Chosen theme: Checklist for Business Audit Preparation in India. Welcome! If audits feel intimidating, you’re not alone. Last year, a founder in Pune avoided penalties and sleepless nights by following a practical, timely checklist—just like the one we’re about to explore. Read on, ask questions in the comments, and subscribe for ongoing, India-specific audit preparation insights.
Plan the Audit Journey and Freeze the Timeline
Map the Indian financial year and key filing dates
Anchor your plan to India’s April–March year, then back-calculate from board approval, ROC filing, and income tax deadlines. Build buffers for inventory counts and external confirmations. A simple calendar saved one Delhi startup from last-minute chaos and helped them close exactly on the date the board expected.
Assemble the audit squad and assign owners
Nominate owners for GST, TDS, payroll, fixed assets, receivables, and legal matters, with one coordinator tracking the checklist. Define response SLAs for audit queries. A Bengaluru CFO once told us that named owners reduced email loops by half and cut audit closure time by nearly two weeks.
Build a clean data room checklist
Create folder structures for trial balance, ledgers, reconciliations, contracts, litigations, and board minutes, with read-only controls. Version every schedule and freeze it after sign-off. When a Pune team standardized their data room, auditors stopped chasing duplicates and the first submission acceptance rate jumped dramatically.
Prepare Core Financials and Ledgers
Trial balance and ledger hygiene
Lock the trial balance, tie every GL to the FS line item, and clear suspense and old unreconciled entries. Review expense capitalization, provisions, and accruals for reasonableness. One Chennai controller found a misposted vendor advance while cleaning the TB, preventing a material classification error during the audit walkthrough.
Bank reconciliations and cash controls
Ensure monthly bank reconciliations are complete, independently reviewed, and supported by statements and proof of outstanding items. Investigate stale cheques and unusual reconciling differences. A Kolkata team embedded a maker–checker control here and eliminated a repetitive posting mistake that had lingered across three quarters.
Revenue, receivables, and GST tie-outs
Reconcile revenue between books, invoices, and e-invoicing/GST returns; match receivables aging with confirmations and subsequent receipts. Tie output tax to GSTR-1 and GSTR-3B. A Bengaluru startup recovered blocked ITC after reconciling invoice mismatches with GSTR-2B, an action triggered by their audit preparation checklist.
Statutory Compliance Must-Haves in India
Prepare reconciliations of GSTR-1 to books, GSTR-3B to tax payments, and ITC to GSTR-2B. Resolve mismatches, blocked credits, and place of supply issues. Document e-invoice applicability thresholds and e-way bill controls. This step routinely cuts audit queries and avoids unpleasant surprises during statutory reporting.
Plan counts before year-end, freeze movements, and document procedures, results, and adjustments. Link count sheets to stock ledgers, and reconcile goods-in-transit. An Ahmedabad warehouse manager who rehearsed count day avoided overstatement from unrecorded returns, a win credited to disciplined checklist rehearsal.
Align the fixed asset register with physical verification, capitalization dates, useful lives under Schedule II or Ind AS 16, and impairment indicators. Reconcile CWIP and AUC movements. A Hyderabad engineer uncovered an idle asset during verification and initiated a disposal plan before it became an audit issue.
Inventory all lease contracts, compute ROU assets and lease liabilities, and reconcile discount rates and remeasurements. Tie rental expense reclassifications to support. A Gurgaon finance lead moved expiring leases into a renewal tracker, preventing missed remeasurement entries that previously triggered year-end adjustments.
Tax Audit, Direct Tax, and Cross-Border Considerations
Compile tax audit schedules including depreciation, related party transactions, turnover classification, and GST-based expenditure mapping for clause 44. Validate thresholds and presumptive regimes. One Indore firm prepared clause 44 early and avoided a last-minute all-nighter that previously derailed their filing calendar.
Tax Audit, Direct Tax, and Cross-Border Considerations
Identify international and specified domestic transactions, prepare intercompany agreements, benchmark margins, and obtain Form 3CEB on time. Keep evidence of FAR analysis. A Noida team that maintained contemporaneous TP files faced a noticeably shorter audit review and fewer probing questions on pricing rationale.
Controls, Policies, and Risk Management
SOPs, segregation of duties, and maker–checker
Map key processes—order-to-cash, procure-to-pay, hire-to-retire—and ensure approval workflows are documented and evidenced. Demonstrate segregation with system roles and manual overrides tracked. A Surat company solved a recurring posting issue by explicitly adding a second-level approval for vendor master changes.
IT controls and MCA audit trail requirement
Confirm your accounting software retains an audit trail with edit logs, as mandated for companies, and restricts backdated changes. Export change histories for auditors. One Pune startup enabled immutable logs and finally stopped debating who edited a critical JV on the busiest day of close.
Fraud risk, related parties, and whistleblowing
Document fraud risk assessments, related party identification, pricing approvals, and a working whistleblowing channel. Reconcile disclosures to ledgers and minutes. A Lucknow board audit committee improved oversight by funneling hotline triage into a monthly dashboard reviewed alongside the audit preparation checklist.
Disclosures, Notes, and Final Sign-off
Collect lawyer letters, summarize disputes, and quantify exposures with management’s assessment. Tie bank guarantees and LC limits to confirmations. An NCR company that refreshed this schedule monthly found an old indemnity clause before it surprised the team during the final partner review.
Disclosures, Notes, and Final Sign-off
Document cash flow forecasts, covenant compliance, and funding plans. Track subsequent events with a dated log and ensure appropriate adjustments or disclosures. Obtain board approval on time. A Coimbatore founder kept a living checklist for covenants, avoiding a near miss that could have triggered a qualification.