Statutory audit: It is as same as the purpose of any other type of audit to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.
The exact meaning of the statutory audit is “Providing true check of financial position of a company (Mostly for External sources) by following respective laws and regulations in the country.”
A statutory audit is a legally required review of the accuracy of a companies (or government's) financial statements and records. The purpose of a statutory audit is the same as the purpose of any other type of audit: to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.
1. In recent days audit was done to check the accuracy of the financial statements and to express a true and fair view on the financial statements.
2. The primary objective of the Statutory Audit is to ensure that the financial statement (such as balance sheet, profit & loss Account etc.) provides a true & fair view of the company financial state of affairs. As per the company’s Act it is mandatory for all the registered companies to get their books of Accounts audited by the practicing Chartered Accountants.
3. Statutory audit means audit of statutory areas i.e. Income tax, Service tax, VAT ,ESI, Provided fund ,etc.
Checklist statutory audit
1. Opening balance verification
2. Vouching, Cash vouching, Bank vouching, Cash Verification, Bank Reconciliation Statement, Purchase Vouching, Sale Vouching, Journal Vouching
3. Profit and Loss
1. In the case of profit & loss a/c care should be taken for the individual breakups of sale and services.
2. Verify the various statutory dues such as GST excise duties which has amore connection with sales and services and various periodic returns showing the payment due date and input tax credit under GST should be accounted properly.
3. Concentrate more on delivery dates and also on deliveries exceeding more than one month. That results delay in delivery.
4. In the case of purchases verification whether the vat has been accounted separately vat input tax credit account.
5. In the case of direct expenses and indirect expenses like rent, fees, royalty, salaries, commission, advertisement, and other expenses concentrate on aggrements and TDS applicability.
6. In the case of preliminary expenses the treatment showing whether it is capitalized within five years
7. Minutes of the meeting should be verified showing the any resolutions for capitalization of expenses, managerial remuneration, loans, approving donations(Especially 50,000 or more)
8. In case of foreign agency commission expense change in foreign exchange fluctuation should be accounted properly.
9. Any income from investment i.e. interest, dividend should be check bank account.
10. Verification of valuation of closing stock whether closing stock valuation as per accounting standard-2
To see any resolution pass for increase in share capital how many no. of share issued. Verify whether the share capital changes are there and whether the changes are authorized under proper resolution.
In the case of secured loans whether the loans have been issued under proper sanction and written representation from banks and confirmation of balances from banks
In case of balance sheet proper disclosure between the secured and unsecured loans should be done and document evidencing the receipt of the loan should be taken.
Where fixed asset has been acquired from outside India and the rate of exchange changes after acquisition, the increase/decrease in the liability of the company for repayment of the whole or part of the money borrowed in any foreign currency for acquisition is adjusted in the cost of the asset.
In case of companies other than investment companies or banking Companies, whether any of the shares, debentures or securities were sold at a price less than their purchase cost If so, obtain written explanation from management regarding justification for the same — section 227(1A)(c).
A.- Collection and Remittance of CST & VAT
B - Collection and Remittance of Service Tax.
C - Deduction and Remittance of TDS
D - Deduction and Remittance of Provident FUND & ESI
E - Deduction and Remittance of Professional Tax