Textile Industry Audit Checklist — Inventory, Job-Work, Export Incentives
TEXTILE INDUSTRY AUDIT CHECKLIST
Entity: {{client_name}} · Year ended: {{period_end}}
Purpose: test inventory valuation across the yarn/fabric/garment production stages, job-work arrangements, and export incentive scheme compliance specific to the textile value chain.
A. Multi-stage inventory
| Test | Result / Observation |
|---|
| Inventory is tracked and valued separately at each stage — raw cotton/fibre, yarn, grey fabric, processed/dyed fabric, and finished garments — rather than as one undifferentiated pool | |
| Cost allocation between stages (spinning, weaving/knitting, processing, garmenting) follows a consistent absorption basis year on year | |
| Work-in-progress at each stage is physically verified and reconciled to production records (looms/machines running, batch cards) | |
| Slow-moving/obsolete stock (out-of-season designs, discontinued shades) has a documented ageing analysis and provisioning policy | |
B. Job-work arrangements
| Test | Result / Observation |
|---|
| Material sent for job work (dyeing, printing, embroidery, stitching) is tracked via delivery challans and reconciled on return — not derecognised from inventory while still owned by the principal | |
| GST job-work provisions (Sec 143 CGST Act — goods sent on job work are not treated as a taxable supply if returned within the prescribed period) have been correctly applied, with any goods not returned in time treated as a deemed supply | |
| Job-work charges paid are subject to the correct GST rate/RCM treatment for the specific process outsourced | |
| TDS on job-work/contract payments (Sec 194C) has been correctly deducted where applicable | |
C. Export incentive schemes
| Test | Result / Observation |
|---|
| Duty drawback / RoDTEP (Remission of Duties and Taxes on Exported Products) claims are supported by shipping bills and correctly reconciled to export turnover | |
| Advance authorisation / EPCG licence obligations (export obligation period, value addition norms) are tracked and not in default | |
| Where the entity claimed benefits under a legacy scheme (e.g. TUFS-linked capital subsidy or interest reimbursement), the subsidy has been accounted for per Ind AS 20 / AS 12 (income approach vs. capital approach) consistently | |
| Export realisation within the RBI-prescribed period (via FIRC) has been verified for all export invoices | |
D. Conclusion
Conclusion on inventory valuation, job-work controls, and export incentive compliance: ____________________________________________
| Prepared by | Reviewed by | Engagement partner |
|---|
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