Main features on Ledger scrutiny

Steps to be followed: –

1. Take last year audited balance sheet from client and open Trial balance of current year in tally software, then check that last year closing balances in audited balance sheet is matched with current year opening balances in tally software (Trail balance).

Note:- Opening balance will show only for ledgers of Different Assets and Liabilities of balance sheet not profit and loss A/C

2. After that check Ledger group in tally software( for this use Ctr+Enter in Tally), while creating ledgers in Tally, we all face the problem of putting ledger in correct head. Here list of ledger under which group:-

Group name Ledger name
Purchase Accounts All type of Purchase like Purchase Local 12%, Purchase Interstate 12% etc.
Sales Accounts All type of sales like Sales Local 12%, Sales Interstate 12% etc.
Duties and TAXES All Type of Taxes like Input GST, Out put GST, Tds payable, income Tax etc.
Direct expenses All expenses which appear in Trading A/c(except Purchase)
Indirect expenses All expenses which appear in Profit and loss A/c
Indirect Income All indirect Income like Discount received, Interest on Investment etc.
Already created in Tally software Only 2 accounts already created like cash, Profit and loss account
Bank Account All Bank current account , all bank FD account ( personal savings a/c and FD not recorded
Deposite a/c All type of deposite like Security deposite, electricity deposite, Rent deposite etc.
Capital a/c All type of capital a/c like share capital, drawings, etc.
Current assets All prepaid, Receivables, accrued, GST Input credit, etc.
Current liablities GST PAYABLE, ALL PAYABLES, OUTSTANDINS. Etc.
Loan and Advances Advance to supplier, Loan given to any party, relatives or others
Sundry Creditors Any party from whom Goods purchased or bill of expenses received
Loan and Liability Loan from bank, Loans from outside party, Debentures a/c, Secured and unsecured loan
Fixed assets All assets on which Depreciation has to be charged
Bank OCC Cash credit limit, taken from bank
Bank OD OD taken from bank
Cash in hand Imnprest a/c, Petty cash, cash kept with employee
Invest ments All types of investments like Investment in shares, Investment in Bonds, Long and short term investment
Stock in Hand Closing stock, opening stock
Suspense A/c Any payment or receipt from party whose name is not mentioned
Sundry debtors Provision for Bad debts, Any party to whom sales made
Provisions All provision except provision for bad debts
Direct Income Any income which related to main course of Business
General reserve Any reserves
Branch division Any branch whose separate accounting has been done

3. In Case of expenses Ledger: –

  • Do F5 columnar in tally (to get Amount and taxes in separate column)
  • Check TDS applicability
  • TDS deducted if TDS applicable
  • If GST is applicable, check whether input GST credit 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 expenses amount, if yes enquire about the reason for the same
  • Check whether cash expenses amount is more than 10000/- , If yes the it would be disallowed to calculate income tax profit
  • Check whether all expenses has been booked month wise

4. In case of sales Ledger:-

  • Do F5 columnar in tally( to get Amount and Taxes in separate column)
  • Check whether Gst is charged as per correct rate
  • Log in GST portal and download GST-1 and GSTR-3B and make reconciliation between GSTR-1, GSTR-3B and Books of accounts(sales). If find any differences, then will talk to concerned person. I have reconciliation sheet, will provide to all
  • Match with last year profit and loss A/c, check whether there is abnormal increase or decrease in sales amount, if yes enquire about the reason for the same

5. In case of Purchase Ledger:-

  • Check whether Gst is charged as per correct rate.
  • Do reconciliation between GSTR-2A , GSTR-3B and Books of accounts Input credit availed. If there are any differences then contact to concerned person to reconcile the same
  • Match with last year profit and loss A/c, check whether there is abnormal increase or decrease in Purchase amount, if yes enquire about the reason for the same

6. Debtors Ledger:-

  • Closing balances of debtors should be debit balance
  • If it is credit balance, it means either Income not booked or Advances not received
  • If Advance Given, change head of party to Advance from customer( current Liability)
  • Check TDS receivable correctly booked and matched with form 26AS
  • Ask for balance confirmation or Party Ledgers and do Debtors reconciliations
  • Do Debtors aging to find long outstanding debtors and book provisions of bad debts

7. Creditors Ledger:-

  • Closing balance should be credit balance
  • If it is debit balance. It means either expenses not booked or advances given
  • Check TDS correctly deducted and match with TDS return
  • Ask for Balance confirmation or Party Ledgers and do creditors reconciliation
  • Do Creditor aging to find long outstanding creditor and write off Amount
  • If Advances given change head of party to loan and advances Assets/ advances from supplier

8. Fixed Assets Ledger:-

  • Check whether Deprecation correctly booked as per Income Tax and companies act.
  • Check Current and deferred Tax computation
  • Check Calculation of profit and loss on sales of assets
  • Check Fixed assets register if prepared to ensure it matches with amount in tally of Fixed assets
  • Obtain written confirmation for Fixed assets kept with third party/ Employees
  • Check whether GST is correctly booked in tally on Fixed assets, If we take input credit on Fixed assets GST amount then Depreciation can not be allowed on this GST amount.

9. Compliances Checking:-

  • Check PF/ ESI entry in tally that it is correctly deducted on month wise and also with deposited Challan
  • Check whether TDS is properly deposited on timely basis if not interest would be applicable as 1% or 1.5% respectively
  • Check whether TDS return is filing on timely basis, If not we have to pay penalty 200/- RS. Per day.
  • Check whether GST Return is properly filing and GST is paid on timely.

10. Others checking:-

  • Check bank statement and verify repayment scheduled of secured loan
  • Check closing balances of bank account
  • Check bank reconciliation statment
  • Section section 185, 186 and section 73 applicability
  • If any employee is left office, kindly check full and final amount with his/her date of resignation.

11. Closing entries: –

  • After completing all things, we will check Net off entry of Input credit without put liability of GST
  • Depreciation should be properly booked
  • Deferred Tax/ liabilities entry as per AS-22/ Inds-12
  • MAT applicability would be check as per section 115JB
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Author Bio

Qualification: CA in Practice
Company: harishankerand co
Location: GHAZIABAD, Uttar Pradesh, IN
Member Since: 05 Feb 2020 | Total Posts: 4
I am CA HARI SHANKER(Practicing CA Since 5 yrs) Consultant all Taxation and Accounting Matters View Full Profile

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