Expenses are high risk area for Any company when comes in terms of Accounting and chances of fetching Quality observations are quit high as compared to other accounting processes. So we are sharing Expense Accounting Audit Checklist for ready reference of you all so must have look and share with your friends too
| Sr. No. | Checks | Yes/No/NA |
| 1 | Internal Controls | |
| 1.1 | Internal Controls Evaluation – Whether Effective or Ineffective? | |
| 2 | Administrative & other expenses | |
| 2.1 | Legal & Professional charges | |
| 2.1.1 | Check the nature of assignment and obtain an assurance as to the reasonableness of the fees paid. | |
| 2.1.2 | Check whether the vouchers are properly authorized. | |
| 2.1.3 | Check whether the legal & professional charges paid to a C.A or an advocate is properly accounted for. | |
| 2.1.4 | Verify whether the TDS has been properly deducted | |
| 2.1.5 | Verify whether the necessary supporting are attached with the expense | |
| 2.1.6 | Check the validity of the expense and ensure that no personal expenses have been charged to revenue account | |
| 2.1.7 | Check the dates, account head, amount of fees paid etc with the corresponding supportings. | |
| 2.2 | Rent Expense | |
| 2.2.1 | Check the terms & conditions of the rent agreement.(for e.g. is it a lease agreement or leave & license agreement,etc). | |
| 2.2.2 | Check whether deposit amount has been given. If yes, whether the entity is entitled to receive interest on the same. Check whether it has been properly accounted for. | |
| 2.2.3 | Check whether municipal taxes of the premises are to borne by the entity. If yes, check whether they are separately accounted for. | |
| 2.2.4 | Check the terms of payment of rent (for e.g. monthly, quarterly, annually) | |
| 2.2.5 | Check whether the vouchers are properly authorized. | |
| 2.2.6 | Check whether the expenses are properly accounted for | |
| 2.2.7 | Verify whether the TDS has been properly deducted | |
| 2.2.8 | Verify whether the necessary documents or supporting are attached with the expenses | |
| 2.2.9 | Check the dates, account head, amount of rent paid etc with the corresponding supportings. | |
| 2.2.10 | Check the validity of the expenses and ensure that no personal expenses have been charged to revenue account | |
| 2.3 | Repairs to Building | |
| 2.3.1 | Check whether the expense incurred is of revenue nature which should be properly accounted for & ensure that no capital expenditure has been made. | |
| 2.3.2 | Check whether the vouchers are properly authorized | |
| 2.3.3 | Verify whether the TDS has been properly deducted | |
| 2.3.4 | Verify whether the necessary supporting are attached with the expense | |
| 2.3.5 | Check the dates, account head, amount paid etc with the corresponding supportings. | |
| 2.3.6 | Check the validity of the expenses and ensure that no personal expenses have been charged to revenue account | |
| 2.4 | Repairs to Computers | |
| 2.4.1 | Check whether the expense incurred is of revenue nature & it is properly accounted for. | |
| 2.4.2 | Check whether the expense incurred is properly authorized & ensure that no unauthorized changes are made to the software of the entity. | |
| 2.4.3 | Check whether the vouchers are properly authorized | |
| 2.4.4 | Verify whether the TDS has been properly deducted | |
| 2.4.5 | Verify whether the necessary supporting are attached with the expense | |
| 2.4.6 | Check the dates, account head, amount paid etc with the corresponding supportings. | |
| 2.4.7 | Check the validity of the expense and ensure that no personal expenses have been debited | |
| 2.5 | Testing Expenses | |
| 2.5.1 | Check what kind of expenses are incurred as testing fees like room coolers, streetlight luminaries, water filter etc. | |
| 2.5.2 | Check whether the expense incurred is of revenue nature & it is properly accounted for. | |
| 2.5.3 | Check whether the vouchers are properly authorized | |
| 2.5.4 | Check whether the expense is properly accounted for | |
| 2.5.5 | Verify whether the TDS has been properly deducted | |
| 2.5.6 | Verify whether the necessary supportings are attached with the expense | |
| 2.5.7 | Check the dates, account head, amount of rent paid etc with the corresponding supportings. | |
| 2.6 | Consultation Charges: | |
| 2.6.1 | Check what kind of expenses are incurred as consultancy charges like management services, retainership fees etc. Check whether they are in line with the current business of the enterprise. | |
| 2.6.2 | Check whether the consultation was in relation to the setting up of a new business, in which case it will have to be added to preliminary expenses. | |
| 2.6.3 | Check that no personal expenses are accounted | |
| 2.6.4 | Check whether consultation charges paid are reasonable & according to the prevailing market conditions. | |
| 2.6.5 | Check whether the vouchers are properly authorized. | |
| 2.6.6 | Check whether the expenses are properly accounted for. | |
| 2.6.7 | Verify whether the TDS has been properly deducted | |
| 2.6.8 | Verify whether the necessary supporting(bills from the consulting agency) are attached with the expense | |
| 2.6.9 | Check the dates, account head, amount of fees paid etc with the corresponding supportings. | |
| 2.6.10 | Check whether the consultation fees paid are to a relative of director, or to his partner, firm etc(i.e. contracts in which directors are interested u/s 297). If yes, check whether provisions of sec 297,299 & 301 are satisfied. Also check for the reasonability of the charges paid as also the terms & conditions of agreement. | |
| 2.7 | Foreign Travelling Expenses | |
| 2.7.1 | Check whether the travel was for the purpose of business. | |
| 2.7.2 | Check the nature of the expenses covered under foreign traveling expenses and verify that the payment has been made in foreign currency. | |
| 2.7.3 | Check the supportings for the expenses claimed to be incurred (e.g. airline tickets, hotel bills, etc.) | |
| 2.7.4 | If supportings are not available, check reasonability of the expense. | |
| 2.7.5 | Check whether the vouchers are properly authorized. | |
| 2.7.6 | Check the actual amount of currency purchased, utilized and refunded for the purpose of disclosure in notes to account. | |
| 2.7.7 | Check for the conversion rates from the advices attached. | |
| 2.7.8 | Check that no personal expenses have been included. | |
| 3 | Selling & Distribution expenses: | |
| 3.1 | C & F Agent’s Charges | |
| 3.1.1 | Check the terms & conditions of the agreements with the c &f agents. | |
| 3.1.2 | Check whether terms & conditions are as per the prevailing market practices. If not, inquire into the reasons for the same. | |
| 3.1.3 | Check whether debit notes have been received from the agents. | |
| 3.1.4 | Check whether the commission has been properly calculated according to the realized value of the contract. | |
| 3.1.5 | Check whether the vouchers are properly authorized. | |
| 3.1.6 | Check whether the expenses are properly accounted for (i.e. check whether the agent’s charges are not added to cost of purchase or deducted from sales.) | |
| 3.1.7 | Verify whether the TDS has been properly deducted. | |
| 3.1.8 | Verify whether the necessary supportings are attached with the expenses. | |
| 3.1.9 | Verify the date, commission amount, name of the agent with the corresponding purchase/sale order to check that it has not been posted to the wrong agent’s account. | |
| 3.1.10 | Check if the c &f expense incurred is within the period of agreement. | |
| 3.1.11 | Check the dates, account head, amount of commission paid etc with the corresponding supportings. | |
| 3.1.12 | Check whether the rate of commission is constant for an agent. If there are deviations, inquire into the reasons for the same. | |
| 3.1.13 | Check for any outstanding commission charges & verify whether they are properly accounted for. | |
| 3.2 | Market Survey & Research Expenses | |
| 3.2.1 | Check the nature of the expense incurred. (For e.g. charges paid for census study, market survey & research expenditure incurred on products) Check whether they are in line with the current business of the enterprise. | |
| 3.2.2 | Check whether the expense was in relation to the setting up of a new business or for the launch of a new product, in which case it will have to be added to preliminary expenses. | |
| 3.2.3 | Check whether the vouchers are properly authorized | |
| 3.2.4 | Check whether the expense is properly accounted for | |
| 3.2.5 | Verify whether the TDS has been properly deducted | |
| 3.2.6 | Verify whether the necessary supportings are attached with the expenses | |
| 3.2.7 | Check the dates, account head, amount of fees paid etc with the corresponding supportings. | |
| 3.2.8 | Check the validity of the expense and ensure that no personal expenses have been charged to revenue account | |
| 3.3 | Promotional Expenses | |
| 3.3.1 | Check the nature of expense incurred.(for e.g. sales promotional exp like marketing exp, advertising exp, distribution exp etc) Check whether they are in line with the current business of the enterprise. | |
| 3.3.2 | Check whether the expense was in relation to the setting up of a new business or for the launch of a new product, in which case it will have to be added to preliminary expenses | |
| 3.3.3 | Check whether the vouchers are properly authorized | |
| 3.3.4 | Check whether the expense are properly accounted for | |
| 3.3.5 | Verify whether the TDS has been properly deducted | |
| 3.3.6 | Verify whether the necessary supporting are attached with the expense | |
| 3.3.7 | Check the dates, account head, amount of fees paid etc with the corresponding supportings. | |
| 3.3.8 | Check the validity of the expense and ensure that no personal expenses have been charged to revenue account | |
| 4 | Analytical review | |
| 5 | Any other additional procedures followed during audit. | |
| 6 | Disclosure requirements as per Schedule VI of the Companies Act,2013 |