounting system.

INTERNAL CHECK:

Internal check is one of the modes of executing internal control. As applied to

accounting system Internal check is a method of organizing the accounts

system of a business concern or a factory where the duties of different clerks

are arranged in such a way that the work of one person is automatically

checked by another and thus the possibility of fraud or error or irregularity is

minimized unless there is a collision between the clerks, e.g., the receipt of


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cash is entered by the cashier on the debit side of the cash book; this entry is

carried to the ledger by another clerk; the statement of account relating to this

transaction is sent to the customer by the third clerk and so on. Thus, we see

that the same transaction has passed through three different hands, and the

work of one is checked automatically by the other. It is a kind of division of

labour. This minimizes the possibilities of frauds and errors unless all the three

join hands in defrauding their employer. Again if an error or fraud has been

committed, it will be detected very soon by another clerk while the

transaction is being automatically checked.

Under this system, no one is allowed to deal with one book throughout

the year. Therefore the work of the members of the staff should be

changed from time to time.

The application of some of the automatic devices, e.g., cash registers, time

recording clocks, book keeping and calculating machines etc., prevents the

commission error and fraud. The clerks should be transferred from one

department or job to another department or job from time to time

without any prior notice.

The work is sub-divided amongst many person and hence the Internal

check system can be usefully employed by big concerns.

The aim of application of Internal check is the prevention and alternatively

the early detection of fraud, errors, and misappropriation.

The advantage of the existence of good and efficient Internal check is that

in that case the auditor can rely upon the accuracy of the accounts. Even

though he finds a very efficient Internal check system in operation, he

should not be negligent but must be alert. He should apply test checks to


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a few items selected at random. If he finds that the Internal check system

in the business is not satisfactorily he should be very careful and test

checks should be extensive and thorough and he should mention that fats

in his report.

EVALUATIVE CRITERIA FOR GOOD INTERNAL CHECK:

A good Internal check system must provide in-built checks and balances

while the operations are being performed. To achieve this end, the

following control mechanism may be introduced:

(A) DIVISION OF LABOUR: No one should be allowed to have right to

perform the work from origin to end. For example, a transaction of sale

may have to be split into display of article by a staff, the performance of

invoice by another, the receipt of cash against the invoice by a third clerk,

the delivery of article against the proof of receipted invoice by another

clerk, checking of outward movement of article against delivery order by a

clerk and so on.

(B) JOB ROTATION: No individual clerk should be allowed to occupy a

particular area of operation for long. Familiarity with and exclusiveness in

a position offers a person greater flexibility to attempt manipulation with

the system.

(C) AUTHORITY LEVELS: There must be clear cut authority levels for

according sanctions to various transactions.C

ommensurate to theauthority vested, responsibility must be extracted. Existence of authority

levels results in review of operations of subordinates.


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(D) SEPARATION OF CUSTODY AND RECORDING: There needs to be

effective control by way of separation that the person handling an asset

cannot make entries for the transaction without any counter check.

(E) ACCOUNTING CONTROLS: In order to ensure internal check with

regards to recording of transaction in accounting records various cross

checks must be introduced to ensure that the accounting records reflect

reliable information.

INTERNAL AUDIT:

As discussed in definition of Internal control, the control is exercised in

the form of Internal check and Internal audit. Internal check is concerned

with so devising the form and flow of operations of an entity that

automatic checks are carried out as the transactions occur. On the other

hand, internal audit is a critical appraisal of functioning of various

operations of an enterprise including the functioning of the system of

internal check. Exceptions from normal functioning of internal check

system are exposed in internal audit. Accuracy, completeness, reliability,

and timeliness of accounting information are tested and reported for

remedial actions. Non-accounting areas viz. operational side of enterprise

are critically studied, analyzed and weakness of the system or practice

viz., inefficiency, wastages, frauds etc.- are brought to the notice of the

management. That part of an internal audit dealing with operational side

of the entity to improve efficiency is termed as operational audit. That

part of Internal audit aiming at improving the effectiveness of accounting

and administrative and other operational systems are called system audit.


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Internal audit is the independent appraisal of activity within an

organization for the review of accounting, financial and other business

practices as a protective and constructive arm of management. It is a type

of control which functions by measuring and evaluating the effectiveness

of other types of control.

Prof. Walter B. Meigs of America says Internal auditing consist of a

continuous, critical review of financial and operating activities by a staff of

auditors functioning as full type sala

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sumit kumar nanda