Statutory Audit Checklist

Statutory Audit Checklist for Companies in India

A statutory audit is an independent examination of a company’s financial statements, books of account and supporting records to determine whether the financial statements have been prepared in accordance with the applicable financial reporting framework and present a true and fair view.

For companies incorporated in India, statutory audit requirements are principally governed by the Companies Act, 2013, applicable rules, accounting standards or Ind AS, and the Standards on Auditing issued by the Institute of Chartered Accountants of India (ICAI).

Companies preparing for year-end audit can use the following statutory audit checklist as a practical guide for organising records, identifying year-end adjustments and reducing delays during the audit.

Businesses requiring professional assistance may also refer to our Statutory Audit Services in India or our broader Audit and Assurance Services in India.

The statutory auditor’s responsibilities and powers are governed, among other provisions, by Section 143 of the Companies Act, 2013. The statutory audit must also be conducted in accordance with the applicable Standards on Auditing issued by ICAI. Companies and auditors may refer to the Companies Act, 2013 – Ministry of Corporate Affairs and ICAI Standards on Auditing for the applicable regulatory framework.

Statutory Audit Checklist – Preliminary Information and Documents

Before detailed verification begins, the auditor may ordinarily obtain and review the following:

• Previous year’s audited financial statements and audit report
• Trial balance and general ledger
• Draft financial statements for the current year
• Accounting policies followed by the company
• Board and shareholders’ meeting minutes
• Statutory registers
• Bank statements and bank reconciliations
• Fixed asset register
• Inventory records
• Debtors and creditors ageing
• Loan agreements and sanction letters
• Tax returns and statutory challans
• GST returns and reconciliations
• TDS returns and Form 26AS/AIS, wherever relevant
• Related party transaction details
• Legal case and contingent liability details
• Management representation and supporting schedules
• Previous audit observations and their status

The precise documents required will depend upon the size, nature, industry, transactions and applicable laws of the company.

Balance Sheet Audit Checklist

1. Share Capital

The auditor should review the company’s authorised, issued, subscribed and paid-up share capital and verify whether changes during the year have been properly authorised and recorded.

Key checks may include:

• Verify whether there has been any change in the shareholding pattern during the year.
• Review relevant Board and shareholder resolutions.
• Verify whether paid-up capital remains within authorised share capital.
• Check statutory filings made with the Ministry of Corporate Affairs, including applicable forms relating to alteration of authorised capital and allotment of securities.
• Verify allotment records, share certificates and statutory registers.
• Reconcile the number of shares issued with accounting records and MCA filings.
• Where shares have been issued to non-residents, examine the applicable FEMA/FDI compliance and related RBI reporting.
• Review securities premium, rights issue, preferential issue, bonus issue or other capital transactions, wherever applicable.

Foreign-owned companies should pay particular attention to FEMA reporting and documentation relating to the issue or transfer of securities.

2. Share Application Money

Where share application money has been received during the year:

• Obtain supporting application/allotment documents.
• Verify the receipt through the banking channel.
• Check whether allotment or refund was made within the applicable legal timeline.
• Review accounting classification at year-end.
• Verify compliance with the Companies Act and FEMA requirements, wherever applicable.

3. Secured Loans and Borrowings

For secured borrowings:

• Obtain a complete list of outstanding loans as at year-end.
• Obtain sanction letters and loan agreements.
• Verify security created against each borrowing.
• Review Board/shareholder approvals wherever required.
• Verify applicable requirements under Sections 179 and 180 of the Companies Act, 2013.
• Verify principal and interest balances with lender confirmations.
• Review repayment schedules and EMIs.
• Identify defaults in repayment of principal or interest.
• Check whether the loan has been utilised for the purpose for which it was obtained.
• Verify the current and non-current classification of borrowings.
• Review charges registered with MCA, where applicable.
• Verify accrued interest and finance charges.

4. Unsecured Loans

For unsecured loans:

• Obtain party-wise details of outstanding loans.
• Review loan agreements and ledger accounts.
• Verify confirmations from lenders.
• Check whether loans have been accepted from permitted persons and in compliance with applicable provisions of the Companies Act.
• Examine interest rates and payment terms.
• Verify TDS compliance on interest payments wherever applicable.
• Check related-party implications, wherever relevant.
• Review disclosure and classification in the financial statements.

5. Statutory Dues

A major part of the statutory audit checklist is verification of statutory liabilities.

TDS

The auditor should consider:

• TDS payable as at year-end
• Monthly TDS payments
• Quarterly TDS returns
• Forms 24Q, 26Q, 27Q and other applicable statements
• Reconciliation of TDS returns with books
• TDS defaults appearing on the TRACES portal
• Interest and late fee arising from delays
• TDS receivable reconciliation with Form 26AS
• Year-end provisions requiring TDS deduction

Tax-related services may be separately reviewed through our Tax Audit Services in India.

PF, ESI and Other Employee Dues

Verify:

• Applicability of PF, ESI and other labour-related contributions
• Employer and employee contribution calculations
• Timely deposit of contributions
• Reconciliation with payroll
• Outstanding amounts at year-end
• Challans and statutory returns

GST

GST verification should include:

• Reconciliation of turnover as per books with GST returns
• Reconciliation of output GST liability
• Reconciliation of input tax credit with available GST records
• Review of blocked/ineligible credits
• GST payable and receivable balances
• Reverse charge transactions
• Export transactions and LUT, wherever applicable
• Year-end adjustments and credit/debit notes

The official GST Portal may be used for applicable GST filings and records.

6. Trade Payables

For trade creditors:

• Obtain party-wise year-end ageing.
• Identify debit balances appearing under creditors.
• Review old and non-moving balances.
• Obtain balance confirmations for material balances.
• Reconcile significant differences.
• Examine subsequent payments.
• Review disputes or legal proceedings involving vendors.
• Verify cut-off of purchases and expenses.
• Consider MSME classification and applicable disclosure/payment requirements.
• Review related-party creditors separately.

7. Expenses Payable and Accrued Liabilities

Verify whether expenses relating to the year have been recognised even where payment is made after year-end.

Examples include:

• Salary payable
• Professional fee payable
• Rent payable
• Interest accrued
• Electricity and utility expenses
• Audit fees
• Other recurring expenses

The auditor should ensure appropriate year-end cut-off and provisioning.

8. Other Current Liabilities

Review:

• Current maturities of long-term debt
• Interest accrued but not due
• Advances from customers
• Unearned or deferred revenue
• Employee imprest balances
• Security deposits
• Other year-end liabilities

Classification between current and non-current liabilities should also be reviewed.

9. Provisions and Employee Benefits

Review provisions for:

• Gratuity
• Leave encashment
• Bonus
• Incentives
• Litigation
• Warranty obligations
• Other employee benefits

Where actuarial valuation is required, obtain and examine the actuarial valuation report and underlying employee data.

10. Deferred Tax Assets and Liabilities

Verify:

• Opening deferred tax balances
• Reversals during the year
• Temporary/timing differences
• Current-year deferred tax computation
• Recoverability of deferred tax assets
• Applicable financial reporting requirements

11. Property, Plant and Equipment / Fixed Assets

A detailed fixed asset review should include:

• Obtain the updated fixed asset register.
• Verify additions during the year with invoices and supporting documents.
• Review capitalisation dates.
• Verify disposals/sale of assets.
• Check physical verification conducted by management.
• Reconcile physical verification differences.
• Review ownership documents for material assets.
• Verify depreciation calculations.
• Check useful lives and residual values.
• Review impairment indicators.
• Check whether repairs and expenses have incorrectly been capitalised or capital expenditure has been charged to revenue.
• Reconcile closing balances with the general ledger.

Useful lives and depreciation under the Companies Act should be considered with reference to Schedule II of the Companies Act, 2013, wherever applicable.

12. Investments

For investments:

• Obtain an investment-wise schedule.
• Verify purchase and sale documents.
• Review demat statements for securities.
• Check ownership and existence.
• Verify income such as dividend or interest.
• Review valuation at year-end.
• Verify gains/losses on disposal.
• Examine investments in related parties.
• Review compliance with applicable provisions of the Companies Act.
• Check appropriate current/non-current classification.

13. Trade Receivables

The statutory audit checklist for debtors should ordinarily cover:

• Obtain debtor ageing.
• Identify balances outstanding for extended periods.
• Obtain confirmations for material balances.
• Review subsequent collections after year-end.
• Examine credit notes issued after year-end.
• Review disputes with customers.
• Assess expected credit loss/provision for doubtful debts, as applicable.
• Review write-offs and management approvals.
• Check revenue cut-off.
• Review credit policy and collection history.

14. Loans and Advances

Review loans and advances to directors, related parties, employees and other entities.

Important checks include:

• Nature and purpose of the loan
• Approval by the Board/shareholders, wherever required
• Compliance with Sections 185 and 186 of the Companies Act, 2013
• Interest terms
• Repayment schedule
• Recoverability
• Defaults
• Balance confirmations
• Related-party disclosure
• Applicable CARO reporting

15. Security Deposits

Verify:

• Agreements supporting security deposits
• Whether deposits are refundable
• Expected recovery period
• Interest, if applicable
• Classification between current and non-current
• Recoverability of old deposits

16. Employee Advances

Check whether:

• Advances are appropriately authorised.
• Outstanding amounts are adjusted against salary or expenses.
• Balances relating to resigned employees are recoverable.
• Material year-end balances are supported by confirmations or other records.

17. Balances With Government and Revenue Authorities

Obtain details of:

• Income-tax refunds receivable
• GST receivables/refunds
• Advance tax
• Other statutory deposits
• Disputed tax deposits
• Amounts recoverable from government authorities

Review their recoverability and accounting classification.

18. TDS Receivable

Reconcile:

• TDS receivable as per books
• Form 26AS
• Interest income
• Professional/service income
• Other income subject to tax deduction

Differences should be identified and appropriately resolved or provided for.

19. Prepaid Expenses

Review:

• Opening prepaid expenses
• Amounts expensed during the year
• Current-year prepaid schedules
• Supporting invoices
• Period of benefit
• Classification at year-end

20. Cash and Cash Equivalents

Audit procedures may include:

• Cash count at or around year-end
• Cash balance certificate
• Review of unusual cash transactions
• Cash expenses and receipts
• Negative cash balances
• Reconciliation with cash book
• Review of statutory restrictions applicable to specified cash payments or receipts

21. Bank Balances

For each bank account:

• Obtain bank statements.
• Obtain bank confirmations wherever appropriate.
• Verify bank reconciliation statements.
• Examine stale/unpresented cheques.
• Verify deposits in transit.
• Review fixed deposits and accrued interest.
• Verify bank loans, overdrafts and cash-credit balances.
• Examine lien or charge over deposits.
• Reconcile foreign currency accounts.

22. Inventory

Inventory is frequently one of the most significant areas in a statutory audit.

The auditor may review:

• Physical verification procedure
• Inventory count records
• Differences between physical and book quantities
• Slow-moving and obsolete inventory
• Inventory valuation policy
• Cost versus net realisable value
• Inventory cut-off
• Goods in transit
• Stock lying with third parties
• Consignment stock
• Inventory pledged with lenders
• Raw material, WIP and finished goods costing
• Overheads included in inventory valuation

Where applicable, inventory should be valued at the lower of cost and net realisable value in accordance with the applicable accounting framework.

Profit and Loss Account Audit Checklist

1. Revenue From Operations

Revenue verification should include:

• Invoice-wise sales/service register
• Sample invoices
• Customer agreements
• Revenue recognition policy
• Cut-off testing around year-end
• GST reconciliation
• Credit notes issued after year-end
• Unbilled revenue
• Advances from customers
• Foreign currency revenue
• Related-party revenue
• Subsequent receipts

Where contracts are milestone-based, billing should be reconciled with contractual milestones and the applicable revenue-recognition requirements.

2. Interest Income

Review:

• Fixed deposit certificates
• Bank confirmations
• Interest calculations
• Accrued interest
• TDS deducted by banks
• Reconciliation with Form 26AS

3. Dividend Income

Verify:

• Investment ownership
• Demat records
• Bank receipt
• Dividend declaration
• Correct recognition in the books

4. Profit or Loss on Sale of Fixed Assets

Verify:

• Management approval
• Sale invoice/agreement
• Original cost and accumulated depreciation
• Sale consideration
• Removal from fixed asset register
• Correct calculation of profit or loss

5. Discounts and Other Income

Check:

• Agreements with customers/vendors
• Credit/debit notes
• Accounting treatment
• Year-end cut-off
• GST implications, wherever relevant

6. Foreign Exchange Gain or Loss

For foreign currency transactions:

• Verify transaction exchange rates.
• Review year-end restatement.
• Check realised/unrealised exchange differences.
• Review foreign currency receivables and payables.
• Ensure treatment is consistent with the applicable accounting framework.

7. Purchases

Purchase testing may cover:

• Purchase register
• Vendor master
• Purchase orders
• Goods receipt records
• Vendor invoices
• GST input tax credit
• Cut-off testing
• Subsequent invoices
• Related-party purchases
• Unrecorded liabilities
• Expense versus capital classification

Particular attention should be given to transactions immediately before and after year-end.

8. Salary and Payroll Expenses

Verify:

• Employee master
• Appointment letters
• CTC structure
• Monthly payroll
• Attendance/leave data
• Salary payments through banks
• TDS on salary
• Employee reimbursements
• Bonus/incentives
• Full and final settlements
• Payroll provisions
• Related statutory deductions

9. PF, ESI, Bonus and Other Employee Contributions

Review:

• Applicability
• Calculation
• Employee deductions
• Employer contribution
• Deposit dates
• Challans
• Reconciliation with payroll
• Outstanding liabilities

10. Legal Cases and Contingent Liabilities

Management should provide a complete list of:

• Pending litigation
• Tax disputes
• Employee disputes
• Customer/vendor claims
• Guarantees
• Other claims and contingencies

The auditor should consider whether each matter requires provision, contingent liability disclosure or other financial statement disclosure.

11. Gratuity, Leave Encashment and Long-Term Employee Benefits

Review:

• Applicable employee benefit policy
• Actuarial valuation
• Employee database submitted to the actuary
• Salary and service data
• Major actuarial assumptions
• Accounting entries and disclosures

12. Full and Final Settlement

Review employees who resigned or were terminated during the year and verify:

• Salary payable/recoverable
• Leave encashment
• Gratuity
• Bonus/incentive
• Loans and advances
• Asset recoveries
• Other deductions

Amounts outstanding at year-end should be appropriately recognised.

13. Actuarial Valuation

Where applicable, compare data used by the actuary with company records, including:

• Number of employees
• Date of joining
• Age
• Salary
• Employee category
• Attrition assumptions
• Salary escalation assumptions

14. Finance Costs

Check:

• Interest on term loans
• Interest on working-capital facilities
• Interest on unsecured loans
• Loan processing charges
• Borrowing costs
• TDS on applicable interest payments
• Loan amortisation schedules
• Accrued interest
• Foreign currency borrowing adjustments
• Capitalisation of borrowing costs, wherever applicable

15. Other Expenses

Expense verification may include:

• Sample vouching
• Invoice authenticity
• Business purpose
• Authorisation
• GST input tax credit
• TDS compliance
• Year-end provisioning
• Prepaid expenses
• Capital versus revenue expenditure
• Related-party expenses
• Prior-period items
• Unsupported expenses
• Unusual or exceptional expenses

Related Party Transactions

Obtain a complete list of related parties and related-party transactions during the year.

Reconcile the details with:

• Statutory registers
• Board minutes
• General ledger
• Contracts and agreements
• Director declarations
• Financial statement disclosures

Verify compliance with applicable provisions of the Companies Act, accounting standards/Ind AS and other applicable laws.

Internal Financial Controls

The auditor should obtain an understanding of the key financial reporting processes and controls relevant to the audit.

Important areas may include:

• Revenue and receivables
• Purchases and payables
• Inventory
• Payroll
• Fixed assets
• Banking and treasury
• Journal entries
• Financial closing and reporting
• IT controls
• Maker-checker controls
• User access and authorisation

Where applicable, reporting on internal financial controls should be addressed in accordance with the Companies Act and applicable guidance.

Companies seeking a wider review of processes and controls may also consider our Internal Audit Services in India.

Audit Trail and Accounting Software

Companies should also evaluate compliance with the applicable requirements relating to accounting software having an audit trail/edit-log facility.

Audit preparation should therefore include review of:

• Accounting software used during the year
• Audit trail/edit log functionality
• Whether the feature remained operational
• User access and modification controls
• Back-up and data-retention arrangements
• Supporting management documentation

ICAI has issued specific implementation guidance relating to reporting on audit trails under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. ICAI Auditing and Assurance Publications

CARO Reporting

Where the Companies (Auditor’s Report) Order (CARO) is applicable, the audit file should separately address the applicable reporting clauses.

Depending on the company and applicability, these may include areas such as:

• Property, plant and equipment
• Inventory and working-capital statements
• Investments, guarantees and loans
• Statutory dues
• Unrecorded income
• Borrowings and defaults
• Use of borrowed funds
• Fraud
• Related-party transactions
• Internal audit system
• Cash losses
• Ability to meet liabilities
• Other prescribed matters

CARO applicability should be evaluated separately for each company rather than assumed merely because a statutory audit is applicable.

Audit Documentation

Proper audit documentation is fundamental to the statutory audit process.

The audit file may contain:

• Audit planning documents
• Trial balance
• Lead schedules
• Working papers
• Sampling details
• Confirmations
• Agreements
• Invoices
• Bank documents
• Tax reconciliations
• Management explanations
• Audit adjustments
• Legal confirmations
• Financial statement review
• Management representation letter
• Final audit conclusions

ICAI’s Standards on Auditing include specific requirements relating to audit documentation, risk assessment, audit evidence, confirmations, analytical procedures, related parties, subsequent events and audit reporting. ICAI Standards on Auditing – Complete Text

Year-End Statutory Audit Readiness Checklist

Before providing the accounts to the statutory auditor, management should ideally ensure that:

• Books of account are closed and reconciled.
• Bank reconciliations are complete.
• Debtor and creditor ageing is available.
• Balance confirmations have been initiated.
• Inventory records are updated.
• Fixed asset register is updated.
• Statutory dues are reconciled.
• GST and TDS reconciliations are completed.
• Loan balances are reconciled.
• Employee benefit provisions have been recorded.
• Related-party transactions have been identified.
• Legal cases and contingent liabilities have been documented.
• Foreign currency balances have been restated.
• Year-end provisions and accruals have been recorded.
• Supporting schedules agree with the trial balance.
• Financial statement disclosures have been reviewed.
• Previous audit observations have been addressed.

A well-organised audit file can substantially reduce repetitive queries and help management and the statutory auditor complete the audit efficiently.

Who Is Responsible for Preparing the Statutory Audit Information?

Management is responsible for maintaining proper books and records, preparing financial statements and providing the auditor with the information and explanations required for the audit.

The statutory auditor independently examines the financial statements and supporting evidence and expresses an audit opinion in accordance with the applicable legal and professional framework.

Accordingly, an audit checklist should not be viewed merely as an auditor’s document. It is equally useful to the company’s finance team for audit readiness and year-end closing.

Why Is a Statutory Audit Checklist Important?

A well-designed statutory audit checklist can help a company:

• organise supporting documentation;
• identify missing reconciliations;
• detect accounting inconsistencies;
• review statutory compliance;
• improve year-end closing;
• reduce repeated audit queries;
• improve coordination between management and auditors; and
• complete the statutory audit more efficiently.

Frequently Asked Questions

What is a statutory audit checklist?

A statutory audit checklist is a structured list of financial, accounting, regulatory and documentation areas that may require examination while conducting or preparing for a statutory audit.

Is statutory audit compulsory for every company in India?

Companies incorporated under the Companies Act are subject to statutory audit in accordance with the applicable provisions of the Act. The precise audit and reporting requirements can vary depending upon the type, size and circumstances of the company.

Who can conduct the statutory audit of a company?

The auditor must satisfy the eligibility and independence requirements prescribed under the Companies Act, 2013 and applicable professional requirements.

For more details concerning audit services, see our Statutory Audit Services in India.

Is there one standard statutory audit checklist applicable to every company?

No. There cannot be one fixed checklist for every company. Audit procedures depend upon the company’s business, size, industry, internal controls, transactions, accounting framework, risk assessment and applicable legal requirements.

What documents are normally required for statutory audit?

Common documents include the trial balance, ledgers, bank statements, reconciliations, fixed asset register, inventory records, debtors and creditors ageing, statutory returns, loan documents, agreements, Board minutes, tax records and supporting schedules.

What is checked during a statutory audit?

The audit normally covers material balances and transactions in the financial statements, relevant internal controls, accounting policies, statutory matters, disclosures and sufficient appropriate audit evidence required to support the auditor’s opinion.

Is CARO applicable to every company?

No. CARO applicability is subject to the criteria and exemptions prescribed under the applicable Companies (Auditor’s Report) Order. Applicability should therefore be determined separately for each company.

Does the auditor check GST and TDS during statutory audit?

GST, TDS and other statutory dues may be relevant to the statutory audit because they affect liabilities, expenses, income, tax balances, compliance disclosures and audit reporting.

Is an internal audit the same as a statutory audit?

No. A statutory audit is an independent audit required under applicable law, whereas internal audit primarily assists management in evaluating controls, risks, processes and governance. Read more about our Internal Audit Services in India.

How can a company prepare for statutory audit?

Management should close and reconcile the books, prepare supporting schedules, update fixed assets and inventory records, reconcile taxes, identify related parties and legal matters, complete year-end provisions and keep relevant supporting documents ready before commencement of the audit.

Professional Statutory Audit Support in India

EzyBiz India Consulting LLP assists Indian and foreign-owned businesses with audit and assurance requirements, audit readiness, financial reporting support and related regulatory matters.

Our team works with businesses operating in India to help organise audit documentation, resolve accounting and statutory reconciliation issues and facilitate timely completion of year-end audit requirements.

For professional assistance, visit our Statutory Audit Services in India.

Related Services

• Audit and Assurance Services in India
• Statutory Audit Services in India
• Internal Audit Services in India
• Tax Audit Services in India
• Appointment of Auditor in a Company

Prepared By: EzyBiz India Consulting LLP
Reviewed By: Anil Agrawal, Chartered Accountant
Last Updated: August 2026

Disclaimer: This statutory audit checklist is intended for general informational and audit-readiness purposes only. It is illustrative and not exhaustive. The nature, timing and extent of audit procedures depend on the facts and circumstances of each entity, applicable law, accounting framework, Standards on Auditing and the professional judgement of the statutory auditor. Businesses should obtain appropriate professional advice based on their specific circumstances.