For practising CAs · statutory audit
Statutory audit checklist, organised by financial statement area.
A working reference for planning a statutory audit — grouped the way your file actually gets reviewed: revenue, expenses, fixed assets, inventory, related parties, and going concern. Adapt it to the entity's risk and materiality; it doesn't replace professional judgement.
- Reviewed July 2026
- 8 min read
- CA Anil Agarwal & the TatvaBooks team
What this checklist is — and isn't
This is a reference checklist for a statutory audit under the Companies Act framework, organised by financial statement area rather than by audit phase. It's meant to sit next to your audit programme as a completeness check — a way to confirm you haven't skipped an obvious procedure for a given area, not a substitute for the risk assessment that should actually drive your audit plan.
We haven't made this a downloadable file for the same reason we don't for our other reference pages: a static template gets photocopied and followed mechanically, while a page you read and adapt each time forces you to actually think about the entity in front of you. Copy what's relevant into your own working papers, in your firm's format, and drop what doesn't apply.
Every engagement should be scoped using SA 315 (identifying and assessing risks) and SA 330 (responding to those risks) — the checklist below assumes that risk assessment has already shaped which of these procedures matter most for a given client, and at what sample size.
1. Revenue and receivables
Revenue recognition and receivables are almost always a significant risk area — cut-off errors and provisioning judgement calls are where financial statements most often go wrong, deliberately or otherwise.
| # | Procedure |
|---|---|
| 1 | Trace a sample of invoices to dispatch/delivery challans and customer acknowledgement to confirm revenue is recognised in the correct period (cut-off). |
| 2 | Check that sales near year-end (last week of the financial year, first week of the next) are booked in the right period — the classic cut-off test. |
| 3 | Reconcile the sales register with GSTR-1/GSTR-3B filed for the year; investigate material mismatches. |
| 4 | Circularise balance confirmations to a sample of debtors (positive or negative confirmation as risk warrants) and follow up on non-replies. |
| 5 | Review the debtors ageing schedule; test the provision for doubtful debts against the entity's stated policy and actual recovery history. |
| 6 | Scan for related-party sales and confirm they are on arm's-length terms and separately disclosed. |
| 7 | Test credit notes and sales returns issued after year-end for evidence they relate to pre-year-end sales. |
| 8 | Verify unusual or round-sum journal entries directly to the revenue account, especially those posted by senior personnel or outside normal hours. |
2. Expenses and payables
The mirror-image risk to revenue: understated liabilities and expenses inflate profit just as effectively as overstated revenue does, and are often less scrutinised.
| # | Procedure |
|---|---|
| 1 | Vouch a sample of purchase and expense entries to supporting invoices, GRNs and approvals. |
| 2 | Test purchase cut-off — goods received before year-end but invoiced later, and vice versa. |
| 3 | Recompute major accruals and provisions (bonus, leave encashment, warranty, audit fee) and check they're not omitted or understated. |
| 4 | Verify TDS has been deducted and deposited on applicable expense payments (contractors, professional fees, rent) and Form 26Q/24Q filings agree with the books. |
| 5 | Trace prepaid expenses (insurance, AMC, rent) and confirm only the period-relevant portion is expensed. |
| 6 | Check for expenses booked without matching approval or budget authorisation, per the entity's internal control matrix. |
| 7 | Review related-party purchases and management remuneration for disclosure under the applicable related-party standard. |
3. Fixed assets
Existence, ownership and depreciation are the three procedures examiners and reviewers check first — and the three most commonly shortcut under time pressure.
| # | Procedure |
|---|---|
| 1 | Agree the fixed asset register total to the general ledger and the financial statements. |
| 2 | Physically verify a sample of assets (existence) and confirm they are in use and not impaired. |
| 3 | Vouch additions during the year to purchase invoices, capitalisation approvals and installation/erection costs where applicable. |
| 4 | Recompute depreciation for a sample of assets — check the method, rate/useful life and pro-rata calculation for mid-year additions or disposals. |
| 5 | Verify disposals — sale deed/invoice, removal from the register, and correct computation of profit or loss on sale. |
| 6 | Confirm title documents (property, vehicles) are held in the entity's name and check for any charge or lien not disclosed. |
| 7 | Test capital work-in-progress for items that should have been capitalised and depreciation started. |
4. Inventory
Inventory audits combine a physical procedure (attending the count) with a valuation judgement (cost vs net realisable value) — miss either half and the balance is unreliable regardless of how neat the ledger looks.
| # | Procedure |
|---|---|
| 1 | Attend the year-end physical stock count (or a cyclical count reconciled to year-end) and test-count a sample of items. |
| 2 | Reconcile the physical count to the perpetual/book inventory records and investigate material variances. |
| 3 | Test inventory valuation — cost formula (FIFO/weighted average) applied consistently, and compare cost to net realisable value for slow-moving or obsolete stock. |
| 4 | Test cut-off for goods in transit, goods on consignment, and goods held on behalf of third parties (excluded from own stock). |
| 5 | Review the provision for slow-moving, damaged or obsolete inventory against ageing analysis. |
| 6 | For manufacturers, verify the costing of work-in-progress and finished goods (materials, labour, overheads absorbed) against actual production records. |
5. Related-party transactions
The risk here is rarely the transaction itself — it's non-disclosure. Management may genuinely not think of a relative's proprietorship or a common-director entity as "related," so this area needs active corroboration, not just a request for a list.
| # | Procedure |
|---|---|
| 1 | Obtain a complete list of related parties from management and independently corroborate it — directors, KMP, their relatives, and entities under common control. |
| 2 | Review board minutes, shareholding registers and related filings (e.g., MCA filings) for related parties management may not have disclosed. |
| 3 | Test whether related-party transactions during the year were approved as required (board/audit committee/shareholders as applicable) and priced on an arm's-length basis. |
| 4 | Confirm related-party balances and transactions are correctly disclosed in the financial statement notes, including nature of relationship. |
| 5 | Be alert to transactions routed through intermediaries or unusual terms (no interest, extended credit, round-tripping) that may mask a related-party arrangement. |
6. Going concern
Going concern is a conclusion, not a checkbox — but the procedures below are the evidence you build that conclusion on, and the ones a reviewer will look for first if the opinion is later questioned.
| # | Procedure |
|---|---|
| 1 | Evaluate management's going concern assessment for at least twelve months from the balance sheet date, and the reasonableness of assumptions used. |
| 2 | Look for indicators of financial stress — negative net worth, recurring losses, default on loan covenants, inability to pay creditors on time, loss of a major customer or key personnel. |
| 3 | Check for post-balance-sheet events (litigation, loan recall, loss of licence) that could affect the going concern assumption. |
| 4 | Review cash flow projections or a business plan prepared by management, if the entity is under financial stress, and test key assumptions. |
| 5 | Assess whether the disclosures around material uncertainty (if any) are adequate, and consider the impact on the audit opinion. |
Practical notes for a practising CA
- Materiality drives sample size, not the checklist. A ₹50 lakh company and a ₹500 crore company both go through these six areas, but the number of items you actually test and the confirmations you send differ enormously.
- Document why, not just what. A checked box with no working paper behind it is worthless in a peer review or NFRA/quality-review inspection. Keep the evidence — the confirmation reply, the recalculation, the sample list — not just the tick.
- Cut-off testing is where most audits actually fail. Revenue and purchase cut-off around year-end deserves more time than most firms give it; it's also the easiest area for management to manipulate under pressure to hit a number.
- Related parties need active corroboration. Don't rely solely on management's list — cross-check against MCA filings, board minutes and common addresses/contact numbers in vendor or customer masters.
- Going concern isn't just for obviously distressed companies. Even a profitable company with a loan covenant breach or a major customer concentration risk needs the assessment documented.
- Verify anything version-specific before you cite it. Clause numbers, SA paragraph references, turnover thresholds for applicability (e.g., CARO, XBRL, cost audit) change from time to time — check the ICAI and MCA portals before quoting an exact figure in your report or working papers.
How TatvaBooks helps at audit time
None of the judgement above comes from software — but a lot of audit time is lost chasing basic evidence that should already be clean: a sales register that doesn't tie to GSTR-1, a fixed asset schedule maintained separately from the books, or a debtors ageing report built by hand each year. TatvaBooks keeps the ledger, GST filings, fixed asset register and inventory valuation in one place, with an append-only activity log — so when you sit down for the audit, the source data is already reconciled and the trail of who-changed-what is there for you to review.
If you're a CA managing multiple clients, see how TatvaBooks for Chartered Accountants works, or look at pricing for the Practice plan.
Frequently asked questions
Is this a downloadable audit checklist template?
Does a checklist replace professional judgement in a statutory audit?
What are the key financial statement areas every statutory audit should cover?
How is this checklist different from an internal financial controls (IFC) checklist?
Where do I find the exact Standards on Auditing (SA) references for each area?
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