Greetings of the Day to All the member of CCI Family.
So friend's after the success of Part-1 of Ledger Scrutiny - Backbone of Statutory Audit
I thought to share with all of you the Part - 2 of my Article.
I promise to all of you that this time the Knowledge will be extensive & Article will be much more precise. There is a request to all of you that please read the Part - 1 before reading the Part - 2.
In the Part - 1 we read about how to Deal with different items of the Balance Sheet i.e. Debtors, Creditors, Cash, Etc.
In this part I will try to solve all the Queries in Part - 1 & will Hope that it will be beneficial for all of you.
So let's Start with it -
Ledger Scrutiny - Backbone of Statutory Audit (Part - 2)
Physical Verification of Cash -
1. First of all check on Tally The Availability of Cash as on Date. (Cash On Date will be the Current Date)
2. Now move straight to the Account's Officer Room & Ask him to Show the Cash Balance he has with Him.
3. If you find any Discrepancy with Balance ask the Accountant Reason for such Difference.
4. If you are not Satisfied with the reason, You can Qualify the Report.
Fixed Deposits -
1. First of all Physically Verify the F.D Certificates.
2. Whether or not Interest on F.D have been recorded in Books of Accounts.
3. Whether or not Bank Confirmation have been received regarding Deposits Maintained.
4. Reconcile the T.DS Deducted with 26-AS.
Payment of Dividend -
1. Whether or Not Board Has Sanctioned the Payment of Dividend.
2. Amount to be Transferred to General Reserve -
a. If the Proposed Dividend Exceeds 10% but is less than 12.5% of Paid Up Capital then Amount to Be transferred to Reserves Shall be Not less than 2.5% of Current Profit.
b. Exceeds 12.5% But less than 15% - Not less than 5% of Current Profit.
c. Exceeds 15% But less than 20% - Not less than 7.5% of Current Profit.
d. Exceeds 20% of Paid up Capital - Not less than 10% of Current Profit.
3. Whether or not CDT has been Deducted & Paid after the Declaration & Payment of Dividend.
4. Whether or Not Dividend have been paid out of Sufficient Profit.
Provident Fund (EPF)-
1. First of all check whether or not it has been Deposited within Due Date i.e 15 th of Next Month.
2. Always Remember one thing that the Employee can Deduct any amount of P.F from its Salary but the Maximum amount for which Employer is Bound is 12% of Basic + D.A.
3. Maximum Salary on which P.F will be Deducted - 6500 Per Month.
E.S.I.C -
1. First of all check whether or not it has been Deposited within Due Date i.e 21st of Next Month.
2. Contribution to be Made: Employer - 4.75% of Salary ; Employee- 1.75% of Salary.
3. Maximum Salary on Which E.S.I.C will be Deducted - 15,000 P.M.
Loan & Advances -
1. Whether or not All Long Term Loans & Advances Actually exist.
2. Whether or not they have been provided at appropriate Value & All Doubtful Balances Have been written off.
3. Loans relating to Associated Enterprises are in accordance with Law & Regulation.
4. Whether or not a charge has been Created on Assets if the Loan is Secured & Whether the same reflects in Company Charge Data in MCA.
Bank Reconciliation Statement -
1. It's an very Important tool to check the Internal Control & Regarding Stale Cheques.
2. Always verify whether or not Balance shown by Books & As well as Pass Book are same.
3. As now the validity of Cheque is 3 Month's, So check if there is any cheque outstanding for more than 3 Month's & Whether or Not it has been Cancelled.
4. Also BRS will help you to identify whether any Fraudulent Activity exists at Client Place.
So My Article Comes to an End.
Hope all of you will appreciate my small effort.
Any Sought of Query & Suggestions are welcome.
Thanks & Regards
Sanyam Arora
CAclubindia
