LEDGER SCRUTINY
This query is : Resolved
26 January 2010
HOW TO SCRUTNISE THE FOLLOWING LEDGERS
1. cURRENT lIABILITIES(provisions,Payable{exp,Salary,ESI, PF},creditors
2. Loans(liability)-BankOD, Term Loan,Defferd Tax.
3. Fixed assets.(p&m, Land,Building)
Thanx
1. cURRENT lIABILITIES(provisions,Payable{exp,Salary,ESI, PF},creditors
2. Loans(liability)-BankOD, Term Loan,Defferd Tax.
3. Fixed assets.(p&m, Land,Building)
Thanx
26 January 2010
Ask for the supporing documents(Ex: Purchase Invoice,Bank Statements Agreements,Salary Register,EPF & ESI monthly Return) in respect of each transactions accounted in respective ledger account and ensure their neccessity for an Org. and ensure that Balance payable and receiveable stood on Balance sheet are tallied with out sider's account.
26 January 2010
Very Good Question for Auditing Area.
Ledger scrutiny reveals "undue pattern" of accounts, if any.
For example; an amount outstanding for more than 2 years is suddenly paid; it may create suspicion whether it is actually paid.
First of all; opening balances of all the accounts will be checked from previous finalised trial balance.
1. CURRENT LIABILITIES(provisions,Payable{Exp,Salary,ESI, PF},Creditors :
Check "unusal" payments in a month; if any. It may be decided having a look over previous month's pattern.
Creditors account may be checked in line with the credit allowed by the creditors.
If late payments are there; there may be possibilities that other payments are also delayed. This correlation may be checked with other payments.
2. Loans(liability)-Bank OD, Term Loan,Deferred Tax.
Regarding loans and Bank OD balances; we have confirmations and statements. Nevertheless; we have to check whether interest have been charged properly.
Regarding deferred Tax; see the calculations made by the Tax Expert. Check it according to your own expertise. (Practically it does not involve that much ledger scrutiny).
3. Fixed assets.(P & M, Land,Building)
See the charge of depreciation and construction/acquisition during the year.
Although; at the time of audit; correlation of all the transactions should be simultaneously checked keeping in mind various factors.
For example; if production has increased; definitely there is either an increase in the plant and machinery and if not; it might be possible that previously the plant was run only upto certain percent of capacity.
Accordingly consumption of power will also increase which will be checked simultaneously applying the ratio analysis.
Ledger scrutiny reveals "undue pattern" of accounts, if any.
For example; an amount outstanding for more than 2 years is suddenly paid; it may create suspicion whether it is actually paid.
First of all; opening balances of all the accounts will be checked from previous finalised trial balance.
1. CURRENT LIABILITIES(provisions,Payable{Exp,Salary,ESI, PF},Creditors :
Check "unusal" payments in a month; if any. It may be decided having a look over previous month's pattern.
Creditors account may be checked in line with the credit allowed by the creditors.
If late payments are there; there may be possibilities that other payments are also delayed. This correlation may be checked with other payments.
2. Loans(liability)-Bank OD, Term Loan,Deferred Tax.
Regarding loans and Bank OD balances; we have confirmations and statements. Nevertheless; we have to check whether interest have been charged properly.
Regarding deferred Tax; see the calculations made by the Tax Expert. Check it according to your own expertise. (Practically it does not involve that much ledger scrutiny).
3. Fixed assets.(P & M, Land,Building)
See the charge of depreciation and construction/acquisition during the year.
Although; at the time of audit; correlation of all the transactions should be simultaneously checked keeping in mind various factors.
For example; if production has increased; definitely there is either an increase in the plant and machinery and if not; it might be possible that previously the plant was run only upto certain percent of capacity.
Accordingly consumption of power will also increase which will be checked simultaneously applying the ratio analysis.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- STCG....................................................
- TAN for Partnership
- Sales return eway bill
- Treatment of Pension ?annuity returns on PMVY
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- Specified Profession
- Last year TDS Claim
- TDS related Query_Liquidated Damages
- STCG FOR GOLD ETFs
- Gst invoice numbering and delivery challan numbering
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Small dealers gst returns filing
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
