Auditing
What a statutory audit actually looks at
An auditor is not checking every entry. They are testing a handful of assertions, and knowing which ones turns a…
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Auditing
Statutory, tax and internal audit — what triggers each, what an auditor will ask for, and how to be ready.
Which audit applies to you
Every company is subject to statutory audit under the Companies Act regardless of turnover. A tax audit under section 44AB applies to businesses and professionals once the prescribed turnover or receipts limit is crossed, or where presumptive taxation is opted out of. GST audit and departmental audit are separate again, and driven by the GST law.
What the auditor tests #
Existence and valuation of stock and fixed assets, cut-off around the year end, recoverability of receivables, completeness of liabilities, related-party dealings, and compliance with TDS and GST. Most qualifications arise from missing supporting documents, not from disputed judgement.
Preparing for the visit #
A closed trial balance, reconciled bank accounts, a stock count carried out on the year-end date with the sheets signed, and a folder of statutory challans will remove most of the back and forth. Where a document genuinely does not exist, say so at the start.
What you will need
- Final trial balance and ledgers
- Bank statements and reconciliation statements
- Physical stock count sheets, signed and dated
- Fixed asset register and purchase invoices
- TDS, GST, EPF and ESI challans and returns
- Board minutes and statutory registers, for companies
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Auditing
What a statutory audit actually looks at
An auditor is not checking every entry. They are testing a handful of assertions, and knowing which ones turns a…