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THE BELOW INFORMATION IS RELATED TO CHECKLIST FOR STATUTORY AUDIT OF COMPANIES
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CHECKLIST FOR STATUTORY AUDIT
1. STATUTORY REGISTERS / BOOKS:
Companies Act, 1956 has, through its different sections, made it obligatory on the part of companies to maintain various registers, books, etc. Since these registers are needed to be maintained statutorily, these are called “Statutory Registers”. The following is the list of statutory registers to be maintained by the Company under Company Law
Ø Register of investments in any shares or securities not held by the company in its own name [Sec. 48(7).]
Ø Register of Charges [ Sec. 143]
Ø Register of Members [Sec. 150]
Ø Index of Members [Sec. 151]
Ø Register of debentures-holders [Sec. 152(2)]
Ø Minute books of General Meetings [Sec. 193]
Ø Minute books of Board Meetings and meetings of the Committee of the Board [Sec. 193]
Ø Register of contracts, companies and firms in which directors are interested [Sec. 301]
Ø Register of Directors, etc. [Sec. 303]
Ø Register of Directors’ share-holdings, etc. [Sec. 307]
Ø Register of loans, etc., to companies under the same management [Sec. 370(IC)]
Ø Register of investments in shares of any Body Corporate [Sec. 372(6)]
Ø List of Account Books maintained by the company along with the name of persons maintaining it.
2. CERTIFICATES REQUIRED TO BE TAKEN:
The following Certificates are required from the management/ concerned authorities / persons while conducting the audit
Ø Number of Bank Accounts together with certificate of bank reconciliation.
Ø Name of the financial institutions from whom loan taken specifying the nature of security. Nature of security should be compared with the Register of charges and mortgages.
Ø Cash in hand.
Ø Certificate in respect of investments held by bankers or other authorities.
Ø Confirmation of accounts with sister-concerns.
Ø Contingent liabilities, if any
3. COPIES OF RESOLUTIONS:
Obtain the following copies of Resolutions while conducting the company audit
Ø Resolution fixing remuneration of working Directors.
Ø Resolution appointing any person to office or place of profit [Sec.314(1B)]
Ø Resolution for capitalization of expenses.
Ø Resolution of any loans by the company
Ø Resolution approving Donations.
4. COPIES / STATEMENTS OF COMPUTATIONS:
Obtain Copies/Statements of computations of the following items while conducting the company audit
· Computation of managerial remuneration.
· Computation of provision for taxation.
5. COPLIANCE WITH ACCOUNTING STANDARDS:
Ensure due compliance with mandatory accounting standards
o AS-1 Disclosure of Accounting Policies.
o AS-2 Valuation of Inventories.
o AS-3 Cash flow Statements.
o AS-4 Contingencies and events occurring after the balance sheet date.
o AS-5 Net profit or loss for the period, prior items and changes in accounting policies.
o AS-6 Depreciation Accounting.
o AS-7 Accounting for Construction Contracts.
o AS-8 Accounting for Research and Developments.
o AS-9 Revenue Recognition.
o AS-10 Accounting for Fixed Assets.
o AS-11 Accounting for effects of changes in Foreign Exchange Rates.
o AS-12 Accounting for Government grants.
o AS-13 Accounting for Investments.
o AS-14 Accounting for Amalgamation.
o AS-15 Accounting for Retirements benefits.
o AS-16 Borrowings Costs.
o AS-17 Segment Reporting.
o AS-18 Related Party disclosure.
o AS-19 Leases.
o AS-20 Earnings per share.
o AS-21 Consolidated financial statements.
o AS-22 Accounting for taxes on income.
o AS-23 Accounting for investments in associates in consolidated financial statements.
o AS-24 Discontinuing Operations.
o AS-25 Interim Financial Reporting.
o AS-26 Intangible Assets.
o AS-27 Financial reporting of Interests in Joint Ventures.
o AS-28 Impairment of Assets.
o AS-29 Provisions, Contingent Liabilities and Contingent assets.
6. FIXED ASSETS:
Ø Check whether all fixed assets are physically in existence and in the ownership of company by checking relevant records.
Ø Check whether fixed assets been revalued during the year. If yes then
a) What is the basis of revaluation?
b) Fact of revaluation has to be disclosed for subsequent 5 years.
c) Quantum of revaluation has to be disclosed.
d) If a revaluation asset has been sold, have transfers been made from revaluation reserve to capital reserve. If not, give suitable note.
Ø Verify whether all assets were in use during the year and all items of fixed assets been adequately insured.
Ø Verify whether additions/deductions deletions of assets are duly authorized by Minutes of Board and all additions are properly supported by documents of titles.
Ø Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
7. CASH AND BANK BALANCES:
· Cash and stamps in hand at the date of balance sheet should be counted and checked by the auditors.
· Surprise check must be made to verify the physical counting of cash and stamps.
· Verify whether unusually large cash balance was observed during the years. And if yes, then proper explanation must be obtained from the management.
· Verify whether there exists a practice of maintaining a particular minimum sum in hand. If yes, then ensure that the same has duly maintained. If not, proper reasons must be asked.
8. AUDIT OF PRELIMINARY EXPENSES:
Ø Preliminary expenses shall normally include the following
a) Legal costs in drafting the memorandum and articles of association
b) Fees for registration of the company
c) Cost of printing of the memorandum and articles of association and the statutory books of the company, and
d) Any other expenses incurred to bring into existence the corporate structure of the company.
Ø The auditor should verify these expenses in the light of supporting documents such as invoices and contracts relating to these expenses.
Ø In case of a company, the auditor should also make sure that the reimbursement of such expenses to promoters is in accordance with the disclosures made in the prospectus.
Ø Further, due compliance with legal provisions regarding reimbursement of the promoters expenses should also be specifically examined.
9. TERM LOANS:
Whether term loans were applied for the purpose for which the loans were obtained.
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