At N RAJARAMAN AND ASSOCIATES, we believe that audits are much more than just a regulatory necessity. They are powerful tools for gaining insights into your operations, enhancing transparency, mitigating risks, and building trust with stakeholders. Our comprehensive audit and assurance services go beyond mere compliance, offering a deep dive into your financial health and operational efficiency.

This blog explores various types of professional audits – GST, NGOs, Income Tax, Stock, Statutory, and Banks – detailing how they are conducted, the documentation required, specific forms, and who is responsible for conducting them.

1. Goods and Services Tax (GST) Annual Return and Reconciliation (GSTR-9 & GSTR-9C)

GST compliance involves not just monthly/quarterly filings but also annual reconciliation. GSTR-9 is the annual return, while GSTR-9C is a reconciliation statement that bridges the gap between your annual return (GSTR-9) and your audited financial statements.

How it's Conducted (Assessee's Responsibility):

• GSTR-9 (Annual Return): This is a consolidation of all the monthly/quarterly returns (GSTR-1 and GSTR-3B) filed during the financial year. The taxpayer compiles details of outward and inward supplies, ITC availed and reversed, and tax paid under various heads. It requires careful reconciliation of data from your internal books of accounts with the details populated from your GST returns.
• GSTR-9C (Reconciliation Statement): This form acts as a reconciliation between the figures declared in the GSTR-9 and the figures as per the taxpayer's audited annual financial statements. The taxpayer needs to identify and report any differences in turnover, tax paid, and Input Tax Credit (ITC) between their GSTR-9 and their audited books, along with reasons for such differences. Any additional tax liability identified during this reconciliation must be paid via DRC-03.

Documentation Required for GSTR-9 & GSTR-9C:

• Financial Statements: Audited Balance Sheet, Profit & Loss Account, and Cash Flow Statement (if applicable) for the relevant financial year.
• GST Returns: All GSTR-1, GSTR-3B, and GSTR-2A/2B (or auto-drafted statement) for the financial year.
• Books of Accounts: Ledgers (Sales, Purchase, ITC, Expense, Bank, Cash), Trial Balance.
• Tax Invoices, Debit/Credit Notes: For both outward and inward supplies.
• E-way Bills: If applicable.
• Input Tax Credit Register: Detailed records of ITC availed, utilized, and reversed.
• HSN/SAC Summary: Categorized details of goods and services as per HSN/SAC codes.
• Details of Amendments: Any amendments made to previous GST returns.
• Other relevant records: Such as those for advances, unbilled revenue, or non-GST supplies.

Forms:

• GSTR-9: The main Annual Return form.
• GSTR-9C: The Reconciliation Statement.

Who is Liable to Conduct and Certify:

• GSTR-9:
  • Mandatory for all regular registered taxpayers whose aggregate annual turnover exceeds ₹2 crore in a financial year.
  • It is optional for businesses with an aggregate annual turnover up to ₹2 crore for specific financial years (this exemption is often notified by the government year-on-year, so always check the latest notifications, e.g., for FY 2023-24, it was optional for those up to ₹2 crore).
  • It is filed by the assessee (taxpayer) themselves.
  • Exempted Categories from GSTR-9: Casual taxable persons, Input Service Distributors (ISD), Non-resident taxable persons, persons paying TDS under Section 51 or collecting TCS under Section 52, and taxpayers opting for the Composition Scheme (they file GSTR-9A).
• GSTR-9C:
  • Mandatory for registered taxpayers whose aggregate annual turnover exceeds ₹5 crore in a financial year.
  • Since August 1, 2021, the requirement for certification by a Chartered Accountant or Cost Accountant has been removed. GSTR-9C must now be self-certified by the assessee (taxpayer) themselves.
  • Exempted Categories from GSTR-9C: Those not required to file GSTR-9, and registered persons whose aggregate turnover is less than or equal to ₹5 crore.

Key Due Dates (FY 2024-25 / AY 2025-26):

• GSTR-9 and GSTR-9C: December 31, 2025 (for Financial Year 2024-25).

Note: Always refer to the latest notifications from the GST Council and CBIC for any changes or extensions to these dates and applicability thresholds. Penalties apply for late filing. While GSTR-9C is now self-certified, the complexity of reconciliation often warrants professional assistance from a CA to ensure accuracy and avoid future departmental discrepancies.

2. NGO Audit

Audits for Non-Governmental Organizations (NGOs), including Trusts, Societies, and Section 8 Companies, are crucial for transparency, accountability, and maintaining donor trust, especially concerning funds received (including foreign contributions).

How it's Conducted:

• Statutory Audit: Mandatory for most NGOs, similar to companies, to ensure financial statements present a true and fair view. The auditor examines financial records, internal controls, and compliance with the NGO's objectives and relevant laws (e.g., Societies Registration Act, Indian Trusts Act, Companies Act, FCRA).
• Income Tax Audit: Mandatory if income exceeds the basic exemption limit or if claiming specific tax exemptions (e.g., 12A/80G registration). The audit focuses on compliance with the Income Tax Act, 1961, particularly regarding application of income for charitable purposes.
• FCRA Audit: Mandatory for NGOs registered under the Foreign Contribution (Regulation) Act, 2010, which receive foreign funding. This audit specifically verifies the utilization of foreign funds as per FCRA regulations.

Documentation Required:

• Trust Deed / Memorandum of Association (MoA) / Articles of Association (AoA) / Bye-laws.
• Registration Certificates (Societies Registration Act, Indian Trusts Act, Companies Act, FCRA, 12A, 80G).
• Books of Accounts (Ledgers, Cash Book, Bank Book, Journal).
• Bank Statements for all accounts (including FCRA account if applicable).
• Receipts and Payment Account, Income and Expenditure Account, Balance Sheet.
• Donor lists and details of donations (domestic and foreign).
• Project reports, funding agreements, utilization certificates.
• Payroll records, expense vouchers, invoices.
• Minutes of Board/Governing Body meetings.
• FCRA Annual Returns (Form FC-4).
• Fixed Asset Register.

Forms:

• Form 10B/10BB: Income Tax Audit Report for charitable/religious trusts or institutions (if applicable).
• Form FC-4: Annual Return under FCRA (for NGOs receiving foreign contributions).
• GSTR-9/9C: If the NGO is registered under GST.
• AOC-4/MGT-7/7A: For Section 8 Companies (as per company compliance).

Who is Liable to Conduct:

• A Chartered Accountant (CA) holding a Certificate of Practice is mandatory to conduct statutory, Income Tax, and FCRA audits for NGOs.

3. Income Tax Audit (Tax Audit)

A tax audit is a mandatory review of a taxpayer's books of accounts to ensure compliance with the provisions of the Income Tax Act, 1961. It is conducted by a Chartered Accountant.

When is it Mandatory (Threshold Limits for FY 2024-25 / AY 2025-26):

• Businesses:
  • Gross receipts/turnover exceeds ₹1 crore.
  • If cash transactions are up to 5% of total gross receipts and payments, the threshold limit is ₹10 crore.
  • For presumptive taxation (Section 44AD/44ADA), if the declared income is less than the prescribed percentage (6% for digital, 8% for cash; 50% for professions) and total income exceeds the basic exemption limit.
• Professions: Gross receipts exceed ₹50 lakhs.

How it's Conducted:

The auditor examines the financial statements, books of accounts, and other relevant documents to verify:

• Proper maintenance of books of accounts.
• Accuracy of income and expenditure.
• Compliance with various provisions of the Income Tax Act (e.g., TDS/TCS, depreciation, related party transactions, applicability of presumptive taxation).
• Reporting of any disallowances or adjustments required under the Act.

Documentation Required:

• Books of Accounts (Cash Book, Bank Book, Ledgers, Journal, Purchase Register, Sales Register).
• Bank Statements.
• Loan documents (if any).
• Purchase and Sales invoices, expense bills/vouchers.
• TDS/TCS challans and returns (Form 26Q, 24Q etc.).
• GST returns and reconciliation (GSTR-3B, GSTR-1, GSTR-2A/2B, GSTR-9).
• Fixed Asset Register and depreciation chart.
• Stock records.
• Agreements, contracts, and other legal documents.
• Previous year's audit reports and Income Tax Returns.

Forms:

• Form 3CA: Audit report for persons whose accounts are already audited under any other law (e.g., Companies Act).
• Form 3CB: Audit report for persons whose accounts are not required to be audited under any other law.
• Form 3CD: Statement of particulars required to be furnished under Section 44AB (annexure to 3CA or 3CB). This is the most crucial part, detailing various clauses related to financial and tax compliance.
• Form 10B/10BB: For Trusts/NGOs, as mentioned above.

Who is Liable to Conduct:

• A Chartered Accountant (CA) holding a Certificate of Practice is the only professional authorized to conduct a Tax Audit under Section 44AB of the Income Tax Act.

4. Stock Audit

A Stock Audit, also known as Inventory Audit, involves the physical verification of inventory and reconciliation with financial records. It is often conducted at the behest of banks or financial institutions providing working capital finance against hypothecation of stock and debtors.

How it's Conducted:

• Physical Verification: The auditor physically counts or verifies a sample of the inventory at the client's premises (warehouses, factories, retail outlets).
• Reconciliation: The physical count is reconciled with the stock records, books of accounts, and loan statements (if applicable).
• Valuation: Assess the valuation of stock based on accounting standards and bank norms.
• Verification of Internal Controls: Review the client's internal controls over inventory management, including receiving, storing, issuing, and dispatching goods.
• Identification of Discrepancies: Identify slow-moving, obsolete, damaged, or excess stock.
• Debtors Verification: In conjunction with stock, auditors often verify debtors (accounts receivable) to assess the quality of current assets.

Documentation Required:

• Stock register / Inventory records (bin cards, stock ledgers).
• Purchase invoices, sales invoices, goods inward/outward registers.
• Production records (for manufacturing units).
• Godown/warehouse registers.
• Audited Financial Statements (Balance Sheet, specifically inventory and debtors).
• Bank statements and loan account statements.
• Debtors' ledger and aging analysis.
• Insurance policies for stock.
• Physical stock verification reports.

Forms:

There are no specific statutory forms for stock audits. The auditor prepares a detailed Stock Audit Report which includes:

• Scope and objectives of the audit.
• Methodology adopted.
• Details of physical verification.
• Discrepancies noted (shortages, excesses, damaged stock, obsolete stock).
• Valuation of stock.
• Observations on internal controls and stock management practices.
• Recommendations for improvement.
• Certification regarding the accuracy and existence of stock and debtors.

Who is Liable to Conduct:

• Chartered Accountants (CAs) are typically appointed by banks or financial institutions to conduct stock audits due to their expertise in financial verification and reporting.

5. Statutory Audit

A Statutory Audit is a legally mandated audit of a company's financial statements to ensure that they provide a "true and fair view" of the company's financial position and performance, in accordance with applicable accounting standards and legal frameworks (primarily the Companies Act, 2013).

How it's Conducted:

• Planning and Risk Assessment: Understanding the client's business, industry, and internal controls to identify areas of high risk.
• Evaluation of Internal Controls: Testing the effectiveness of the company's internal control systems over financial reporting.
• Substantive Procedures: Detailed testing of transactions and balances to verify the accuracy and completeness of financial information. This includes:
  • Vouching of expenses and revenues.
  • Verification of assets and liabilities.
  • Confirmation of balances with third parties (e.g., banks, debtors, creditors).
  • Analytical procedures.
• Compliance Review: Ensuring compliance with the Companies Act, accounting standards (Ind AS / AS), and other relevant laws.
• Reporting: Forming an opinion on the financial statements and issuing an audit report.

Documentation Required:

• Company's Incorporation documents (MoA, AoA).
• Statutory Registers (Register of Members, Directors, Charges, etc.).
• Board Meeting and Annual General Meeting (AGM) Minutes.
• Books of Accounts (Ledgers, Cash Book, Bank Book, etc.).
• Financial Statements (Trial Balance, Balance Sheet, Profit & Loss Account, Cash Flow Statement, Notes to Accounts).
• Bank Statements and Bank Reconciliation Statements.
• Purchase/Sales Registers and Invoices.
• Fixed Asset Register.
• Loan Agreements, Vendor Contracts, Customer Agreements.
• Payroll Records.
• Tax Returns (ITR, GST, TDS).
• Any previous audit reports.

Forms:

• AOC-4: Filing of financial statements with ROC.
• MGT-7/MGT-7A: Filing of Annual Return with ROC.
• ADT-1: Intimation of appointment of Auditor to ROC.
• Statutory Audit Report: The report issued by the auditor, including the auditor's opinion and annexures like CARO (Companies Auditor's Report Order) report if applicable.

Who is Liable to Conduct:

• Only a Chartered Accountant (CA) firm or an individual Chartered Accountant holding a Certificate of Practice, duly appointed by the company, can conduct a Statutory Audit in India. The appointment is made at the AGM and intimated to the ROC via Form ADT-1.

6. Bank Audit

Bank audits involve a detailed examination of the financial records, operations, and compliance of banks with banking regulations, particularly those issued by the Reserve Bank of India (RBI).

Types of Bank Audits:

• Statutory Central Audit: Conducted by CAs appointed by RBI for the head office and significant branches.
• Statutory Branch Audit: Conducted by CAs for individual branches.
• Concurrent Audit: A real-time audit performed by CAs or bank's own staff to ensure operational compliance and identify irregularities immediately.
• Revenue Audit: Focuses on verifying the accuracy and completeness of the bank's income streams.
• IS Audit: Audit of the bank's information systems and IT controls.

How it's Conducted:

• Compliance with RBI Guidelines: Extensive focus on adherence to RBI circulars, master directions, and prudential norms (e.g., NPA recognition, provisioning, KYC/AML norms, capital adequacy).
• Verification of Advances (Loans): Detailed review of loan appraisals, sanctioning, documentation, end-use monitoring, and classification of advances as per RBI guidelines.
• Verification of Deposits: Reconciliation of deposit accounts, adherence to KYC norms, and interest calculations.
• Income and Expenditure Verification: Ensuring proper recognition of interest income, fees, and expenses.
• Treasury Operations Audit: Reviewing investments, foreign exchange transactions, and derivatives.
• Internal Control Evaluation: Assessing the effectiveness of the bank's internal control system.
• Asset Liability Management (ALM) Review: Examining the bank's ALM policies and practices.

Documentation Required:

• RBI circulars and master directions.
• Bank's internal policies, manuals, and standard operating procedures (SOPs).
• Loan files (sanction letters, appraisal reports, security documents, repayment schedules).
• Deposit ledgers and KYC documents.
• Inter-branch reconciliation statements.
• Vouchers for income and expenditure.
• Treasury records, investment portfolios.
• SWIFT messages and foreign exchange transaction records.
• CBS (Core Banking Solution) reports and system audit trails.
• Previous audit reports (internal, concurrent, statutory).

Forms:

There are no specific statutory forms issued by the Income Tax Department for bank audits, but auditors prepare detailed reports, often following templates and guidelines provided by the RBI and ICAI. These reports include:

• Long Form Audit Report (LFAR)
• Branch Audit Report
• Specific reports on revenue leakage, NPA classification, etc.

Who is Liable to Conduct:

• Only Chartered Accountants (CAs) are eligible to conduct bank audits in India, following strict guidelines and appointment procedures prescribed by the RBI and ICAI.

Why Choose Our CA Firm for Your Audit & Assurance Needs?

At N RAJARAMAN AND ASSOCIATES, we pride ourselves on delivering audits that are not just about ticking boxes but about adding tangible value to your organization. Our team of experienced Chartered Accountants offers:

• Expertise Across Sectors: Specialized knowledge in diverse audit areas, including GST, NGOs, Income Tax, Stock, Statutory, and Banks.
• Risk-Based Approach: Identifying and focusing on critical risk areas to provide meaningful insights.
• Regulatory Compliance: Ensuring strict adherence to the latest laws, standards, and guidelines.
• Enhanced Credibility: Providing reliable audit reports that build trust with investors, donors, lenders, and regulatory bodies.
• Process Improvement: Offering valuable recommendations to strengthen internal controls and optimize operations.
• Timely and Efficient Service: Delivering quality audits within stipulated deadlines.

Partner with us to transform your audit process from a mere compliance exercise into a strategic tool for growth and good governance. Contact us today for a consultation!