Page 165 - CA Inter Audit PARAM

CA Ravi Taori

− All goods received prior to the period/ year- end should have been booked in the form of
purchases and included in trade creditors.

• Test purchases/ expenses on a sample basis selecting the same from the accounts payable ledgers
and checking their supporting documents to ensure that the purchases were recorded at the correct
amounts and correct dates.

• Match purchase invoice dates to the gate entry (inward) dates to check whether the purchases are
being recorded in the correct accounting period. This can include an examination of purchase/
expense invoices received subsequent to the period being audited, to see if they should have been
included in the period under audit.

• Review subsequent expense vouchers. Review all material expense vouchers recorded post the
balance sheet date to see if they relate to transactions from within the audit period.

• For advance received from customers/ revenue received in advance, obtain the customer wise listing
along with its ageing and the nature. Enquire from the entity’s management if there has been any
dispute with the customer and if there is any additional liability to be recorded. For all such advances,
the auditor should verify the underlying documentation based on which the entity had received the
advance.

• In relation to statutory dues liability like withholding tax (TDS) payable, GST payable, luxury tax
payable, professional tax payable, PF and ESI payable etc., prepare a reasonability with respect to
sales/ purchases/ employee benefit expenses. Example- GST liability for last month may be calculated
by applying the applicable rate to the sales made and in case of any variance with the GST liability
recorded by the entity, reasons for variance should be requested from client and in case found
satisfactory, the same should be maintained as part of audit documentation.

Similarly, Provident Fund liability for last month may be calculated by applying the applicable rate to the
employee benefit expense and in case of any variance with the liability recorded by the entity, reasons for
variance should be requested from client and in case found satisfactory, the same should be maintained as
part of audit documentation.

Further, the auditor should obtain and verify the challans for deposits made subsequent to the period-end
for all statutory liabilities as at the balance sheet date and also analyse the reasons, if any, in consultation
with the management for any variance between the amounts deposited subsequently vis-à-vis the liability
recorded in books of account.

• He shall prepare a complete list of all statutory dues and consider his reporting requirements under
CARO,2020.

QNO Identify Assertions Verified by Audit Procedures Old Course – (N22R)
AIFS. Bhaskar CNO-Unique
30.80
Name the assertions for the following audit procedures:
(i) Year end inventory verification.
(ii) Depreciation has been properly charged on all assets.

(iii) The title deeds of the lands disclosed in the Balance Sheet are held in the name of the company.
(iv) All liabilities are properly recorded in the financial statements.
(v) Related party transactions are shown properly.
Answer (i) Year-end inventory verification: Existence Assertion.
(ii) Depreciation has been properly charged on all assets: Valuation Assertion.
(iii) Title deed of lands disclosed in the Balance Sheet are held in the name of the
Company: Rights & Obligations Assertion.
(iv) All liabilities are properly recorded in the financial statements: Completeness.
(v) Related party transactions are shown properly: Presentation & Disclosure.

www.auditguru.in 5.11