M.K.Dandeker & Co.,
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TRIAL BALANCE(TB)
◦ Verify Opening Balance to ensure Closing balance of Previous
year is correctly carried forward.
◦ Books of Accounts must be freezed before starting the
verification.
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VOUCHING
◦ It is an examination by the auditor of all documentary evidence
which is available to support the genuineness of transactions
entered in client’s records as to completeness, accuracy and
validity of the data procured by the accounting system.
M.K.Dandeker & Co.,
METHODS OF SELECTING SAMPLES FOR VOUCHING
Statistical Sampling
Random
Sampling
All items within a
population stand an
equal chance of
selection applied
through random
number tables or
generators.
Non Statistical Sampling
Systematic
Sampling
Monetary Unit
Sampling
Haphazard
Sampling
Number of sampling
units in a population is
divided by the sample
size to give a sampling
interval.
A type of valueweighted selection
in which sample
size, selection and
evaluation results
in a conclusion in
monetary amounts.
An acceptable alternative
to random selection
provided the auditors are
satisfied that the sample
is representative of the
entire population
Based on attribute
sampling
techniques and is
often used in test of
controls.
Block Sampling
Sampling involves a
selecting (block or
blocks) of contiguous
items from within a
population
Rarely used in modern
It requires care to guard
auditing
against making a selection
which is biased.
M.K.Dandeker & Co.,

Payment of following statutory dues within time and as per rules
◦ PF
 Whether required amount got deducted from employee salary and required amount got contributed by
employer?
 Whether the same has been paid within time?
 Max basic salary & DA eligible for PF deduction is
Rs. 15000/Due Date : 15th of next month
◦ ESI
 Whether employee and employer contributed towards ESI and the same has been deposited within time?
 Due Date : 21st of next month
◦ TDS
 Where the company is making payments, wherever tax need to deducted, whether the company is
deducting tax and paying the same under right category within time?
 If not, whether interest on non-deduction/non-payment/late deduction/late payment of tax been paid?
 Due Date : 7th of next month
◦ Service Tax
 Where company is providing service and collecting tax from clients, whether the amount collected has
been deposited within time?
 Due Date : 6th of the month following the quarter (other than companies) and for companies it is 6th of next
month
M.K.Dandeker & Co.,

Meaning
Person responsible to deduct the tax while make payment/ entering contract (Source) to other party and
remit back the same to statutory authority with in a due date.
Applicability
To all assessees other than Individual with restriction. In case of Individual subject to Person having Tax
audit u/s 44 AB of Income Tax Act 1961.

Section
Particulars
Provision /
Applicability (Rs)
Percentage of
deduction
192
Salaries & wages
193
Interest of debentures
AS per Income
tax rate of
Individual
10%
194
Deemed Dividend
Interest on securities by
bank
Interest on securities by
others
Winning from
lottery/puzzle/Game
Winning from Horse race
Income of employee
exceeds basic
exemption limit
Payment exceeds Rs
5,000/No minimum Limit
Payment exceeds Rs
10,000/Payment exceeds Rs
5,000/Payment exceeds Rs
10,000/Payment exceeds Rs
5,000/-
194A
194B
194BB
10%
10%
10%
30%
30%
M.K.Dandeker & Co.,
Section
Particulars
Provision /
Applicability (Rs)
Percentage of
deduction
194C (1)
Payment to Contractors
194C (2)
Payment to sub contractors
1% -Individual &
HUF
2% for others
194 D
Payment of Insurance
Commission
Payment of NSS Deposits
Rs. 30000/- for single
payment Rs. 75000/for aggregate payment
during Financial Year
Payment exceeds Rs
20,000/Payment exceeds Rs
25,000/Payment exceeds Rs
1,000/Payment exceeds Rs
1,000/Payment exceeds Rs
5,000/Payment exceeds Rs
1,80,000/Payment exceeds Rs
1,80,000/Payment exceeds Rs
30,000/Payment exceed Rs
1,00,000/Payment exceed Rs
2,00,000/-
194EE
194F
194 G
194 H
194 I
194 J
194 L
194 LA
Repurchase of units
by Mutual Funds / UTI
Commission ons Sale
of Lottery tickets
Commission or Brokerage
Rent of Land, Building or
Furniture
Rent of Plant & Machinery
Professional / technical
services, royalty
Compensation on
acquisition of Capital Asset
Compensation on
acquisition of certain
immovable property
10%
20% (Individual –
Nil)
20%
10%
10%
10 %
2%
10 %
10 %
10%
M.K.Dandeker & Co.,
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Numerous changes in the Act from the Companies Act, 1956.
Verify whether the company complies with the provisions based on
the amended Act and within the time as specified in the Act.
Major changes
◦ Appointment and Terms of Auditor
◦ Loan to Director
◦ Loan and Investment by Company
◦ Corporate Social Responsibility
◦ Depreciation – Schedule II
◦ Acceptance of Deposit
M.K.Dandeker & Co.,

Term:
◦ One Consecutive term of 5 Years (Sole Practitioner)
◦ Two Consecutive Term of 5 Years (Firm)

Term is applicable for
◦ Listed companies
◦ Unlisted public companies having paid up capital of Rs. 10 crores
or more
◦ All Private companies having paid up capital of Rs. 20 crores or
more
◦ Companies not covered above but having public borrowings from
banks or financial institutions of Rs. 50 crores or more
M.K.Dandeker & Co.,

Internal Audit
◦ Prescribed companies to appoint Internal Auditor
◦ He shall either be a Chartered Accountant or Cost Accountant or
such other personnel decided by the Board

Prescribed companies :
◦ Listed Companies
◦ Unlisted Public Companies having
 Paid up capital of Rs. 50 crores or more
 Turnover of Rs. 200 crores or more
 Outstanding loans or borrowings from bank or financial institutions
exceeding 100 crores or more
 Outstanding deposits of Rs. 25 crores or more
Contd.,
M.K.Dandeker & Co.,

Private companies
 Turnover of Rs. 200 crores or more
 Outstanding loans or borrowings from bank or financial institutions
exceeding 100 crores or more
M.K.Dandeker & Co.,

No company shall provide loan to director or any other person in
whom such director is interested

However
◦ It shall not apply to giving of loan to Managing Director or Whole
Time Director as a part of conditions of service extended by it to
all its employees or
◦ Pursuant to any scheme approved by the members by a special
resolution
M.K.Dandeker & Co.,

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No company shall
◦ give any loan to any person or body corporate
◦ Give guarantee or provide security in connection with the loan
◦ Acquire by way of subscription or purchase of securities of body
corporate
 Exceeding 60% of paid-up capital, free reserves and securities
premium account or 100% of free reserves and securities
premium account.
However if the above limit exceeds company to obtain approval
from Board and by special resolution at the general meeting; and
public financial institution, wherever necessary
M.K.Dandeker & Co.,

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Company having
◦ Net worth - Rupees 500 crores or more
◦ Turnover – Rupees 1000 crores or more
◦ Net profit – Rupees 5 crores or more
Shall formulate CSR Committee
Such CSR committee
◦ Formulate and recommend to the Board CSR Policy
◦ Recommend the amount of expenditure (At least 2% of average
net profits of 3 immediately preceding financial year)
◦ Monitor CSR policy
Company shall give preference to local areas and areas around it
where it operates
M.K.Dandeker & Co.,

Schedule II requires depreciating assets over its useful lives.

Useful lives shall not be longer than the specified lives of the asset
as given in Part C of the Act and residual value shall not exceed 5%
of the Cost of the Asset.

Provides method to amortize intangible assets
M.K.Dandeker & Co.,
No company shall invite, accept or renew deposits from public.
However, where a public company having
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net worth of not less than Rs. 100 crores or
turnover of not less than Rs. 500 crores and
obtained prior consent at general meeting by a special resolution and
Filed above resolution with Registrar.
The above restriction not applicable to banking company, nonbanking financial company and such other company Central
Government, after consultation with RBI, may specify
A company may, subject to passing of resolution in general
meeting and subject to rules prescribed in consultation with RBI
may accept deposits from members.
M.K.Dandeker & Co.,


Management prepares financial statement based on Schedule III
Check for
◦ Provision entry (Depreciation, Bad Debts, Gratuity, Leave
Encashment)
 In case of Gratuity check for base data
 Whether assumptions of actuary consistent with that of
company
◦ Compliance with Accounting Standard
◦ Relevant Disclosure in Notes to Accounts
M.K.Dandeker & Co.,


Types of Audit Report
◦ Unmodified
Financial Statements prepared are true and fair
◦ Modified
 Qualified
 Adverse
 Disclaimer
CARO
M.K.Dandeker & Co.,
Qualified:
Auditor having obtained sufficient appropriate audit evidence
concludes misstatements are material but not pervasive or auditor
could not obtain sufficient appropriate audit evidence but the auditor
concludes possible effects on misstatements could be material but not
pervasive
 Adverse:
Auditor having obtained sufficient appropriate audit evidence
concludes misstatements are material and pervasive
 Disclaimer:
Auditor could not obtain sufficient appropriate audit evidence
but the auditor concludes possible effects on misstatements could be
material and pervasive

M.K.Dandeker & Co.,

As per CARO
5, Auditor’s report of such companies to include
an annexure which shall include statement on following matters :
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Fixed Assets
Inventory
Loans and Advances
Internal control
Deposits
Cost Accounting Records
Statutory Dues
Loss making companies
Repayment of dues
Guarantees given
Use of funds
Fraud
M.K.Dandeker & Co.,

It shall be applicable to all companies other than
◦ A Banking Company
◦ An Insurance Company
◦ One Person Company
◦ A Private Limited company
 Paid up capital not more than Rs. 50 Lakhs
 Loan outstanding not exceeding Rs. 25 Lakhs from any Bank or Financial Institutions

Turnover not exceeding Rs. 5 crores
M.K.Dandeker & Co.,
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Eligibility Letter
Appointment Letter
Letter of Engagement
Trial Balance
Vouching Sample list (Along with method used for Sampling)
BRS and Bank Confirmation
Cash Balance Certificate
Variance Analysis
Management Representation Letter
List of Related Party
Other Confirmations (debtors/creditors/related party)
Copy of Minutes (if required)
Actuarial Valuation Report
Declaration by Directors for as disqualified
M.K.Dandeker & Co.,
M.K.Dandeker & Co.,