Statutory Audit Checklist in India

Every company that meets certain criteria must conduct a statutory audit, and this checklist can assist them in efficiently conducting one.

Statutory audit involves evaluating corporate procedures by an auditor specialized in regulatory audit and also operating mechanisms to prevent error and fraud. They test account balances to make sure they conform with industrial practices and standards set by regulators.

Checklist for Cash Verification
Cash verification is an integral component of statutory audit. This step involves physically counting all cash at the end of every period or during an unexpected audit to detect any major fluctuations in balances and ensure all transactions are recorded accurately.

An auditor must ensure that the bank reconciliation statement matches up with accounting records found in the general ledger account at year-end, and examine any charges or interest levied by banks.

Additionally, an auditor should ensure all statutory payments (like PF & ESI ) and loan payments can be traced in the books of accounts and that all challans have been collected on time. He should also make sure payroll taxes have been correctly deducted and employee files maintained by HR department as well as checking whether input tax claims have been filed on appropriate transactions.

Checklist for Loans & Advances
If a company holds loans & advances on its books, it should provide all related documents to its auditor. These could include lists of creditors written off, copies of TDS/TCS/GST/ST/ED challans etc.

Audits should also play a vital role in monitoring loan disbursement. An auditor should check that loan disbursement complies with all terms & conditions outlined in its sanction letter, and that no loans are extended against own shares, securities, or assets of an NBFC.

A statutory auditor should examine system reports of aging to make sure that credit notes have not been used to artificially improve receivables balances, verify NBFC has an adequate appraisal system for hire purchase finance, as well as lending within their limit under section-143. Furthermore, ensure all receipts and payments are supported by relevant vouchers.

Checklist for PF & ESI
A statutory audit is a legally mandated examination of an organisation’s records and financial data, including their financial statements. The purpose is to ascertain whether these reflect its true financial position accurately and fairly.

Statutory audits are required of any business that operates in the public realm or is owned by a government entity, and conducted by qualified chartered accountants who assess bookkeeping and transaction records to ensure their accuracy.

These checks include verifying employee eligibility for PF & ESIC deduction, depositing the correct tax deducted on time with PF and ESI authorities and meeting any statutory requirements such as GST, Income Tax, Customs Duty, VAT or Wealth taxes.

Auditors must verify that an NBFC’s investments comply with regulations and follow sound commercial practices, such as sanctioning loans/advances appropriately and ageing long-term loans correctly as well as verifying whether security provided by its borrowers is genuine.

Checklist for GST
Statutory audit is an examination conducted by an official government body to ensure the financial records of an enterprise are accurate. It is mandated by several statutes such as Income Tax Act, Reserve Bank of India Act and Companies Act.

Every public and private limited company must conduct an annual statutory audit. Depending on their business type, this audit may cover different aspects. A statutory auditor will examine their financial statements and records to ensure they are accurate and complete before providing their auditing service to a client entity.

Manufacturing companies must submit a GSTR-3B return each month, and the statutory auditor will review it to identify any discrepancies or potential problems. He or she may look out for issues like: