CHECKLIST FOR STATUTORY AUDIT
A Statutory Audit is an audit which is legally required to be reviewed to know the accuracy of a company financial statements and records. A statutory Audit helps in determination whether an oraganization furnishes a fair and accurate representation of its financial position which can be done by examining the various information such as bank balances
In other words, an audit is an examination of records which is held by an organisation, business, government entity, or individual, which also involves the analysis of Financial Records. The purpose of this audit is to often determine if funds of the company are properly handled and all the records and fillings are accurate.
Applicable Limit for Mandatory Statutory Audit:
As per Companies Act,2013 Statutory Audit is governed
Limited Liability Partnership(LLP)- It is applicable if turnover exceeds Rs.40 lakhs or its contribution exceeds Rs.25 Lakhs in any financial year.
Private Company/Public Company- Statutory Audit is mandatory irrespective of Profits, Turnover. Even during the company is suffering from loss statutory is compulsory.
Appointment of Statutory Audit:
A Chartered Accountant Firm with majority partners or LLP or A practicing Chartered Accountant can be appointed as a statutory auditor of a company.
While conducting Statutory Audit following areas has to be taken to into consideration:
1. Audit of Balance Sheet
It is an evaluation of the accuracy of information found in a company’s balance sheet. It involves a number of checks, as per the auditor’s balance sheet audit checklist, as auditors conduct this evaluation based on supporting documents. Balance Sheet audit will involve verification of:
2. Audit of Profit & Loss Account
A test of controls is considered to be an audit procedure to test the effectiveness of a control used by a client entity for prevention or detection of material misstatements.
Based on the results of this test, auditors may choose to rely upon a client’s system of controls as part of their auditing activities. In case if the test reveals that controls are weak, the auditors will enhance their use of substantive testing, which usually increases the cost of an audit.
4. Researching the Control environment of the organisation:
Every organization has control environment either through regulatory guidelines or initiatives of the competitor or economic trends taking place in the country or at the international level. These elements show the competitive strategy or the stand of the company in the market. Every statutory auditor has to research these elements to know more about the controlled environment of the business.
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