Statutory Audit Checklist 2026: Companies Act & CARO
A comprehensive, standardized execution framework for chartered accountant firms conducting statutory audits under the Companies Act 2013 and CARO 2020. Built to ensure uniform working papers across partner and article teams.
Phase 1: Preliminary & engagement acceptance
Standard engagement controls mandated by ICAI Standards on Auditing (SA 210, SA 220).
Independence & eligibility declaration
Verify Section 141 ceilings, debt limits, and partner rotation compliance before signing appointment acceptance.
Communication with previous auditor
Send mandatory written communication to the retiring auditor in accordance with ICAI Code of Ethics.
Formal engagement letter
Obtain countersigned engagement letter defining audit scope, management responsibility, and fee arrangements.
Materiality benchmark calculation
Document overall and performance materiality thresholds based on revenue, PBT, or total assets as per SA 320.
Phase 2: Substantive audit verification matrix
Key balance sheet and profit & loss verification items to test and document.
| Audit Section | Core Substantive Test | Mandatory Working Paper |
|---|---|---|
| Property, Plant & Equipment | Physical verification report reconciliation & title deed verification | Fixed Asset Register (FAR) reconciliation & impairment testing note |
| Inventory & Stock | Year-end physical count attendance & cut-off testing | Stock count observation sheet & slow-moving valuation analysis |
| Trade Receivables & Payables | External direct balance confirmations (SA 505) & aging schedule | Balance confirmation tracker & MSME interest liability working |
| Cash & Bank Balances | Bank confirmation letters & Bank Reconciliation Statements (BRS) | Independent bank certificate & subsequent clearing verification |
| Borrowings & Finance Costs | Sanction letters, interest rate reset proofs & ROC Charge check | Form CHG-1/CHG-4 filings from MCA portal with loan reconciliations |
| Revenue Recognition | Ind AS 115 / AS 9 performance obligation testing & GST cross-matching | GSTR-9/3B vs turnover reconciliation with sample sales contract audits |
| Statutory Dues & Taxes | TDS, PF, ESIC, GST payments prior to Section 43B due dates | Challan verification sheet & 26AS/AIS reconciliation statement |
Swipe the table sideways to see every column
Phase 3: CARO 2020 clause-by-clause review
Ensuring compliance with the 21 reporting clauses under the Companies (Auditor’s Report) Order, 2020.
Clause (i) - Property, Plant & Equipment & Intangibles
Verify maintenance of proper records, physical verification frequency, benami property proceedings, and revaluation by registered valuer.
Clause (ii) - Inventory & Working Capital Limits
Assess physical count coverage (10% variance rule) and quarterly bank stock statement reconciliations for limits exceeding ₹5 Crores.
Clause (ix) - Default in Borrowings & Loan Utilization
Check defaults in repayment of loans/interest to banks/lenders, willful defaulter declarations, and diversion of short-term funds for long-term purposes.
Clause (xi) - Fraud Reporting & Whistle-Blower Complaints
Review whistle-blower complaints received and ensure Form ADT-4 filings with Central Government where fraud exceeds statutory thresholds.
How CAfirmOS transforms audit management
Move from paper binders and loose spreadsheets to an automated digital audit trial.
Running audits across 20+ corporate clients simultaneously creates enormous risk of missed sampling schedules and uncollected external confirmations. In CAfirmOS, partners can convert this checklist into a standardized assignment template.
Article assistants upload supporting working papers directly to encrypted client folders. AI document analysis scans bank statements and vendor invoices to highlight duplicate payments and GST mismatches automatically.
Partners maintain a live progress dashboard showing completed clauses, open sampling queries, and outstanding balance confirmations across all active audit engagements. See CAfirmOS for Audit Firms
Practice Toolkit & Checklist - Frequently Asked Questions
Straight answers to the questions CA firms ask us most often.
Does this audit checklist comply with the latest NFRA standards?
Yes. The checklist integrates core documentation standards required by the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI) Standards on Auditing.
Can our firm customize these checklist items for specific client industries?
Absolutely. Within CAfirmOS, you can clone the master statutory audit checklist and customize sections for manufacturing, NBFCs, real estate, or software services entities.
How does CAfirmOS help during ICAI Peer Review inspections?
CAfirmOS creates an immutable audit trail. Every working paper upload, partner sign-off, sampling rationale, and timestamp is permanently logged and exportable in standard peer review format.
Explore CAfirmOS
Related pages for CA firms comparing practice management, CRM and compliance automation options.
Purpose-built practice management and audit workflow features.
Secure client document vault with bank-grade encryption.
Automated invoice and statement parsing for sample verification.
Automated statutory calendar for tax and ROC filings.
Run flawless audits with zero compliance oversights
Empower your audit team with structured workflows, AI parsing, and instant partner sign-offs.
