What Are the Practical Steps in a Statutory Audit India? - PKC Management Consulting

Auditing is the procedure of independently verifying the accuracy of an organization s financial information. Auditors ensure that an organization's financial statements and other documentation are postage-stamp free from material errors, fraud, and misleading statements.

All statutory audit India are mandated by law and are usually conducted by certified public accountants (CPAs). One involves reviewing the financial records of a company to ensure accuracy and conformance with the law, for example, referring to bank statements and transaction reports.

With our Statutory Audit Consulting services, PFC India assists businesses in India with fulfilling their statutory audit requirements. We have a team of expert chartered accountants who provide Statutory Audit Consulting and guidance at every level of the process, from initial planning through execution to reporting.

Process Of A Statutory Audit In India

Statutory Audit India: It is a statutory legal audit based on the Companies Act of 2013. It must be carried out every year in each company by an independent body: an auditor or an audit company. The basic issue is that it is a check of the bookkeeping books of someone or a corporation.

No matter the size of the business, it is extremely important to submit annual audit reports. In India, a statutory audit is a mandatory procedure. It is a complex process; but this can be understood. This article explains how statutory audit India works on a basic level with simple terms.

The auditor must have a thorough knowledge of the company in question.

An auditor needs to understand the company and also the business to get to the bottom of some problems. To make the most of this opportunity to the company, providing relevant information can be helpful. Information on the present, past, and future of the business can be found here, together with information about its development, the products it produces, stocks of raw materials, shares, its competitors, marketing, operations, financial reports, and so on.

Assets

The auditor should visit the asset site and physically verify that the assets are present. The auditor must make sure that there are no material discrepancies.

Loans

The auditor should see to it that the company's loan-management policy complies with Section 189 of the Companies Act of 2013. Internal control system: The auditor should confirm that the quality of the internal control procedure for the investments on fixed assets and inventories and the product sales is sufficient enough.

Deposits

The auditor should verify the bank account data for the business. The auditor should also consider the company's deposits and withdrawals on the bank accounts as well.

Loan Usage

An auditor needs to ensure that the usage of loans is consistent with the purpose of the loan. The auditor must verify whether the business serves the purpose of a loan. Report on Fraud: The auditor must confirm the company not engaged in fraud or submit false reports concerning the preparation of financial statements.

Profit and Loss

The auditor must perform an accounting of the company's income or loss for the current financial year.

Other Dues and Payments

The auditor must make sure that the repayment of loans and other liabilities of the company to its bankers, debentures, or other financial institutions are checked. The auditor must check whether the company provides a guarantee for loans to any financial institutions on behalf of others.

Statutory Dues

The auditor is mandated to confirm the payment of taxes and fees like income tax, Goods and Services Tax (GST), wealth tax, sales tax, customs duty, cess tax, etc., with the appropriate authorities. The auditor is mandated to check statutory due arrears.

Key Steps In Statutory Audits In India

The audit process may include these steps:

Planning and risk assessment

The auditor assesses the client's business condition and sets out an audit program accordingly. This involves identifying major areas of business and evaluating the likelihood of material misstatements.

Audit testing

The auditor performs examinations in the vicinity of the clients to ascertain their internal procedures and controls. It is generally followed by documentation review, employee interviews, and process observation.

Financial statement analysis

The auditor performs a detailed examination of the client's financial statements to identify potential errors and fraud. He reviews balance sheet items, income statement items, and disclosure subitems.

Audit reporting

An auditor produces an audit report detailing the findings in a format determined by regulators. The report is then given to management and board members of a client for appropriate actions.

Follow-up and closure

The auditor will follow up with the client to ensure that all audit recommendations have been made. 

Why choose PKC Consultants with regard to statutory audit in Chennai?

The PKC Management Consulting team of chartered accountants can make sure that your statutory audit is compliant with the requirements of the Companies Act, 2013 and similar rules and regulations. Our team will help ensure your compliance with legal standards and other issues.