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Statutory Audit

1 2 3 4 Acceptance Checklist (Risk evaluation tool before accepting an Audit Assignment) Continuance Checklist (This checklist should be used each year to ensure that the audit risks have not changed adversely) Business understanding for Audit planning Checklist for a Audit Staff

have not changed adversely)

Acceptance Checklist
Client : Audit Period : Prepared by Reviewed by

S.No Identification of Risk / Problem areas 1 Have we come across any integrity/adverse issues related to: - Reputation of the client - Reputation of the management - Business practices - Client litigation - Management litigation

Comments

2 Has the management frequently changed banks, attorneys or auditors? 3 Reasons for change of auditors, if there is a change. 4 Is there any indication of limitation on scope of audit imposed by the client? 5 Is there any indication of criminal activity by client e.g. money laundering, etc.? 6 Based on review of accounts: - Is there any qualification in the previous Auditors Reports or adverse note in the notes to accounts or accounting policies? - Is there any indication of an aggressive interpretation of any Accounting Standard? 7 Based on economic scenario and industry risks: - Is the industry in which the client operates facing an abnormal business cycle, i.e. abnormal recession or boom? - Has there been any recent change in the Government policies or regulations in the concerned industry? - Are there any commercial risks which affect the acceptance? Debt owed Customer dependency 8 Loans or guarantees: Are there loans or guarantees, not within the ordinary course of business? - from the client to the firm, a partner or a potential member of the audit team? - from the firm, a partner or a potential member of the audit team to the client? Overall Conclusion: Based on the comments as noted above, we conclude that the engagement can be accepted/ not accepted Engagement Partners Signature: Date

Continuance Checklist
Client : Audit Period : Prepared by Reviewed by

Sr.No. Identification of Risk / Problem areas Comments 1 Do we continue to have the experience, knowledge and resources to service the client? 2 Are the circumstances of a nature to bring into doubt whether we should continue to act? 3 Is the industry in which the client operates facing an abnormal business cycle, i.e. abnormal recession or boom? 4 Loans or guarantees: Are there loans or guarantees, not within the ordinary course of business? - from the client to the firm, a partner or a potential member of the audit team? - from the firm, a partner or a potential member of the audit team to the client? 5 Level of fee income Are there significant fees which have been outstanding for a prolonged period of time? 6 Control environment Do the accounting or data processing departments appear to be inadequately staffed? 7 Organisation and management structure Has the client undergone rapid expansion? Has the client recently acquired other entities? Overall Conclusion Based on the comments as noted above, we conclude that the engagement can be continued / not continued for the year. Engagement Partner Signature: Date:

Business Understanding For Audit Planning


Client Name: Audit Period :

1 .................................. Private Limited was incorporated on ____________.


It is a wholly-owned subsidiary of ______________. was established to carry the following activities Activities relating to Activities relating to Activities in Activities of a operates from the following locations:

2 Pertinent information about key shareholders:


Name of Shareholder Ownership Interest No. of Shares (Rs. 10/- each) % Shareholding

3 Pertinent information about key management personnel:


Name of Employee Title Years with the Entity

4 Information about Members of the Board of Directors:


Name of Director Whether independent? Director since

5 Information about members of the Audit Committee ( if such a committee does not exist, write None):
Name of Director Designation Member Since

6 Describe significant trends within the industry (e.g., growing, stable,or declining)

7 Describe the extent to which significant accounting applications are computerised

8 Are there geographically diverse operations?

9 Is the company effected by significant FOREX/ interest rate movements?

10 Is there a history of qualified audit reports?

Checklist for a Audit Staff


Client Name: Audit Period :

Sr. Particulars Y / N / NA Remarks 1 Opening Balance 1.2 Have you checked opening balances of: 1. General ledger 2. Debtors ledger 3. Creditors ledger 4. Cash Balance and Bank Balances 5. Other Subsidiary ledgers 2 Vouching 2.1 Vouching includes the following: 1 Receipts and payments of Cash Book and Bank Book, including Petty Cash Book. 2 3 4 5 8 Sales Purchases Credit notes Debit notes Any other book/register of prime entries, salary and wages register, special register like trip register, including ticket booking register, job register based on the nature of business.

2.2 Have you checked correctness of 1 Account head / account code 2 Date 3 Amount 4 Name of Party 5 Quantities and rates where applicable 2.3 Are the vouchers properly authorised and supported by necessary external evidence and/or internal documentation? 2.4 Does the transaction relate to the accounting year under audit? 3 Fixed Assets 1 Have you scrutinised repair accounts to ensure no items of capital nature are included therein?

2 Have you scrutinised additions to fixed assets to ensure no items of revenue nature are capitalised? 3 Has expenditure prior to the asset being put to use been capitalised in accordance with AS-10? 4 Have you ensured that interest up to the date of use of asset has been capitalised in accordance with AS 16? 4 Inventories 1 Has the list of physically verified inventories been corelated with the book records? Have you checked goods-in-transit with subsequent 2 receipts? 3 Have you ensured that the cost of inventories includes all costs of bringing them to the present location and condition?

4 Have you ensured that excise duty payable on Finished Goods is included in the valuation of stock and sales tax has been excluded? 5 Is there proper control over stock transfers? Have reconciliations been made? 5 Trade Receivables 1 Have you obtained a statement from the client explaining the manner of legal action taken for debts that have become bad? 6 Cash and Cash Equivalents Whether cash verification has been carried out 1 during the audit? Whether all cash vouchers exceeding Rs.5,000 has been signed by authorized person.? 2 Compare salary paid with the payroll. Is there any fictitious 7 employee on roll? Whether debit balance of creditors shown under Loans & 8 Advances? Whether credit balance of debtors shown under current liabilities 9 & provisions? Whether Deposits are supported by documents such as rent 10 agreement/FD Receipt etc.,? 11 Have adjustments been made for prepaid expenses? Is there any change in accounting procedures and internal 12 control?

ABBREVIATIONS AAS AD AGM AS ASI CARO CENVAT CFS CIF CLB CWIP DCA DTA DTL EPS ESIC FEMA FOB MAT MODVAT NBFC PBIT PBT RSVI SEBI SLM VRS WDV WIP Auditing and Assurance Standards Authorised Dealer Annual General Meeting Accounting Standard Accounting Standard Interpretation Companies (Auditors Report) Order, 2003 Central Value Added Tax Consolidated Financial Statement Cost, Insurance & Freight Company Law Board Capital Work-in-Progress Department of Company Affairs Deferred Tax Assets Deferred Tax Liabilities Earnings Per Share Employees State Insurance Corporation Foreign Exchange Management Act Free On Board Minimum Alternate Tax Modified Value Added Tax Non Banking Financial Companies Profit Before Interest and Tax Profit Before Tax Revised Schedule VI Securities & Exchange Board of India Straight Line Method Voluntary Retirement Scheme Written Down Value Method Work-in-Progress