In reference to freight bills, the term audit is used to determine the accuracy of freight bills.

What does Audit mean?

Audit is a systematic and independent examination of an organisation’s financial statements for identifying possible weaknesses in internal controls.

Audit aims to form a relatively objective view of whether the accounts provide a true and fair view, so that decisions can be made on this basis.

Purpose of Freight Bill Audit:

In order to detect frauds in freight bills, it is essential that all freight bill should undergo audit at least once a year. The important point here is not only to check the integrity & accuracy of records but also compare with company standard. Proper comparison will help us to determine whether all transactions have been recorded correctly or not. All Freight Bills should be submitted for audit without waiting for the last date of closing of financial year.

Audit in relation to Freight Bills:

The primary function of audit department is to check and verify all transactions appearing on freight bills with corresponding customers’ order, invoices and delivery challans (if any) and vouchers maintained in stores utilization register etc. The secondary function is to ensure that freight bill wise deliveries are not made with one invoice.

Freight bills should be checked for reasonableness vis a vis loading, unloading and carriage charges by comparison with previous years’ comparative statements and other records (eg. Loading & unloading registers). They should also be carefully scrutinized for the correct classification under the head “freight” – ie., sea or inland waterway. It should also be checked whether the line covering cargo insurance premium has been shown under “freight”.

In this connection, it will be useful to remember that a freight bill is presumed to be correct unless it is proved otherwise. For non-receipt of goods within the prescribed time limit from the date of dispatch or for non-delivery thereof at the destination, the consignee must give notice in writing to the carrier within a reasonable time not exceeding one month after receipt of shipping documents. If due proof is not submitted to establish loss or damage within three months after delivery of goods, a claim can no longer be entertained.