What should a foreign company expect auditors to perform for Indian audit?

The auditors should perform the following:

• They will verify whether the opening balances have been carried forward correctly from the previous year’s audited financial statements.
• They will examine the purchasing procedures and make sure there is no parasitical employees benefiting at the expense of the company.
• They will compare purchase vouchers with the pertinent taxable invoices received from the seller, and material received notes to confirm whether or not the quantities and amounts match.
• They may verify whether the supporting bills tallied with the journal vouchers and the expenditures relate to the current period.
• They will ascertain that appropriate tax deduction at source was deducted whenever applicable.
• They will have to verify whether these expenses are within the prescribed limits set for the position in question.
• They will verify whether any cash payments have exceeded INR 20,000 (in accordance with regulation Section 40A(3)) and also check for credit balances in cash.
• They will want to reconcile value-added tax returns with purchases and sales, provident fund contributions, professional tax contributions, and employee state insurance contributions.
• They will ascertain RG 23 A Part II/ RG 23 C Part II are aligned with your purchase registers and all the input credits have been recorded correctly.
• They will need to verify the company’s Personal ledger Account register to determine whether payments were through this Account after considering your input credit.
• They will need to complete a Physical Stock Verification to ensure that the physical quantity of goods reconciles with the inventory register.