EQUITY & LIABILITIES
1. Share Capital
Whether there is any change in Shareholder’s pattern
if yes -obtain the certified copies of the relevant resolution passed
Whether there is any change in Share Capital
if yes-verify paid-up share capital as at the year-end is within limits of authorized capital.
Obtain copies
Form-SH-7 for an increase in authorized share capital
Form-PAS-3 for an increase in paid-up capital
Form-FCGPR in case of Foreign Direct Investment (FDI) by a Non-Resident shareholder)
2. Share Application Money Pending Allotment
If there is any receipt of Share Application Money during the year, obtain copies of Share Application Forms evidencing the receipt of Share Application Money, if any
3. Non-Current Liabilities
(a) Long Term Borrowings (At Amortised Cost)
Loan Term Secured Loan
Secured Loan outstanding at year-end & Security details against the Loan.
Loan Term Unsecured Loan
Unsecured Loan outstanding at year-end
Whether resolution has been passed for Loan in a Board meeting (BR) / General meeting (SR) as the case may be, compliance with section 179/ 180 of The Companies Act 2013?
Board resolution
Proposed loan(PL)=PL+Already Loan(AL) <= PC+FR
General Meeting(SR)
Proposed loan(PL)=PL+Already Loan(AL) > PC+FR
Note: Loan does not include temporary Loan like CC
Note: Check whether the Company appropriately portion bifurcated of long-term loan into current maturities of long-term debt.
Whether any term of repayment of the Loan is violated? If yes, please prepare a list of EMI bounced, interest unpaid and period of defaults?
Whether term loan has been used for which it was obtained?
Whether the Loan is taken from any NBFC or any institution other than a bank, please check TDS is deducted on the payment of Interest payment?
Whether the loan is taken from Directors- it is important to determine whether the loan given by the director or his relative is out of his/their own funds and the declaration is received by the company to that effect.
(b) Long Term Lease Obligations
Long Term Capital Lease Obligation is the amount due for asset lease agreements that are due in more than one year from balance sheet date. These are liabilities in the balance sheet.
(c) Deferred Tax Liabilities
Calculation of Timing Difference to be checked. Generally, Depreciation as per companies Act vs Depreciation as per IT Act.
Working of Opening DTA/DTL to be verified for its reversal items, if any
Computation for DTA/DTL as of March 31st for the year under review to be computed in last.
(d) Long Term Provisions
Long term provisions are usually money set aside for employee benefits such as gratuity; leave encashment, provident funds etc.
Computation of Provision for Gratuity where employee limit exceeds 10. Whether Actuarial Valuation is obtained by the client for the same.
Whether the Company has got registered its Gratuity Trust with Income Tax Authorities
Disclosure of retirement benefit to be done in notes to Account of the balance sheet
Whether The Company does leave encashment – please obtain a Copy of leave policy, if any.
The Company makes provision for encashable leave as per its computation or actuarial valuation.
Whether the Company has invested such funds from provision created in any investment?
4. Current Liabilities
(a) Short Term Borrowings (At Amortised Cost)
Short Term Secured Loan/Credit
Secured Loan outstanding at year-end & Security/Hypothecation details against the Loan.
Short Term Unsecured Loan/Credit
Unsecured Loan outstanding at year-end
Whether resolution has been passed for Loan in a Board meeting (BR) / General meeting (SR) as the case may be, compliance with section 179/ 180 of The Companies Act 2013?
Board resolution
Proposed loan(PL)=PL+Already Loan(AL) <= PC+FR
General Meeting(SR)
Proposed loan(PL)=PL+Already Loan(AL) > PC+FR
Note: Loan does not include temporary Loan like CC
Note: Check whether the Company appropriately portion bifurcated of long-term loan into current maturities of long-term debt.
Whether any term of repayment of the Loan/Credit is violated? If yes, please prepare a list of EMI bounced, interest unpaid and period of defaults?
Whether the loan is taken from Directors- it is important to determine whether the loan given by the director or his relative is out of his/their own funds and the declaration is received by the company to that effect.
(b) Trade Payable
List of creditors at year-end.
List of creditors having Debit Balance as of March 31st and reason for debit balances. (Move to Current Assets as Advance to Party)
Obtain Balance Confirmations as of March 31st.
Whether any creditor filed a legal case suit against the Company. Ask details from management and legal status of the case and relevant documents for the matter.
Whether advance to supplier made during the previous year is adjusted in the current year? – if not, reason thereof and copy of agreement with a supplier for such advance to review.
Creditors Ageing to be obtained
Sundry Creditors for Expenses
Whether any expenses are due on March 31st, but payment is to be made after March 31st.
Whether the proper provision of such expenses is made at year-end.
(c) Other Current Liabilities
(i) Statutory Dues (Duties & Taxes)
TDS
Obtain a Copy of TDS challans about liability outstanding as of March 31st of the year and previous year liability.
Obtain TDS return form 24Q, 26Q, 27Q and 27EQ for all the quarters – Consolidated file from Traces.
Calculate TDS liability (in total) and reconcile its payment by the 7th of every month.
Whether Company has made any TDS default during the financial year? See Traces website for default.
Compute Interest on TDS and TDS delay payments, if any.
PF/ESI/Bonus Act/ Gratuity Act
Check applicability & Calculation of contribution of employer & employee.
Obtain Copy of all challans/Return, computation to be tallied and reconciled
Any Pending Statutory Dues?
GST
Reconciliation of GSTR-3B or GST returns with books accounts regarding Output tax liability and input tax credit obtained.
Review whether the Company has made payment to its vendors within 180 days from the date of invoice on which the Company takes ITC.
Copy of LUT to be obtained for the year under review.
Reconciliation of Input Credit – invoice-wise with GSTR-2A to be obtained
Reconciliation of Sales / Service Income – invoice-wise as per books with GSTR-1 to be obtained.
Annual Return GSTR-9 for Previous years filed? (if Applicable)
Any Pending Statutory Dues?
(d) Short Term Provisions
Short-term Provisions are Provision for discount on debtors, Provision for tax, doubtful debts etc
Calculation of Provision for Taxation to be checked as per IT Act, Expenses disallowed
Whether Company passed entry of interest accrued but not due on borrowings.eg. Interest for the month of March.
Unearned Income – whether the Company has received any income in advance -, please obtain a copy of the invoice next year to review whether it is about the year under review or next year?
ASSETS
5. Non-Current Assets
(a) Fixed Assets
List of additions in fixed assets during the year under review
Copy of each invoice to be obtained from the client and to be documented and Copy of Ledger to be taken.
Obtain Updated Fixed Assets Registers as of March 31st
Whether The Company conducts physical Verification of Fixed Assets or not?
Depreciation calculation sheet & Method of depreciation used. To be tallied with FAR – if available.
Is there any change in the Method of dep.? If yes, then ask the reason for the change.
Check whether any decrease or increase in value has been adjusted correctly in books of accounts due to a change in depreciation method.
Whether Residual Value is 5% in all cases of Fixed Assets? – if not, please specify the reason
The useful life of assets complies with Schedule VII of the Companies Act or not
Intangible assets and Capital WIP valuation to be verified
(b) Non-Current Investments (Long Term Investments)
Obtain a list of all investments held by the Company.-(At Cost)
In respect of investments in unquoted (unlisted) shares, verify the year’s balance sheets under audit in respect of Invested Companies.
In case of investment in listed shares – Copy of all contract notes from the brokers to be obtained
Capital Gain / (loss) computation to be obtained and to be tallied with books of accounts
Whether investment in shares in any related party complies with Companies Act, 2013. Section 186 of companies Act.
(c) Deferred Tax Assets
Calculation of Timing Difference to be checked. Generally, Depreciation as per companies Act vs Depreciation as per IT Act.
Working of Opening DTA/DTL to be verified for its reversal items, if any
Computation for DTA/DTL as of March 31st for the year under review to be computed in last.
(d) Long Term Loans & Advances
Is there any loan granted to Directors? If yes, obtain the list in a detailed format.
(Loan cannot be given to director & any person to whom director is interested as per section 185 of Company Act, 2013.)
Whether Loan has been granted to related party and relatives
Any loan has been given to Shareholders or any other person under section 186, Is there any violation of this provision of the Companies Act?
Board resolutions copy for Loan granted to any director & persons whom director is interested as per section 185 & 186 of the Companies Act 2013
Whether it is required to report under CARO UNDER 3(III)?
Verify that provision of sec 2(22)(e) applies to co.? If yes, work out the amount covered u/s.
Whether BOD and Copy of agreement appropriately authorize Loan and advance made to other.
Suppose loans and advances are made to others, whether good interest or return received from such party. TDS deducted by party reflected in 26AS of the Company.
In case of default in repayment of principal and interest on Loan and advances, whether the Company takes proper action against the party.
(e) Other Non-Current Assets
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