How would you audit the purchase ledger?

How would you audit the purchase ledger?

The audit of ledgers normally involves the following steps:

1. Internal check.
2. Opening Balances.
3. Postings.
4. Control Accounts.
5. Verification of Personal Account Balances.
6. Verification of Real Accounts.
7. Scrutiny of Individual Accounts.
8. Totals.

How do you perform a ledger scrutiny?

Steps to be followed

1. Open Ledger (In Tally,do Display–Account Books—>Ledger)
2. Check Opening Balance (Whether it is matching with last year Closing Balance Sheet)
3. Check Ledger Group (You can Select Ledger and do Ctrl+Enter in Tally)
4. If it is a Expense Ledger ,
5. If it is an Income Ledger.
6. If it is an Debtor Ledger.

How do you audit ledger accounts?

Notes on Audit of Ledgers – Guidelines to Auditors

1. Scrutinizing Purchase Ledger. Opening balance. List of closing balances. Confirmation of balances.
2. Scrutinizing Sales Ledger. Opening balance. Transfer entries. Writing off as bad debt.
3. Scrutinizing General Ledger.
4. Scrutinizing Main Journal. Opening entries. Closing entries.

Why do we do ledger scrutiny?

Ledger scrutiny is part of audit procedures, like vouching, posting etc. The scrutiny is required in all type of audit whether the same is Internal Audit, Statutory Audit. Ledger scrutiny is to be done for all type of clients whether the same is Pvt Co., Public Ltd, or a concern.

What is done in ledger scrutiny?

8. Fixed Assets Ledger:-

• Check whether Deprecation correctly booked as per Income Tax and companies act.
• Check Current and deferred Tax computation.
• Check Calculation of profit and loss on sales of assets.
• Check Fixed assets register if prepared to ensure it matches with amount in tally of Fixed assets.

What makes a good purchase ledger?

Purchase ledger qualifications, skills and experience Impeccable accuracy. Knowledge of accounting software. Excellent time-keeping. Ability to build good working relationships.

How do you scrutinize a trial balance?

How to Analyze Trial Balance in the Steps of the Accounting Cycle

1. Generate a trial balance report from the ledger for the accounting period after posting your closing entries.
2. Verify that the totals of the debit and credit columns at the end of the trial balance report agree.

How do you scrutinize a balance sheet?

The strength of a company’s balance sheet can be evaluated by three broad categories of investment-quality measurements: working capital, or short-term liquidity, asset performance, and capitalization structure. Capitalization structure is the amount of debt versus equity that a company has on its balance sheet.

What are the steps for vouching sales ledger?

Checking of posting in ledger account from subsidiary book. Checking of calculations. Reviewing truthfulness of debtor balances in customer account. Reviewing of Internal Control System.

What is impersonal ledger?

Impersonal ledgers are also called General Ledgers or Nominal Ledgers. They are of two types such as Nominal Accounts and Real Accounts. Nominal accounts are related to Trading and Profit A Loss Accounts whereas real accounts record assets. The transactions in the Impersonal Ledger relate to Profit and Loss Account.

What is GL review?

General Ledger Review is the process of analyzing your department’s ledger transactions to provide reasonable assurance that the charges and credits are valid. In addition, the reviewer verifies that transactions are appropriate and that they are compliant with all applicable policies and regulations.

What is finalization account?

Finalization of account means check and reconciled books of accounts is correct, perfect and accurate. Normally, books of account finalize at the end of the year. But best practice is check and reconcile accounts periodically i.e. monthly or quarterly.

What is the purpose of Ledger scrutiny in audit?

Ledger scrutiny is part of audit procedures, like vouching, posting etc.The scrutiny is required in all type of audit whether the same is Internal Audit, Statutory Audit. Ledger scrutiny is to be done for all type of clients whether the same is Pvt Co., Public Ltd, or a concern.

How to check Ledger Group on balance sheet?

Note:-Opening Balance will show only for Ledgers of Different Assets and Liabilities of Balance Sheet and not Profit and Loss A/c 3. Check Ledger Group (You can Select Ledger and do Ctrl+Enter in Tally) Ensure that it is in correct head.You can refer Tally Ledger List for this 5. If it is an Income Ledger We use Dep.

How are opening and closing balances of ledger accounts reconciled?

The opening and closing balance in a particular ledger account should be reconciled to find out that the balance includes only entries pertain to the said account and each and a very amount in the balance is identifiable with the said account.

Which is the correct side of the DRS Ledger?

The Drs. Ledger of a particular customer shows opening & closing bal. with outstanding ascertainable against specific sales invoice, debt or credit note. The balance outstanding is on the correct side of the account for which the same is maintained.