This checklist can help you ensure your accounts are accurate and complete before finalisation.
Opening Balances: Verify opening balances match the previous year’s audited balance sheet. [Balance Sheet Finalization]
Bank Reconciliations: Ensure all bank statements are reconciled, with any discrepancies investigated and resolved.
Transactions Completeness: Record all transactions for the period, including outstanding invoices, receipts, and accruals. Accuracy: Review all transactions for validity and proper classification.
Assets: Review asset valuations for accuracy, considering depreciation and amortization. Identify and address any obsolete or impaired assets.
Liabilities: Ensure all accounts payable are accurately recorded and outstanding. Accrue for any unpaid expenses at the end of the period. Verify provisions for liabilities like taxes and audit fees.
Equity : Check for proper recording of capital contributions and distributions.
Reconciliations:
Sales & Purchase Ledgers: Reconcile these ledgers with any GST return data.
Cash Ledgers: Verify cash ledger balances match bank statements after reconciliation.
Additional Checks: Previous Year Adjustments: Ensure any adjustments from the previous year are correctly reflected.
Expense Comparisons: Compare current year expenses to previous years, investigating any significant variations.
Prepaid Expenses: Verify proper allocation of prepaid expenses between the current and future periods.
Suspense Accounts: Clear any outstanding balances in suspense accounts.
Tax: Confirm TDS (Tax Deducted at Source) is deducted and deposited on time.
Director’s Expenses: Ensure personal expenses of directors are not included in company accounts.
Further Considerations: What is Ledger Scrutiny :- Ledger Scrutiny in easy language means Checking different ledger (in tally) in detail to find out errors if any Steps to be followed
1.Open Ledger (In Tally, do Display–Account Books—>Ledger)
2.Check Opening Balance (Whether it is matching with last year Closing Balance Sheet)
Note:-Opening Balance will show only for Ledgers of Different Assets and Liabilities of Balance Sheet and not Profit and Loss A/c
3. Check Ledger Group (You can Select Ledger and do Ctrl+Enter in Tally) Ensure that it is in correct head. You can refer Tally Ledger List for this Ledger Scrutiny Checklist-for Balance Sheet finalization and Audit-How to Check Ledgers
4.If it is a Expense Ledger, Do F5 Columunar in Tally (to get amount and taxes in separate column)
Check Whether TDS Applicable on it or not
Reconciliation Procedure
TDS Deducted if TDS Applicable
If Registered in GST, Whether Input GST Credit is available and correctly taken or not
Accounts and Finance
Step 4 Balance Sheet Finalization Procedure Similarly, if company registered in Service tax, whether Input of GST is available and correctly taken or not Match with Last year Profit and Loss A/c, Check whether there is abnormal increase or decrease in expense Things To Be Checked Reconciliation Procedure
Depreciation Computation
Tax And Deferred Taxed
Computation amount, If yes enquire about reason for the same Ensure that Amount of expense matches with amount of purchase shown in different returns filed like GST Check Expense made in Cash whose amount more than 10000(You can do F12 Range) Exporting Data in Excel.
5. If it is an Income Ledger Do F5 Columnar in Tally (to get amount and taxes in separate column)
Check Whether GST charged as per Correct Rate Ensure that Amount of Income matches with amount of Sales shown in different returns filed like GST Match with Last year Profit and Loss A/c. Check whether there is abnormal increase or decrease in Income amount, if yes enquire about reason for the same
6.If it is an Debtor Ledger Closing Balance should be a Debit Balance If it is a Credit Balance, it means either Income not booked or Advance Received
If Income not booked book Income by passing Income Entry (Party Dr To Income)
If Advance Given, Change head of Party to Advance from Customer (Current Liability)
Do Debtor Aging to find long outstanding debtors and book Provision for Bad Debts
Ask for Balance Confirmation or Party Ledgers and do Debtor Reconciilation
Check TDS Receivable correctly booked and Match with Form 26AS
7.If it is an Creditor Ledger Closing Balance should be a Credit Balance
If it is a Debit Balance, it means either Expense not booked or Advance given
If Income not booked, book Expense by passing Expense Entry (Expense Dr To Party)
If Advance Given, Change head of Party to Loans and Advances Assets/Advance from Supplier (Current Assets)
Do Creditor Aging to find long outstanding creditor and Write off Amount
Ask for Balance Confirmation or Party Ledgers and do Creditor Reconciliation.
Check TDS Correctly deducted and Match with TDS Returns
8 If it is an Fixed Asset Ledger Check Whether Depreciation Correctly booked as per Companies Act and Income Tax Act Match with Depreciation Chart as per Companies Act and Income Tax Act
Check Current and Deferred Tax Computation
Check Calculation of Profit and loss on Sale of Assets
Check Fixed Asset Register if prepared to ensure it matches with amount in Tally of Fixed Asset
Obtain Written Confirmation for Fixed Assets kept with third party/employees
Check whether Input of GST on Purchase of Capital goods available and correctly booked
This is a general checklist, and specific requirements may vary depending on your company and location.
If required, consult with a professional accountant or tax advisor for guidance.
By Above this checklist, you can increase your confidence in the accuracy of your accounts and ensure a smooth finalisation process.
