How to Prepare for a Statutory Audit: Checklist for a Businesses
By KCJM, Chartered Accountants | Excellence in Everything We Do
A statutory audit is a mandatory requirement for many Indian businesses under the Companies Act and Income Tax Act. It ensures that financial statements reflect a true and fair view of the company’s financial position. However, many businesses face challenges during audits due to poor preparation or lack of documentation.
At KCJM, Chartered Accountants, we’ve helped numerous businesses streamline their audit process with proper planning and execution. This comprehensive checklist will guide your team through the essential steps of preparing for a smooth statutory audit in India.
✅ 1. Understand Applicability
Check if your business is subject to statutory audit. Under the Companies Act, 2013, audits are mandatory for:
- All companies (private or public)
- LLPs with turnover > ₹40 lakh or contribution > ₹25 lakh
- Partnerships/Proprietorships with turnover > ₹1 crore (or ₹10 crore for digital transactions under Income Tax)
📁 2. Organize Financial Records
Ensure all financial documents are properly maintained and updated:
- Ledger entries and trial balance
- Purchase and sales registers
- Bank statements and reconciliations
- Fixed assets register with depreciation schedule
- Loan and investment records
📑 3. Review Statutory Compliances
Check timely compliance and filings for:
- GST Returns (GSTR-1, 3B, Annual Return)
- TDS Returns and Form 26AS matching
- PF, ESI, and other labour law payments
- ROC filings like AOC-4, MGT-7
💡 4. Reconcile Key Statements
Ensure reconciliation between:
- Books of accounts and bank statements
- GSTR vs. books of accounts
- Form 26AS vs. TDS receivable in books
- Inventory records vs. physical stock
📆 5. Update Board Resolutions & Minutes
For companies, keep your corporate governance documents ready:
- Board meeting and AGM minutes
- Shareholder resolutions
- Loan and investment approvals
📋 6. Identify and Address Red Flags
Be proactive by resolving irregularities in:
- Unreconciled balances
- Large cash transactions
- Unusual journal entries
- Old outstanding receivables/payables
👨💼 7. Coordinate With Your Auditor
Facilitate communication by appointing a point of contact in your team for auditors. Share login access (view only) and segregate audit-relevant data in folders to speed up review.
📝 8. Keep Notes on Estimates and Policies
Prepare explanations for accounting policies, estimates, or any changes during the year (e.g. depreciation method, inventory valuation). This improves transparency and builds trust with auditors.
📦 9. Document Internal Controls
Auditors often review your internal control framework. Keep SOPs (Standard Operating Procedures) and internal checklists handy to showcase process control and risk mitigation.
📈 10. Prepare the Management Representation Letter
This letter certifies the accuracy of financial statements and must be signed by the company’s management. Draft it early and get it reviewed by your CA.
Why Choose KCJM, Chartered Accountants for Your Statutory Audit?
We’ve been serving Indian businesses since 2002 with excellence in Audit & Assurance, Income Tax, GST, and Corporate Law. Our audit support includes:
- Pre-audit checklists and documentation support
- Tax audit, company audit, and LLP audit compliance
- Detailed MIS reports and recommendations
- Support during departmental audits or inquiries
🧾 Need help preparing for your upcoming statutory audit?
Let KCJM, Chartered Accountants handle the process with professionalism and precision.
🌐 https://kcjm.in
📧 support@kcjm.in
📞 Reach out today to schedule a consultation!
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