what is the procedure to vouch indirect expenses in case of statutory audit?
what is the procedure to vouch indirect expenses in case of statutory audit?
Hi Harry follow the following checklist...
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Operating Expenses
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Work Done
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Sr.No.
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Particulars
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Y
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N
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NA
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1.
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Operating expenses includes the following
- Administrative Expenses
- Selling & Distribution Expenses
- Financial Expenses
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2.
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Understand the requirement of Schedule VI of the companies act in respect of Operating expenses
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3
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Whether company is having documented list of Authorized personnel who sanction expenses & their individual amount of sanctioning the limits
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4
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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.
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5
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Verify the Cut off entries to ensure that all the expenses are properly recorded in the current financial period.
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6
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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)
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7
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Verify the necessary provisions are made during the closing of accounts & ensure that are correct.
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8
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Understand the provision policy of the company for Operating expenses. Normally the provisions are based on actual & estimated basis.
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9.
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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.
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10.
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Enquire about major expenses made during the year & take the appropriate reasoning for the same & justify the same.
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11.
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Verify if any “Related Party” transaction made during the year & ensure that are presented in the financial statement.
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12.
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Verify the accounting entries passed in the books
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13.
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Ensure that Operating expenses balances are reasonably stated in the financial statement.
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Naveen Fintech Pvt Ltd
Kolkata
CA Inter
View Details
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
View Details
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