Statutory Audit checklist of Limited Company

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rubi

rubi (Querist)
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27 May 2024 Anyone please provide me the checklist of statutory audit of limited company.

Asha Kanta Sharma

Asha Kanta Sharma

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11 July 2024 Certainly! Here's a checklist for the statutory audit of a limited company. This checklist covers various aspects that auditors typically consider during the audit process:

### Preliminary Audit Steps

1. **Engagement Letter**: Ensure an engagement letter is signed between the auditor and the company.
2. **Understanding the Business**: Gain an understanding of the company's business operations, industry, and key risks.
3. **Audit Planning**: Develop an audit plan based on risk assessment and materiality thresholds.

### Financial Statements Review

1. **Review of Financial Statements**:
- Balance Sheet
- Profit and Loss Account
- Cash Flow Statement
- Notes to Accounts

2. **Disclosure Requirements**: Verify compliance with relevant accounting standards and regulatory requirements.

### Audit Procedures

1. **Internal Controls Evaluation**: Assess the effectiveness of internal controls over financial reporting.
2. **Testing and Substantive Procedures**:
- **Verification of Assets and Liabilities**: Existence, ownership, valuation, and completeness.
- **Revenue Recognition**: Ensure revenue is recognized as per accounting standards.
- **Expenses**: Check for accuracy, classification, and completeness.
- **Provisions and Contingencies**: Evaluate adequacy and disclosure.
- **Related Party Transactions**: Review for proper disclosure and compliance with regulations.
- **Inventory**: Physical verification and valuation.
- **Fixed Assets**: Verification of additions, disposals, and depreciation.
- **Bank and Cash Balances**: Confirmation and reconciliation.
- **Investments**: Valuation and compliance with accounting standards.
- **Borrowings**: Confirmation and terms compliance.
- **Taxation**: Compliance with tax laws and provision for tax liabilities.

### Compliance and Legal Aspects

1. **Compliance with Companies Act**: Check adherence to statutory requirements regarding meetings, filings, etc.
2. **Directors' Report**: Review content and compliance.
3. **Secretarial Compliance**: Ensure compliance with secretarial standards and requirements.
4. **Shareholder Compliance**: Verification of share capital, transfers, etc.
5. **Legal Compliance**: Assess any legal matters affecting financial statements.

### Reporting

1. **Audit Findings**: Prepare an audit report detailing findings, observations, and recommendations.
2. **Management Letter**: Communicate non-audit findings and suggestions to management for improvement.
3. **Final Review**: Review the draft financial statements and audit report with management before finalization.

### Other Considerations

1. **Subsequent Events**: Review events occurring after the balance sheet date that may impact financial statements.
2. **Going Concern**: Evaluate the company's ability to continue operating as a going concern.
3. **Professional Ethics**: Adhere to professional standards and ethics in conducting the audit.

### Documentation

1. **Audit Working Papers**: Maintain comprehensive audit working papers documenting audit procedures, findings, and conclusions.

### Conclusion

This checklist provides a broad overview of the key areas typically covered during the statutory audit of a limited company. Auditors may customize this checklist based on the specific industry, size of the company, and regulatory requirements applicable to the audit engagement.