statutory audit presentation

5/28/2018 Statutory Audit Presentation

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Tally Solutions Pvt. Ltd. All Rights Reserved

Tally.ERP 9

Auditors Edition

Statutory Audit


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Tally Solutions Pvt. Ltd. All Rights Reserved 2

Agenda

Statutory Audit using Tally.ERP 9 AE

Benefits

Definition & Audit Objective

Audit & Analysis-Features

Audit Journals

Financial Statements


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Benefits

The Tally.ERP 9 AE offers many benefits to Auditorsperforming a Statutory Audit.

Enables faster and easier data analysis - saves timeand cost

Generates Exceptions for Accounts, Stocks, Balances,etc.

Perform General Ledger review / scrutiny and assignSampling Methods for verification of vouchers

Perform Analytical procedures, Fixed Asset Analysis Finalise book of account through Audit Journals

Aids in preparing Schedule VI Balance Sheet and Profit& Loss A/c


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Definitions & Audit Objectives

Statutory Audit refers to examination/verification activitiesperformed by a Chartered Accountant to ascertain:

a) Whether books of accounts prepared, conform to theaccepted accounting principles, policies and

law/statutesb) Reflect a true and fair view of the businesss state of

affairs to interested parties

The Chartered Accountant certifies whether the accounting

information recorded in the books:a) Conform

or

b) Does not to above requirements


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Audit & Compliance Menu

Open Tally.ERP 9

Auditors Edition.

Select the requiredCompany to display

Gateway of Tally.

Select Audit &

Compliance under

Audit to access theaudit features.

Tally Main -> Gateway of Tally


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Access to Audit & Compliance Menu

When the Client activates the Security ControlScenario 1

Click Alt+F3:CmpInfo in Gateway ofTallyto display the

Company Alterationscreen.

Under SecurityControl:

Select Yesfor UseSecurity Control Enter details for

Name ofAdministrator&Passwordfields


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Access to Audit & Compliance Menu

When the Auditor provides the access details Scenario2

Click Audit &Compliance inGateway of Tally

screen todisplay CompanyAlteration-EnableSecurityscreen.

Enable access to auditfeatures by entering: Name of

Administrator Password

Accept and savethe login details foraccess.


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Audit & Compliance

Access theStatutory AuditMenufeatures byexecuting the

steps:

Tally Main>GatewayofTally> Audit&

Compliance

Features coveredare: Audit

Programme

Audit &Analysis

Audit Journals Financial

Statements

Main features of the Statutory Audit Menu.



Audit Programme

Click AuditProgrammeunderStatutory Auditmenu

Select YestoSet/Alter Client &Auditor DetailsinAudit Programmescreen

Select defaultarea(s) to beaudited underAreas of Audit.

You can alsodefine your ownarea of audit(User DefinedArea of Audit).You can alsoremove the areaof audit defined(Remove UserDefined Area of

Audit).

Prepare the programme for conducting the audit. Selected areaappears underAreas of Audit.Period: Entertime details afteraudit completion.Verified By:Enter Auditorsname.Extent of

Verification:Enter scope ofverification.VerificationRemarks: Enter

any remarks.

The details ofNameand Addressare automaticallypicked up from theCompany Creationscreen under ClientDetails.

Enter other detailsunder Client

DetailsandAuditor Details.



Audit Programme

You can alsodefine audit areasas required andsave them under

List ofAuditAreas window.

Select UserDefined Area of

Auditunder Listof AuditAreasto define.

Define audit programme as per your requirements.Define therequired areas ofaudit under theAddingUser

DefinedArea ofAuditwindow.

The user definedarea of audit isnow saved underAreas of Audit

and is availablefor selection inthe current andfuture audits.



Data Analysis

Perform a set of verification/analysis steps to ascertain certainattributes about Client data by comparing two years data

Change period toview previousyears data for

comparison withcurrent year.

ClickF2: Period-to change period.

Note: Use thismenu when thedata of both yearsare available in asingle folder.

Enter the currentyear againstBeginningto

display itsdashboard.

For example,enter 2009todisplaydashboard forcurrent year2009-10.

The Audit &Analysisscreenafter the change

of period.

The Dashboards topsection, DataAnalysis- provides

information on dataexceptions, errors ordiscrepancies,mined out of theunaudited data.

The Auditingdealswith verification ofvoucher details andtransactions likeMSME, Forex,etc.

The dynamicinformation underAuditing are:

Total: totalvouchers to beaudited.Audited: thenumber to beaudited.UnderObservation:vouchers underauditorsobservation.

Under Clarification:vouchers to beclarified by client.

Clarified: clarifiedvouchers to be re-audited.Altered: vouchersmodified afterupdating audit status

to be re-audited.

Other importantmenus includecontrol/support

centers, etc.



Data Analysis

Compare currentyears Clients datawith the previousyear.

ClickCtrl+F3:Compare Cmp-to select data of theprevious year for

comparison withcurrent year.

Note: Use this menif data of both yearsreside in separatefolders.

Study trends in data between current and previous year andconfigure ledger accounts.

Mention the pathwhere theprevious yearsdata is located

Select the data ofthe previous yearin CompareCompanyscreen.

The Audit &AnalysisDashboard aftercomparison.

ClickCtrl+F9:MasterConfigto displayStatutory Audit

Configurationscreen



Data Analysis

Access all featuresunder StatutoryAuditmenu

directly from anyof its features.

Click Alt+F10:Audit Reports.

Access Stat Audit all features directly from any where in thedashboard.

Select therequired stat auditfeature directly

under AuditReportsin AuditReportsscreen toperform thedesired auditprocess.



Verification of Chart of Accounts

The Chart of Accounts is the starting point of a statutory audit.Select All Itemsagainst ShowLedgers havingStatusin

Configurationscreen.

Accept entries forother fields.

The report providesinformation on theexceptions in theledgers of data.

ClickF12:Configureandselect All Itemstodisplay all types of

exceptions.

The Chart ofAccounts after theconfigurationprovides information

on all exceptions inthe ledgers.

Note that a newexception, No

Changeis displayedalong with others.



Verification of Chart of Accounts

Features in Verification of Chart of Accounts.Out of the theseexceptionsgenerated, considerthe following

examples:

Only Balances,No Transactions

Regrouped

Only Balances,No Transactions:

Auditor can advise

the client to writeoff: considering the

age of thebalance

other factors

Regrouped:Auditor can verifythe reason(s) forregrouping the

ledger account.

For Example, theselected ledgeraccount was

grouped underSundry Debtors inYr 08-09but in Yr09-10, groupedunder Sundry

Creditors.



Verification of Stock Items

Displays stock related exceptions in the data to be audited.Display ofexceptionsrelating to stockswhen data of two

years arecompared.

For example,consider theexception.Negative

Stock.

The Auditor canverify/find thereason(s) for thenegative stock.

Difference inOpening Stock

The Auditor can

verify/find thereason(s) for thedifference in thecurrent yearsopening balancewhen comparedwith the closingbalance of theprevious year.

Not Used.

The Auditor canverify/find the

reason(s) for thenil activity in thestock items.



Verification of Stock Items

Configure display of details in Verification of Stock Items.ClickF12:ConfigureConfigure displaydetails for stock

items, Exceptions,Groups, AuditNotes and Names.

The display afterconfiguration. Notethe display of newexception-No

Change.



Verification of Balances

Verify differences in op balances in ledger accounts.

Investigate ledgeraccounts whoseclosing balances inthe previous year

do not tally withthe openingbalances in thecurrent year.

Consider theExceptions of theFixed AssetsGroup.

Analyse and findreasons for thedifferences in theclosing and

opening balancesof ledgeraccounts forappropriateaction.

Note: If data ofboth years are inthe same folder, thedifferences in op

balances are notrelevant.

The differences arerelevant only when

the data of bothyears are found inseparate foldersand are compared.




Examine change in default/normal behaviour of ledger accountsConsider an accountGroup-DirectExpenses, whoseamount is displayedin red colour underTransactions(rightside of the report).Verify the change inthe normal behaviourof the ledger account.

Place the cursoron the right sideand drill down tothe ledger leveldisplay.

Select the ledgeraccount(s) withcredit closingbalances.

Select thetransaction for audit(press Spacebar).

Click F9:Audittoaudit it.

Select the value forAudit Status andenter observationunder Audit Note.

Values available forAudit Status: Unknown Audited Need Clarification Under Observation

Explanation for AuditStatus values:

Unknown: Thisvalue is used whenthe Auditor wants tochange the earlieraudit decision taken.

Audited: This value

is chosen when auditof the transaction iscompleted and theAuditor has arrivedat a decision.

Need Clarification:This value is chosenwhen the Auditorrequiresadditional/moreinformation from theClient beforecompleting the audit.

Under

Observation: Thisvalue is chosen whenthe Auditor is still inthe process ofauditing and has not

completed it.




Perform General Ledger review / scrutiny by configuring display.Left side detailshighlighted in reddepict opening /closing difference

and right sidedetails highlightedin red depictbehaviouralchanges

ClickAlt+X:Exceptions

Analysedifference/variancein closing balancesin amount and

percentage.

Click Alt+V:BalanceVariance-

Amount.

F12:Configure-Configure howdetails have to

be displayed inthe feature.



Analytical Procedures

Study behaviour between two different entities, e.g., A Group to GroupLedger to Group, Ledger to Ledger, etc.

Select the requiredinformation togenerate the

comparison report(see image).

Compare the SalesGroup with theIndirect Expenses

Group.

Discuss with theClient on adversevariances and planthe required auditsteps.For example, adecrease in Salesvalue with increasein expenses is not a

good sign.



Pending Documents

Generate pending status of orders, bills and outstanding.Find the numberand value oftrading transactiondetails:

Pending salesand purchaseorders

Goods received

without bills Goods delivered

but not billed Outstandings-

Receivables &Payables

For example,generate thePending PurchaseOrder Summary

to ascertain: Number of

pending POs

Opening value

Value of receipts

Closing value

Plan the audit stepsaccordingly.

Perform the audit othe pending order(e.g. PO).

Select any ordertransaction bypressing theSpacebar.

Click F9: Audittoperform the audit otransaction.

Select the valueunder Audit Statuand enter thedetails under Audit

Note.

Values available forAudit Statusare: Unknown

Audited Need Clarification Under

Observation



Pending Documents

Ascertain the age of the pending orders/bills.Select anytransaction type(e.g. Receivables)under

Outstandings.

Click Receivables.

Click F6: Age wisein ReceivablesSummary(Outstandings)

screento age thereceivables.

Select any ageingmethod (Ageing byBill Date/Ageingby Due Date) in

Ageing Analysisscreen.

Define the ageingranges/periods inCompanyAgeingAlterationscreen.

The receivablesamounts and theiraged details aredefined in the

Outstandingsscreen.

Click Alt+X:Exceptions to list allSundry Creditors withdebit balances

Click Alt+F12Range to filter foronly debtors in orderto generate relevant

ageing report



Statutory Payments

Ascertain statusinformation onstatutory/tax

remittances-

What amount ispayable?

How much ispaid?

What is thebalance payable?

To use this feature,it is necessary thatinitially the various

statutory & taxationfeatures areactivated in F3:StatutoryunderF11:Featuresand

relevant entrieshave been passedin Tally.ERP 9.

Gather key information on Statutory Paymentsfor audit.



Fixed Assets Analysis

Verify information onfixed assets opening balance

additions disposals closing balance number of days for

depreciationcalculation

Aids in preparingdepreciation schedulewith provision toexport this to Excel

Analyse important information relating to fixed assets duringthe year


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Periodic Payments and Receipts

Verify information onpayments/receiptswhich are periodic innature.

E.g. Rents, Salaries,Interest income,telephone bills, etc.

Verify variance interms of amountsand vouchersrelating to

payments/receipts foraudit.

Examine payments that are made periodically anddetect variances.

ClickCtrl+F9:MasterConfigtoconfigure ledgers

as PeriodicLedgers.

Select PeriodicPayments andReceiptsunderMaster

Configurationinthe StatutoryAuditConfigurationscreen.

Select requiredledgers and clickCtrl+ A: Changeto configure them

as Periodic Ledgers.


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Repeated Value Transactions

Verify the repeatedvalues accounted inthe report asconfigured.

Probable duplicate entry of transactionsConfigure the displayof transactions basedon amount range: equal to

greater than lesser than

Sort the transactionsas required.

Click F12:Configure-to configure thereport display.E.g.-Amounts aboveRs.5000 in

ascending order.

Investigate for agiven ledger ofsame transactionvalue how manyinstances arerepeated


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Relative Size Factor (RSF)

Relative Size Factor (RSF) is a forensic tool used by auditors todetect any anomalies in transactions of a ledger account.

Click Relative SizeFactor (RSF) inAudit & Analysis

screen.

A report of the ledgerswith the respectiveRelative Size Factor

(RSF) is displayed inthe Relative SizeFactor (RSF) screen.

Click F4: Grouptoexamine ledgeraccounts to review the

amounts debited.

Select any ledgeraccount (e.g.Electricity Charges)

and examine thetransactions withrespect to RSF.

The RSF factor is theration of the highestand the 2ndhighest

ledger amounts.

The RSF ratio isverified taking intoconsideration the

nature of ledgeraccount and thebusiness activity.

Click F9: Audittoperform the audit ofthe transaction.

Select the requiredvalues for AuditStatusand Audit

Note.

The values availablefor Audit Statusare: Unknown

Audited Need Clarification Under Observation


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Auditing/VouchingPerform steps ofVoucher verification,Sampling, Forex,Payroll and MSMEaudits using the Audit

& Analysisfeature.

View the number oftransactions/vouchersaudited under:

Total Audited Under Observation Need Clarification Clarified Altered

Auditing status:TotalThe totalnumber of vouchersunder audit for theyear.

Audited The numbeof vouchers audited.Under Observation The number ofvouchers under

observation.

Need ClarificationThe number ofvouchers sent to theClient for Clarification.Clarified(To be re-

audited) Thenumber of vouchersclarified by the Clientto the Auditor and hasto be re-audited.

Altered(To be re-audited)The numbeof vouchers which havbeen altered by theClient after audit andhas to be re-audited.


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Verification of Vouchers

Select vouchers byany samplingmethod in theSampling Detailsscreen.

For example, selectAll Vouchersunder SamplingMethodsandreturn to the

previous screen.

Note: Samplingcan be 100%/based on

Group(s)/Ledger(s)

Select any Group(e.g. Fixed Assets)for sampling bypressing Spacebar.Click Alt + S:

SamplingConfigtoselect a sample.

Verify vouchersselected usingdifferent methodsfor audit.

Select therequired Group forverification ofvouchers in theVerification ofVouchersscreen.

Click Ctrl+ A:Accept.

The details ofsampled vouchers

are displayedunder SampledVouchersin theVerification ofVouchersscreen.


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Verification of Vouchers

View sampled transactions and voucher types audited.

View details ofsampled vouchers

Click F7:Show

Sampled.

View the details ofvoucher types andthe auditedvouchers.

Click Ctrl + V:VchType Audit.


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Related Party Transactions

These aretransactionsbetween theclient and other

parties whereeither has someinterest/stake.

Click Ctrl+ F9:Master Config.

Configure therelated partyledgers byconsulting

the client.

Select requiredledger Account(s).

Click F9: Update

to configure theledgers as relatedparties.

Select any ledgerDrill down tovoucher level andselect for audit

the transaction.

Select the required related party ledger for audit.Perform the auditof the transaction.

Select the value

under AuditStatusand enterappropriateremarks underAudit Note.

You canalternativelyconfigure theledger accounts

as related partythrough ledgercreation underMasters menu.

Configure thedisplay detailsunder OtherInformation in

LedgerAlterationscreen.

Click F12:Configure.Select Yesagainst UseOtherInformationfor Ledger

Accounts.

Select Related Party Transactions.According toAccountingStandards, AS-18, a party is

considered asrelated, if it hasthe ability tocontrol the otherparty or exercise

significantinfluence over theother in makingfinancial and/oroperatingdecisions.


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Forex Transactions

Verify the exchange rates used for foreign currenciestransactions.Select anyVoucher Type(e.g. Payment)by moving cursorto the right underForex Vouchersand drill down tothe voucher level.

Note: To use FEtransactionsfeature, activatethe multi currencyoption in

F11:Features.

Perform audit of anytransaction/voucherClick F9: Audit.

Select Forex Transactions.


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Micro, Small & Medium Enterprise (MSME) Txns

Buyers of goodsand services fromMSME have to payinterest at 3 times

the bank rate forlate payments.

Configure selectionof MSME ledgersby discussing withthe client.

Click Ctrl+F9:Master Config toselect the ledgersfor audit.

Verify the timely payments to micro, small and medium enterprises(MSME) for goods and services.Select Micro, Small & Medium Enterprise (MSME) Transactions.


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Micro, Small & Medium Enterprise (MSME) Txns

Display age wise amounts due to MSME parties.Generate ageinganalysis foroutstanding billsof MSME.

ClickF6: Agewise.

Generate ageingreport by bill ordue dates.

Define the ageingperiods to displaythe report.


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Salary / Wages PaymentsAudit the employee headcount and their salaries details forthe year.

Headcountdetails: Opening

number

New joiners Resigned/Retir

ed Closing

number

Salary details: Gross

earnings Deductions Net earning

Place the cursoron the right sideof the reportunder

Earnings,Deductions,Net Salary.

Drill down to

display themonthlyemployeeearnings.

Select a salarytransaction foraudit.

Press spacebarand click F9:Audit.

The MonthlySummary ofSalaries/Wagesis displayed.

Select Salary / Wages Payments.To use thisfeature, youhave to activatethe Payroll

option indefaultTally.ERP 9 andaccount thepayroll

transactions.


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Salary / Wages Payments

Generate report on movements in Headcount based on Officeand Dept.

Place the cursoron the right sideunder HeadCount.

Drill down todisplay theheadcount detailsfor Offices &

Depts.

Filter data todisplay headcountdetails for aselected Officeand Dept.Click Ctrl+ F7:EmployeeFilters.

Configure the display of details in Salary/Wages Payments.

Configure displayof details.ClickF12:Configure.


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Audit Journals

Use Audit Journals to close Books of Accounts forpreparing final accounts as per Sch VI ofCompanies Act.

Pass Entries for: Appropriation-record entries such as Dividend,

Dividend Tax, Reserve & Surplus Depreciation- record Depreciation entries

Set up provisions for: Interest-pass provisional entries for interest Tax-pass provisional entries for tax

Finalisation- entries passed in P&L before interest,depreciation and Tax

Others- entries passed by client affecting P&L A/c

AppropriationsExample:Appropriationof net profit

for Dividenddistribution.

OthersVerify the entries passed by Client which affectthe P&L A/c.

Click AuditJournals underStatutoryAudit in Audit& Compliance

to display theAudit JournalSummaryscreen.

These entriescan beexported forimport intoclient data

Click F7: AuditJrnl to displaythe AccountingVoucher

Creationscreen.

Select requiredappropriationvalue underList of

Appropriationsto pass thefinal entry.


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Financial Statements

Perform audit of the two main financial statements:1. Balance Sheet2. Profit & Loss A/c

Advantages the Auditor Edition offers:

Generate final accounts statements by click of button

Define schedule numbers (numeric, alpha-numeric,roman)

Regroup group/ledgers as per your requirements(regrouping does not affect the groupings in defaultTally.ERP 9)

Aids in preparing Schedule VI Balance Sheet andProfit & Loss A/c by exporting to Excel


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Schedule VI -Balance Sheet

Define numbers forthe accountingschedules as peryour requirements.

Click F9: Sch.No.tonumber/renumberSchedules.

Define Sch No for account heads.


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Schedule VI -Balance Sheet

Move Tally ledgers/Groups from one Schedule VI Group to anotherRestore default settings.Drill down and movea ledger fromSecured LoanstoUnsecured Loans.

Note: You can onlymove a defaultgroup/ledgercreated in Tally from

one Schedule VIGroupto another.

Click Ctrl+Enter:Config: Select aledger underSecured Loansto

move toUnsecured Loans.

Click F10:Restore Deftorestore originalsettings.

Select UnsecuredLoansunder List ofGroups and accept.

The ScheduleSummaryforSecured LoansGroup after the

movement.

Click ScheduleSummaryofUnsecuredLoansto view the

movement of theledger accountfrom SecuredLoans.

Click YestoRestoreDefault?

Click any key torestore defaultsettings.


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Schedule-VI Profit & Loss A/c

Click F9:Sch.No.Define/Renumberschedules as peryour

requirements.

Define Sch No for account heads.


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Statutory Audit in Tally.ERP 9

Thank you

statutory audit presentation

Documents

underareas of audit

agendastatutory audit

statutory audit menu

audit compliance menuwhen

audit compliance underaudit

audit compliance menuopen

audit journals aids

tally solutions