Method of Checking of Professional Tax

1. Mailed the requirements to the specific person for the P.Tax Challans & returns
2. Checked the P.Tax slab rates for the respective state & the Financial Year.
3. Made the required format for checking of P. Tax.
Month Amount Amount difference Due Actual Delay
deducted deposited Date Date

4. Obtain the salary sheet and depending on the audit period, select the checking method
(either 100% or test basis).
5. After obtaining the salary sheet and other required documents, take out the extract of
Professional tax Payable ledger from the accounting software (Wherein I get the
information of P.tax liability created each month & the being made)
6. After this, reconcile the liability for P.Tax as shown in the books with respect to the
Challans available.
7. If their occurs any deviation take a note of the same.

Observations:

SI.No. Director Payment mode Reason

1. Mr. Sanded Fogla On their Own -
2. Mr. Udhav Modi On their Own -
3. Mr. Subrata Kumar By the company Being treated as an employee by the
Dash company.

8. For checking whether the deductions has been made correctly or not, do sample
checking for few months, say, May, august, December & March.
9. For checking the deductions, apply the If formula of excel to apply the slabs & then
check it with the respective P.Tax of employees being deducted for differences.
10. P.Tax is deducted on total earnings.

Method of checking ESIC

1. First 4 points being the same as mentioned in the P.Tax checking method with required
changes.

2. After obtaining the salary sheet and other required documents, take out the extract of
ESIC Payable ledger from the accounting software (Wherein I get the information of
ESIC liability created each month )
Observation:
In this Company’s case, they do not create ESIC liabilities for each month. Rather than
that they prefer to directly show it as expenses & then credit it to Salary.
 3. In ESIC both the employee & employer make contributions @ 1.75% & 4.75%
respectively.
4. There was an ESIC scrutiny case on this company for F.Y. 2013-14 for which the
payment has been made in May 2017. This information was found out from the SBI
accounts payments being made & not from the ESIC payable ledger.

Method of Checking of PF
1. First 4 points being the same as mentioned in the P.Tax checking method with required
changes.

2. After obtaining the salary sheet and Challans, take out the extract of PF Payable ledger
from the accounting software (Wherein I get the information of PF liability created each
month )

3. In PF, both the employer & employee contribute @ 12% of the basic salary. The
employers contribution is bifurcated into two parts :

EPS @ 8.33%
Employer's
Contribution @
12%
EPF Remaining PF
Employee's
Contribution @
12%

4. In this company the director’s contribution to PF has been maintained in a separate

account which also needs to be considered.

5. Also the date of generation of Challans is taken into account & not the
acknowledgement letter date. This happens because acknowledgement can be taken out
at any time.

Method of checking of TDS

1. First 4 points being the same as mentioned in the P.Tax checking method with required
changes.

2. Thereafter , the TDS amount deducted can be obtained from the books of accounts
(From the accounting software used in the organization)

3. The TDS amount deposited & whether deposited within due dates or not can be
obtained from the TDS Challans.

4. Both the amount deducted & amount deposited should match otherwise record the
difference.

5. If there is challan but no detail pertaining to what for payments has been done then,
check the same from the books of Accounts.
Observation:
In this co. there were two Challans for Late payment of TDS, about which I could get
information only from the books as there were no supporting documents to explain
what for the payments were made.

6. Also there are quarterly returns for TDS, which are :

24Q 26Q 27Q

For all other TDS on
TDS on Salary TDS falling u/s Payment to
u/s 192B 194C, 194IA, Foreigner u/s
194J etc. 195
 Method of Checking BRS:

1. First of all, make a list of all the bank accounts which the company uses for various
purposes. This information can be extracted from the respective accounting software
used in the organization.

2. Then note down the respective balances of each bank account as shown in the books of
accounts.

3. Simultaneously do the noting of the bank balances as per the bank statements. If any
differences arise then note it respectively.

4. Obtain the BRS of the Bank accounts where any difference arises.

5. Where BRS is not available obtain the bank confirmations for the same.
Method of Cash Vouching:

1. Take out the extract of cash book from the accounting software of the company.

2. Obtain the cash vouching files of the company.

3. Depending on the requirement, either do sampling or 100% checking.

4. Check the following:

a. The amount as mentioned in the bill is same as that in the books of accounts.
b. The name of the party is correctly mentioned.
c. The bill is raised in the name of the company.
d. Manager’s signature is present as approval of the bill.
e. Proper break-up of the amount as mentioned in the bill is given (if any)
f. The voucher numbers are correctly given.
g. All the bills are signed by the authorized signatory.
Method of checking GSTR-3B

1. Obtain the GSTR 3B challan.

2. Make the required format as follows:

Month IGST CGST SGST
As As Difference As As Difference As As Difference
per per per per per per
books 3B books 3B books 3B
July
August

3. Obtain the details pertaining to the IGST/CGST/SGST (Output) from the accounting
software of the company.

4. Obtain the GST Challans from the company.

5. Reconcile both the data & note down the difference if any.

6. Obtain explanation from the respective personnel regarding the same.

7. Also reconcile whether the payments being made by the company as shown in GSTR 3B
matches with that in GSTR 1.

8. And check whether the returns have been filed within the due dates or not.

9. If not filed then check whether any interest payment or penalty was charged on the
company or not.
 Ledger Scrutiny

1. Fixed Assets
a. Take out the extract of fixed assets from the Accounting Software.
b. Thereafter make a list of the Assets in which there had been additions in the
period for which the audit is being conducted.
c. Then obtain the fixed assets file to check for the purchases made (if maintained).
Otherwise the same can be checked from Journal Vouchers.
d. Check the following from the Vouchers:
i. The bill is in the name of the Company.
ii. The amount is the same as that in the books.
iii. It is a Capital purchase, i.e. not of revenue nature.

2. Car Hire Charges

a. Obtain the Car Hire Agreements, if any.
b. If not then check the same from the Journal Voucher file.
c. Make reconciliation whether the car hire expense as shown in the books matches
with that in the vouchers.

3. Donations & Subscription

a. Make a list of all the parties to whom any subscription or donation is being
given.
b. Thereafter, Jot down the amount of donation or subscription for the same.
c. Then obtain the donation & Subscriptions file being maintained by the company.
d. Then Check whether the amount as shown in the books matches with that in the
certificates of the same.
e. Also check under which section the donation is being given.

4. Electricity Charges
a.