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Vouching indirect expenses

Awaiting ca final results

what is the procedure to vouch indirect expenses in case of statutory audit?

 
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Hi Harry follow the following checklist...

Operating Expenses
Work Done
Sr.No.
Particulars
Y
N
NA
1.
Operating expenses includes the following
-          Administrative Expenses
-          Selling & Distribution Expenses
-          Financial Expenses
 
 
 
2.
Understand the requirement of Schedule VI of the companies act in respect of Operating expenses
 
 
 
3
Whether company is having documented list of Authorized personnel who sanction expenses & their individual amount of sanctioning the limits
 
 
 
 
4
Identify the nature of expenses such as revenue & capital & ensure that expenses are properly booked. Check that capital expenditure is not treated as revenue expenditure.
 
 
 
5
Verify the Cut off entries to ensure that all the expenses are properly recorded in the current financial period.
 
 
 
6
Verify the following Four Potential Errors: -
-          Completeness –(transaction are not recorded)
-          Recording – (transaction are recorded in accurately)
-          Cut off – (transactions are recorded in accounts in the wrong period.)
-          Validity –(recorded transaction are not valid)
 
 
 
7
Verify the necessary provisions are made during the closing of accounts & ensure that are correct.
 
 
 
8
Understand the provision policy of the company for Operating expenses. Normally the provisions are based on actual & estimated basis.
 
 
 
9.
Apply the “Analytical Testing” method for verifying the expenses & based on that derived the expected figures & compare with the actual figures recorded in the financial statement.
 
 
 
10.
Enquire about major expenses made during the year & take the appropriate reasoning for the same & justify the same.
 
 
 
11.
Verify if any “Related Party” transaction made during the year & ensure that are presented in the financial statement.
 
 
 
12.
Verify the accounting entries passed in the books
 
 
 
13.
Ensure that Operating expenses balances are reasonably stated in the financial statement.
 
 
 

 

 
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