Ledger Scrutiny Checklist- for Balance Sheet finalization and Audit-How to Check Ledgers

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

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
• TDS Deducted if TDS Applicable
• If Registered in Vat,Whether Input Vat Credit is available and correctly taken or not
• Similarly,if company registered in Service tax,whether Input of Service tax or Excise 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 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 Vat 
• Check Expense made in Cash whose amount more than 20000(You can do F12 Range)

5. If it is an Income Ledger

• Do F5 Columnar  in Tally (to get amount and taxes in separate column)
• Check Whether Vat/Service Tax/Excise charged as per Correct Rate
• Ensure that Amount of Income matches with amount of Sales shown in different returns filed like Vat,Service tax,Excise
• 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 Vat/Excise on Purchase of Capital goods available and correctly booked

Difference between accounting Company and Non Company