Audit Programme

The Advisory Audit Programme for Statutory Audit of

an Organization
Stage I Before Commencement of the audit:
1.
2.

3.

Open a new file by giving the current file number for a particular client.
The file should contain the following:
Brief History including activities, associate concerns, locations,
present directors etc.
Last year audited Balance Sheet.

Trial Balance of the proposed audit period.

Bank Reconciliation Statements for all banks.

Interim/ Internal audit report, if any.

Last year management report.

The auditor is advised to go through all the documents carefully to equip.

Stage II At the time of Commencement of the audit

1.

2.
3.
4.
5.
6.
7.

Enquire for any change (Addition/ Deletion) in terms of activities,

location, associate concerns etc and update the brief history of the client.
Also ensure, that the changes are properly recorded in the respective
documents and informed to concerned authorities
Ensure, the print outs of the final books of accounts of the previous year
with proper closing entries. (Tallied with the Audited Balance Sheet)
Check opening balances with the audited balance sheet including
Qty/value of stock statement.
Check BRS and verify the balances from bankbook and
bank statements. Also see and mark the clearance dates of pending entries
in BRS. Reverse the entries in case of stale /cancelled cheques.
Ensure completeness of accounts by applying test
checks.
Examine the system of revenue/ expenses recognition
and its correctness as per AS 9.
Request the Client to provide the documents specified
below:
Bank balance Confirmation certificate.
Certificate of interest paid/received during the financial year in case
of all Term Loans and Fixed Deposits with closing balance.
Balance confirmation from major debtors/creditors.
Quantitative details of inventory. (As per Format enclosed).

Audit Programme

Stock Sheet

Debtors for more than six months with further classification of

Good, Bad or doubtful.
Photocopy of TDS certificates & Advance Tax.
Copies of Sales Tax/Service tax/TDS/Excise returns.
Copies of Challan for Employee Contribution for PF/ESI.
Payment proof (Challan) of statutory dues Payable.
Details of Foreign Currency Transaction If any.
Details of Contingent liabilities, if any.
Stage III During the audit
1.
2.

3.

Check, examine and verify to see the level of implementation and

effectiveness of procedures, Checks, Systems and controls, while
capturing and recording the transactions in the books of accounts.
Decide the size of SAMPLE for detailed vouching/ checking, on the basis
of above observation of each area i.e. Cash, Bank, Purchase, Sales, Stores,
Expenses, Fixed Assets, Payroll etc. Criteria for selection of sample
should be recorded in audit file.
Ensure timely payments to all enterprises registered under MSMED Act,
2006, as per contractual obligation.

MSMED_classification
.pdf

MSMED2006.pdf

SalientFeaturesMSM
EDAct.pdf

Vouching

Examine vouchers w.r.t. Accounting heads, codes, date of transaction,

amount, name of the party and so on.
Check authorization, approvals, authenticity of supporting documents
(Internal/ External) and propriety.
Check, that the transaction falls within the audit period and supports
are in proper name of the auditee.
See and report, if any voucher remains unentered.
See and report, if entries are passed in books directly, without
vouchers.
Revenue, Deferred and Capital expenditure is segregated properly and
accounted for as per AS.
Fixed assets/Investments, purchased if any, during the year should be
examined w.r.t. Authority, Benefit, Ownership, Value and Existence.
Year-end journal vouchers must be compulsorily examined/
scrutinized to ensure that the adjustment entries are properly recorded.
Ensure that personal expenses of directors/owners are not debited in
books.

Audit Programme

Ledger Overview

Identify non-routine accounts and examine the transactions.

Identify party accounts, where no transaction has taken place
during the year. Examine, whether any dispute/ litigation is pending or
the balances need to be written off.
Identify unusual transactions in parties accounts by looking at
flow of transactions and examine them thoroughly to see their impact
on profitability and/or presentation of final accounts.
Repair and Maintenance accounts must be examined to see
expenditure of capital nature, if any.
Distinguish Loans/ Advances given and taken from normal
Debtors/Creditors Accounts.
Identify Debtors/ Advances, where recovery is bad/ doubtful. It
can be done through ageing analysis.
Examine expenditure accounts with a view to separate
expenses of personal nature debited in the books.
Examine all revenue and expenses accounts to ensure that
income and expenditure of the audit period is only booked. It does not
include Pre/ Post period items.
Vehicle running and maintenance expenses must be examined
to see that the expenses are related with only company owned vehicles.
Telephone / mobile/ Electricity / Rent expenses etc should be
properly reconciled with respect to Item/period.
Identify all receivables and payables accounts (whether or not
in the name of the parties) and check/reconcile the current status of the
same.
Verify all accounts written off during the year and satisfy
yourself on reasons thereof.
Check and scrutinize all credit entries in the expenses accounts
and debit entries in the income accounts.

Confirmations/ Reconciliation/ Verification and Valuation:

Inter branch/ Inter unit Accounts, Reconciliation.

Inter Company accounts reconciliation of all associate
concerns.
Confirmation of balances as on the year- end from all major
Debtors/ Suppliers/ Creditors.
Certificate from Bank in respect of bank balance as on 31 st
March should be obtained in respect of all accounts.
Confirmation of balance/ interest paid/ repayments made,
should be taken from bank or financial institutions in respect of term
loans etc. as on 31st march.
Reconciliation of Sales/ Income figures from the Vat/ Excise/
Service Tax Returns filed with respective departments.
Reconcile the figures of salaries/ wages with PF records and
returns.

Audit Programme

Report of Physical Verification of Fixed Assets carried out if

any, by the management. Alternatively, a certificate should be taken.
Also check the additions/ deletions made during the period and ensure
the requirements of AS 10 are complied with. Also, ensure that fixed
assets records are maintained properly.
Report of Physical Verification of inventory carried out if any,
by the management. Alternatively, a certificate should be taken. Also,
ensure that the stock records are properly maintained to record all
receipts/issues/shortages etc.
Valuation of Inventory as per AS 2 be taken and checked. Also,
verify the Stock Statement submitted if any, to the bank and/or other
authorities. Also, comment on change of valuation method, if any as
compared to last year.
Valuation of Investments as per AS 13 to be taken and checked.
Valuation and accounting of Retirement Benefits (Bonus,
Gratuity, Leave salary and other superannuation etc) to be examined as
per AS 15.
See and examine if any Impairment of assets exists (AS28)
See and examine related party transaction from reporting point
of view AS 18.

Provisions/ Prepaid

Check, that appropriate provisions have been created in the

books of accounts for various expenses/ liabilities.

Check and separate-out the expenses paid but relates to next

year as Pre-paid expenses.

Examine the basis, calculations and documents relating thereto.

Review the transactions of next financial year till the date of

audit with a view to identify the impact on Balance Sheet in respect of
Provisions, Contingent Liabilities and so on.

Legal Compliances
Check, Verify and ensure that the process set up by the client for making
various legal compliances i.e. VAT, Excise, Service Tax, TDS, PF, ESI is
proper.
TDS

Ensure deduction on all payments and /or credits at applicable

rates.

Ensure deposition of TDS deducted and Returns filed on timely

basis.
Check TDS certificates are issued timely.
Check TDS calculations on salaries to employees. All benefits,
perquisites and payments to employees and their relatives must be
considered for this purpose.

Audit Programme

Similar checks are to be applied in ensuring

compliances of all applicable laws including labor
laws.
Ratio Analysis

Compare G.P. / N.P. ratio of last two years and record the
reasons of variations, if any.
Compare Direct/ Indirect expenses with previous year and
record reasons of major variations, if any.
Examine the matching concept for all individual heads of
income/expenses.
Calculate the ratio of cash expenses/payments v/s
income/sales.

Other Specific Areas

See and check MOA object clause for any addition of business
activity during the year.
Ensure that all statutory records including minutes book,
Resolutions prescribed under the Companies Act, are maintained
properly.
Obtain a certificate that no legal cases are filed or pending
against/ from the company. Otherwise, examine the status of legal
cases and disputes with a view to find out definite/ contingent liability.
Find out, if any guarantee is given by the company. If yes, the
details thereof to be obtained.
Source and the method of Introduction of Capital, if any, need
to be examined and documented.
Any loans taken/ repaid during the period should be checked
with respect to mode and documentation.
Check and examine the agreements/ contracts entered into, if
any, during the year to see their implications on accounts.
Check if any insurance claim is filed/ settled during the year. If
yes, see the proper accounting impact thereof.
Investments made during the year if any, should be examined
with respect to ownership/ documentation/ purpose.
Check, if any foreign currency transaction has taken place
during the year. If yes, see the accounting implications of AS-11
thereof.

Check applicability of Excise Act. .If yes, then, Excise register

like RG23 Part-II and PLA and accounting of the same should be
thoroughly checked.

Check applicability of Service Tax.If yes, \then, the tax

deposited should be tallied with the returns.

Audit Programme

Reporting Requirements

See the applicability of CARO. If Applicable, reply against

each point should be taken/ derived from the records after proper
verification. As per annexure enclosed.
Checklist for
CARO.doc

See the applicability of TAX AUDIT. If applicable, reply to

each point should be taken/ derived from the records after proper
verification.

See the requirements of SCHEDULE VI. If applicable, the

information/ documents should be collected and verified from the
records, accordingly.
See the requirements of ACCOUNTING STANDARDS and
ensure its implementation by the management. As per annexure
enclosed.
Accounting
Standard.doc

4.

Draft a Management Report giving detailed observations of audit. Discuss

with the audit partner and then issue the same to the companys
management. As per format attached.

5.

Punching of final trial balance (signed by audit partner) in the pre-defined

format in consultation with audit coordinator.

6.

Obtain Management Representation/ Reply letter and then draft a final

report.

7.

Set of documents required for Audit purpose and Income Tax purpose
should be segregated and placed in respective files, before completion of
the audit.

Audit Programme