ॐ नमो भगवते वसुदेवाय नमः

Guidance on LEDGER SCRUTINY

Verifying Cash Ledger

 Check If Cash Has Negative Balance During anytime ?

 Check whether cash expenses amount is more than 10000/- , If yes the it would be
disallowed to calculate income tax profit

Analysis

 Prepare ECO Commission Reconciliation, Check Their Journal Entries, Check Whether
Taxation Entries are Okay or not.
 Check Early Check Ins & Late Check Outs From IDS System & Check if Extra Revenue is Posted
or not, if not ask for explanation.
 Check CITY LEDGER – DEBTORS CONTROL ACCOUNT. UNDERSTAND IT & Do Analysis.
Transfer of Guest Balance to City Ledger – Debtors Ledger, When His amount is Due. [As he is
no more guest] [For Better Followup of Dues]
 Check Off-Menu Items Bills – Whether Charged to Customer or Not –
 Understand Happy Hour Billings & Discounts Process – POS Must be Configured in this
manner only. Check Invoices of Happy Hour.
 Compare with Previous Year Figures – in Value & in %. – Pass Comments on Variances.
 Compare with Previous Year Figures, Current Budgeted Figures, & Current Year Actual
Figures (PY BF CY).
 Compare Revenue Comparable – Rooms, FnB, Others. Of Three Diff. Figures – (PY BF CY)
 Average Occupancy & Average Room Rate - (PY BF CY)
 Comparisons of Operating Expenses - (PY BF CY)
 FnB Revenue Composition – Food, Soft drinks, Hard Drinks, Tobacco (PY BF CY)
 Profit V/s EMI & Interest Payment For Ranbanka – (PY BF CY)
 DSCR - (PY BF CY)

Verification of Opening Balances

 Take last year audited balance sheet from client and open Trial balance of current year in
tally software, then check that last year closing balances in audited balance sheet is matched
with current year opening balances in tally software (Trail balance).

Review Chart of Accounts

 Begin by reviewing the chart of accounts to ensure it is well-structured and aligns with
accounting standards. Verify that all accounts are properly classified and labeled.
Example- Review Chart of Accounts: Ensure that the revenue accounts are appropriately
labeled as “Sales Revenue” and subcategorized based on product lines or services.
 Check Proper Grouping of Expenses, Revenue, Debtors & Creditors.

Debtors Scrutiny

 Obtain the Auditee’s response, for debtors outstanding of more than 90 days.
 Identify Bad Debts
 Check the Age-Wise Analysis (Ageing) of Debtors & Comment Upon it.

Rishikesh Prajapat

Article Assistant
SAHAJ & ASSOCIATES, Chartered Accountants
 ॐ नमो भगवते वसुदेवाय नमः

 Extract Bill Wise Outstanding Ledger.

Rishikesh Prajapat

Article Assistant
SAHAJ & ASSOCIATES, Chartered Accountants
 ॐ नमो भगवते वसुदेवाय नमः

Creditors Scrutiny

 Check Ageing Analysis.

 Verify if there is any long Outstanding Creditor, Obtain Response on O/s above 90 Days.

Scrutiny of Fixed Assets & Depreciation

 Check If Any New Fixed Assets is Purchased during the Period.

 Check Companies Act Requirements for Depreciation and Fixed Assets.
 Ask For Fixed Assets Register.
 Verify if Repairs have been Capitalized or FA have been Expensed ?

Fixed Deposits (Term Deposits with Banks)

 Reconcile the amount with FD certificate.

 Ask for 16-A and check whether TDS have been correctly deducted by bank.
 Reconcile the TDS deducted with 26AS statement.
 Collect Form 16-A for your record.
 Check If Any Fixed Asset is Sold, If Yes, Calculate PnL.
 Obtain Written Confirmation for fixed assets held with Employees/Third Party.

Directors Personal Account

 Check the transactions that have taken place through the directors personal account.
 Verify the calculation of directors remuneration including the amount of the TDS Deducted.
 See that the personal expenses have been debited to drawings accounts

Checking of Bank reconciliation

 Confirm the bank balances along with the bank statements.

 Note the cheques which are outstanding for long, and also ascertain the reasons for the
same i.e. Stale Cheques.
 List the cheques which have been issued but not recorded.
 Also list the cheques which have remained uncleared for more than 30 days.
 Obtain the copy of quarter end reconciliation statement in our audit file

Advance to Employees

 Check the Trial balance in respect of Advance to employees to ascertain the amount
outstanding in the name of each employee. Find out the date since when the advance is
outstanding to be settled and make a list if employees advances that have not been settled
for a long period.
 Ensure that no further advance is given to an employee unless the previous outstanding
advance is cleared by him.
 Advance to an employee may be towards – Travel / Official work\ loan or a salary advance.
Ensure that the recovery is made from the salary of the employee when the advance taken
by the employee is not settled by him within a reasonable period.
 Further check that the recovery of installments in respect of loan / salary advance is made
correctly on monthly basis from the salary of the employees.

Rishikesh Prajapat

Article Assistant
SAHAJ & ASSOCIATES, Chartered Accountants
 ॐ नमो भगवते वसुदेवाय नमः

 Check and make a list of employees who have left the company and their full and final
settlements have not been made but debit balances are still appearing in their names in the
Advance to employees account.

Payroll

 The amount of salary drawn by a staff is in accordance with companies policy;

 Appointment of the staff is as per the rules and regulations and post sanctioned;
 The pay drawn by a newly appointed staff is as per the appointment letter;
 Necessary deductions have been made in accordance with the relevant rules and orders
 Salaries paid have been properly recorded in the salary register
 The payment of salary must be duly acknowledged by the payee staff only; and
 Salary increments are as per the rules and orders.

Sales Ledger:-

 Do F5 columnar in tally( to get Amount and Taxes in separate column)

 Check whether Gst is charged as per correct rate
 Log in GST portal and download GST-1 and GSTR-3B and make reconciliation between GSTR-
1, GSTR-3B and Books of accounts(sales). If find any differences, then will talk to concerned
person. I have reconciliation sheet, will provide to all
 Match with last year profit and loss A/c, check whether there is abnormal increase or
decrease in sales amount, if yes enquire about the reason for the same

Others

 Deferred Tax/ liabilities entry as per AS-22/ Inds-12

 MAT applicability would be check as per section 115JB
 Section section 185, 186 and section 73 applicability

Rishikesh Prajapat

Article Assistant
SAHAJ & ASSOCIATES, Chartered Accountants