Pre-Audit Health Check: 10 Questions to Ask Before the Auditor Arrives

Most audit delays are not caused by the audit itself. They come from books that are incomplete, mismatched or full of surprises. A 30-minute self-check before your CA starts can save days of back-and-forth, avoid disallowances and keep the report clean.

Ask yourself these ten questions

1. Are my books complete up to 31 March?

Every sale, purchase, expense, bank entry and journal should be recorded. Look for missing bank entries, unposted vouchers and entries dated in the wrong year. Auditors can’t certify what isn’t on the books.

2. Do my bank balances match the bank statements?

Prepare a bank reconciliation for every account, including cash credit and loan accounts. Old uncleared cheques and unexplained differences are a classic red flag.

3. Does my GST data match my books?

Compare sales in GSTR-1 and GSTR-3B with your sales ledger, and compare ITC in GSTR-2B with purchase records. Differences should be explained before the auditor finds them, and before the department does.

4. Have I deducted and deposited TDS correctly?

Check that TDS was deducted on rent, professional fees, contractor payments, commission and interest, and deposited and returned on time. TDS defaults lead to disallowance of the related expense, so fix them first. Match your records with Form 26AS or AIS.

5. Have I paid my MSME suppliers on time?

Under Section 43B(h), payments to micro and small enterprises are allowed as a deduction only if paid within the prescribed time (15 days, or up to 45 days with a written agreement). Dues pending at year-end can be disallowed unless paid by the return due date. List your MSME vendors and their outstanding balances.

6. Were there cash payments or receipts above the limits?

Watch for:

• Cash expenses above ₹10,000 to a single person in a day (Section 40A(3))
• Loans or deposits taken or repaid in cash above ₹20,000 (Sections 269SS and 269T)
• Cash receipts of ₹2 lakh or more (Section 269ST)

These violations are reported in the audit and can mean disallowance or penalty.

7. Are my loans, deposits and related-party balances documented?

Keep confirmations, agreements and bank proof for unsecured loans, capital introduced, partner or director balances and related-party dealings. Unexplained credits are one of the biggest risk areas in scrutiny.

8. Are my fixed assets, stock and depreciation in order?

Have an updated fixed asset register with purchase dates and invoices. For stock, keep the valuation method, quantity records and year-end physical count sheet. Asset additions made at the end of March need a particular check on put-to-use dates.

9. Do receivables and payables make sense?

Review old debtors, advances and creditors. Reconcile major parties and identify balances that should be written off, provided for or confirmed. Negative balances and long-pending advances raise questions.

10. Do I have the supporting documents ready?

Keep invoices, agreements, bank statements, loan statements, GST returns, TDS returns, previous-year audit report and returns, and registrations ready in one folder. A well-organised folder is the single biggest time saver.

Bonus: Tell your CA about unusual events early

Mention new loans, asset sales, changes in business, partner changes, notices received, or any unusual transactions up front. Surprises late in the audit cost time and cause stress.

A simple rule of thumb: if you can’t explain a transaction in one sentence with a document to support it, the auditor will ask about it. 

The author can also be reached at caharsimrankaur@gamil.com