24/06/2018 Balance Sheet Finalization and Audit Checklist Steps and Procedure - T

Accounts and Finance (/subjects/accounts-and-finance/)

→ Step 4 Balance Sheet Finalization Procedure (/subjects/accounts-and-finance/step-4-balance-sheet-finalization-procedure/) → Things To Be Checked

Balance Sheet Finalization and Audit Checklist Steps and

Procedure
Last updated at Sept. 19, 2016 by Teachoo

How to finalize balance sheet and Profit and Loss Accounts Practically of a Company in Tally/SAP/BUSY?
Following Steps should be followed:-

1. Complete all routine entries like Purchase/Sales/Receipt/payment

2. Complete book closure entries like

Write off of Prepaid

Provision for bad debts/Provision for expenses/

Accrued Income/Accrued expense

3. Purchase/Sales/Input /Output figures shall match with VAT RETURN/ST RETURN/EXCISE RETURN.

4. Ensure that GP Ratio is similar to previous period, if not there should be proper justification for the same

5. Check points of expense disallowed and prepare Current tax and Deferred tax Computation and pass entry for the same.

Add : Expenses Disallowed

(a) Depreciation As Per Companies Act

(b) Any Expense on which TDS Not Deducted or deposited by 30 Sep.

(c) Any Cash Payment > 20,000/-

(d) Any Unascertained Provisions (Provision for Bad Debts)

(e) Any Personal Expenses

(f) Any Illegal Expenses

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24/06/2018 Balance Sheet Finalization and Audit Checklist Steps and Procedure - T

(g) Any Interest on Loan Not paid till Due Date of ITR (30 Sep.)

(h) Any Bonus Not paid till Due Date of ITR (30 Sep.)

(i) Any Tax Not Deposited till Due Date of ITR (like PF)

(j) Any Income Tax / Wealth Tax / Int. / Penalty Shown in P&L

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6. Prepare BRS (Bank Reconciliation Statement) for each bank account

7. For major debtors/creditors ,ask for balance confirmation or ask for vendor statement and prepare vendor reconciliation

8 Do Debtor aging and creditor ageing, for long outstanding debtors show as bad debts or provision

9 Change Ledgers in Wrong Heads

Examples

Debtors having Credit Balance-Either pass entry for Sales/Income or transfer them into Advance from Customer

Similarly for Creditors having Debit Balance-Either pass entry for expense or transfer them into Advance to Supplier

Any Expense or Income showing Negative Balance- It means either entries or wrong or expense has been booked as

Income or viceversa

10 Clear Suspense Account-find and put party name

11 Ensure that there is no negative balance of cash or stock

12 Pass Output Input Adjustment Entries for Vat/ Service tax/Excise etc and ensure it matches with returns

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24/06/2018 Balance Sheet Finalization and Audit Checklist Steps and Procedure - T

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13 For returns not filed, make provision for interest/penalty for the same

14 Prepare Depreciation Chart as per Companies Act and Income Tax Act and pass entry for the same.

15 Check last year Profit and Loss and Balance Sheet and ensure that no major expense/income etc which appeared in previous
period is missed. These should be similar to previous period or else there should be proper justification for the same.

In Addition,we should also so Ledger Scrutiny as explained in next page

Next: Ledger Scrutiny Checklist- for Balance Sheet finalization and Audit-How to Check Ledgers→ (/5212/257/Ledger-

Scrutiny-Checklist-for-Balance-Sheet-finalization/category/Things-To-Be-Checked/)

Accounts and Finance (/subjects/accounts-and-finance/) →

Step 4 Balance Sheet Finalization Procedure (/subjects/accounts-and-finance/step-4-balance-sheet-finalization-procedure/) →

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24/06/2018 Balance Sheet Finalization and Audit Checklist Steps and Procedure - T

Things To Be Checked
(/subjects/accounts-and-finance/step-4-
balance-sheet-finalization-procedure/)

Balance Sheet Finalization and Audit

Checklist Steps and Procedure
You are here (/837/257/Balance-Sheet-
Finalization-and-Audit-Checklist-Steps-
and-Procedure/category/Things-To-Be-
Checked/)

Ledger Scrutiny Checklist- for Balance

Sheet finalization and Audit-How to Check
Ledgers (/5212/257/Ledger-Scrutiny-
Checklist-for-Balance-Sheet-
finalization/category/Things-To-Be-
Checked/)

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Step 4 Balance Sheet Finalization Procedure
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Depreciation Computation (/840/259/Depreciation-Comparison-Companies-and-Non-Companies/category/Depreciation-Computation/?utm_source=post-

page&utm_campaign=category-list-in-post&utm_medium=self)
Tax And Deferred Taxed Computation (/3611/260/Disallowing-Depreciation-as-per-Companies-Act/category/Tax-And-Deferred-Taxed-Computation/?
utm_source=post-page&utm_campaign=category-list-in-post&utm_medium=self)
Exporting Data in Excel (/3869/261/Procedure-for-Exporting-Data-in-Excel-for-Balance-Sheet-Finalization/category/Exporting-Data-in-Excel/?
utm_source=post-page&utm_campaign=category-list-in-post&utm_medium=self)
Revised Schedule III Balance Sheet (/3870/262/Compulsory-requirement-of-Schedule-III-Balance-Sheet---Companies-Act/category/Revised-Schedule-III-
Balance-Sheet/?utm_source=post-page&utm_campaign=category-list-in-post&utm_medium=self)

About the Author

CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation
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Laxmi Pradhan (/question/4017/Video/)

June 30, 2017, 10:48 a.m.

Video

View answer (/question/4017/Video/)

Nandita Saha (/question/3025/Interest-on-loan-not-paid-due-date-of-ITR...Please-explain-that-ITR-me/)

May 5, 2017, 8:49 p.m.

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24/06/2018 Balance Sheet Finalization and Audit Checklist Steps and Procedure - T

Interest on loan not paid due date of ITR...

Please explain that ITR means?

View answer (/question/3025/Interest-on-loan-not-paid-due-date-of-ITR...Please-explain-that-ITR-me/)

Nandita Saha (/question/3024/What-do-you-mean-by-ITR-/)

May 5, 2017, 8:47 p.m.

What do you mean by ITR?

View answer (/question/3024/What-do-you-mean-by-ITR-/)

Sandeep Pandey (/question/2619/Sir-if-i-deposit-excess-amount-in-SB-Cess-head-can-i-adjust-excess-SB- Cess-amount-for-paying-of-service-tax-14-/)

April 4, 2017, 7:13 a.m.

Sir if i deposit excess amount in SB Cess head can i adjust excess SB Cess amount for paying of service tax 14%

View answer (/question/2619/Sir-if-i-deposit-excess-amount-in-SB-Cess-head-can-i-adjust-excess-SB- Cess-amount-for-paying-of-service-tax-14-/)

Neeraj Sharma (/question/1201/if-f-form-issued-of-wrong-amount-then-what-is-the-procedure/)

Jan. 10, 2017, 4:26 p.m.

if f form issued of wrong amount then what is the procedure

View answer (/question/1201/if-f-form-issued-of-wrong-amount-then-what-is-the-procedure/)

Prasanth (/question/76/how-many-types-of-balance-sheet-India-and-US--/)

June 17, 2016, 12:51 p.m.

how many types of balance sheet India and US ?

View answer (/question/76/how-many-types-of-balance-sheet-India-and-US--/)

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