A Comprehensive Guide: What Documentation is Required for Audits Under Ind AS?

The transition from Indian GAAP to Indian Accounting Standards (Ind AS) has marked a significant shift in India’s financial reporting landscape, bringing it in line with global standards. While this move enhances transparency and comparability, it also introduces a new layer of complexity to annual audits. A smooth, efficient audit process now, more than ever, hinges on meticulous record-keeping and organized preparation. This guide provides a clear and actionable overview of the documentation for audits under Ind AS, ensuring your business is fully prepared. Understanding the extensive documentation for audits under Ind AS India is crucial for compliance and avoiding potential roadblocks with your auditors. While Ind AS primarily affects certain specified companies, understanding the rigorous documentation needed for Ind AS compliance in India is a valuable practice for any growing business aiming for robust financial governance and future readiness, and is a core part of any effective Strategies for Tax Compliance and Audit Preparedness.

First Things First: What is Ind AS and Who Needs to Comply?

Before diving into the extensive list of documents, it’s essential to understand the context. This section clarifies the core Ind AS audit requirements India. Ind AS, or Indian Accounting Standards, are a set of accounting principles converged with the International Financial Reporting Standards (IFRS). They are designed to make financial statements from Indian companies understandable and comparable across the globe.

However, not every company in India needs to follow Ind AS. The Ministry of Corporate Affairs (MCA) has laid out specific applicability criteria. In simple terms, compliance is mandatory for larger and listed entities. If your business falls into any of the following categories, you must prepare your financial statements as per Ind AS:

Listed Companies: All companies whose equity or debt securities are listed on any stock exchange in India.
Unlisted Companies: Unlisted companies having a net worth of ₹250 crore or more.
Holding, Subsidiary, Joint Venture, or Associate Companies: If a company is a holding, subsidiary, JV, or associate of a company that meets the above criteria, it must also comply with Ind AS.

For official notifications and detailed applicability rules, you can refer to the Ministry of Corporate Affairs (MCA) website.

The Core Principle: Understanding the Effect of Ind AS on Audit Documentation

One of the most common questions is why Ind AS demands so much more paperwork than the old Indian GAAP. The answer lies in a fundamental shift in philosophy. While Indian GAAP was largely rules-based, providing specific instructions for transactions, Ind AS is principle-based. This means it provides a broader framework, requiring management to use judgment to reflect the true economic substance of transactions. This reliance on judgment is the primary reason for the significant effect of Ind AS on audit documentation.

Auditors need to see how and why management arrived at certain conclusions. This requires extensive supporting evidence for key areas, including:

Fair Value Accounting: Ind AS requires many assets and liabilities to be measured at fair value. This isn’t just a number; it requires comprehensive documentation like third-party valuation reports, detailed methodologies, key assumptions used (e.g., discount rates, growth rates), and sensitivity analysis.
Substance over Form: Auditors need to verify that the accounting treatment reflects the economic reality of a transaction, not just its legal form. For example, a complex sales agreement might need supporting documents to justify when control of the goods or services was truly transferred to the customer.
Management Estimates & Judgements: This is a critical area. Any significant estimate, such as the provision for doubtful debts, impairment of assets, or obligations for employee benefits, must be backed by detailed memos. These memos should outline the basis of the estimate, the data used, the calculations performed, and the rationale behind the final figure.

The Ultimate Ind AS Audit Documentation Checklist India

To navigate the audit process smoothly, having a structured checklist is non-negotiable. Here is a comprehensive breakdown of the necessary documents for audits Ind AS India, categorized for clarity.

1. Core Financial and General Ledger Records

This forms the bedrock of your audit file. The legal mandate for the Maintenance of Books of Accounts: Section 128 Explained underscores the importance of these records. These documents provide the primary overview of the company’s financial activities for the period.

Trial Balance, General Ledger, and Subsidiary Ledgers: The complete general ledger for the audit period, along with subsidiary ledgers for debtors, creditors, fixed assets, etc.
Statutory Financial Statements: The draft set of financial statements, including the Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, and the Statement of Changes in Equity.
Notes to Accounts: Detailed notes to accounts with all disclosures mandated by Ind AS, including accounting policies, related party transactions, and segment reporting.
Consolidated Financial Statements: If applicable, the consolidated financials along with all supporting workings, financial statements of subsidiaries, associates, and joint ventures.

2. Asset and Liability Documentation

Ind AS has specific, detailed standards for various assets and liabilities, each requiring its own set of supporting documents.

Property, Plant, and Equipment (Ind AS 16): A detailed fixed asset register with additions, disposals, and depreciation calculations. Also include physical verification reports, invoices for new asset purchases, and professional valuation reports if any assets have been revalued.
Leases (Ind AS 116): Copies of all lease agreements. You must provide detailed workings for the calculation of the Right-of-Use (ROU) asset and the corresponding lease liability, including the discount rate used.
Financial Instruments (Ind AS 109): A complete register of all investments, loan agreements (both given and taken), derivative contracts, and thorough workings for the fair valuation of all financial assets and liabilities.
Inventories (Ind AS 2): Detailed inventory records (stock registers), the company’s inventory valuation policy, reports from physical stock-takes, and calculations for any write-downs to Net Realizable Value (NRV).

3. Revenue, Expenses, and Equity Records

These documents justify the numbers that appear in your Statement of Profit and Loss and Statement of Changes in Equity.

Revenue from Contracts with Customers (Ind AS 115): This is a high-focus area. You’ll need copies of major customer contracts, internal memos identifying distinct performance obligations, workings for how the transaction price was allocated, and justification for the timing of revenue recognition.
Employee Benefits (Ind AS 19): Actuarial valuation reports for defined benefit obligations like gratuity and leave encashment. Employment contracts for key managerial personnel are also required.
Share-Based Payments (Ind AS 102): The official ESOP or other share-based payment schemes, details of grants made during the year, and the fair valuation workings (e.g., Black-Scholes model) used to calculate the expense.
Statement of Changes in Equity: All supporting documents for transactions affecting equity, such as board resolutions for dividend declarations, share issuance documents, and buy-back-related paperwork.

4. Compliance Documentation for Ind AS Audits

Auditors also verify the company’s adherence to various laws and regulations. Having this compliance documentation for Ind AS audits ready is crucial.

Statutory Compliance: Filed GST returns (GSTR-1, GSTR-3B) and reconciliations. Filed TDS returns and proofs of payment. All ROC filings, including the annual return (MGT-7) and financial statements (AOC-4).
Corporate Governance: Minutes of Board Meetings, Audit Committee Meetings, and Annual/Extra-ordinary General Meetings, which often include resolutions on the Appointment and Rotation of Auditors: Key Provisions in Section 139. Updated statutory registers (e.g., Register of Members, Register of Directors).
Tax Records: Filed Income Tax Returns, Tax Audit Reports (if applicable), and detailed income tax computations and provisions.

For easy access to compliance portals, you can visit the official GST Portal and the Income Tax Department portal.

How TaxRobo Can Streamline Your Ind AS Audit Preparation

Navigating the complexities of Ind AS can be daunting. The sheer volume of documentation and the need for expert judgment can overwhelm even experienced finance teams. This is where TaxRobo comes in. Our team of experts specializes in accounting, auditing, and compliance services tailored for Indian businesses.

We can help you prepare the necessary documentation for audits under Ind AS by establishing robust accounting processes, ensuring your records are meticulously maintained throughout the year, not just at year-end. We liaise with auditors on your behalf, answer their queries, and ensure that the entire audit process is as seamless and efficient as possible.

Struggling with Ind AS compliance? Contact TaxRobo’s experts today for a seamless audit experience.

Conclusion: Stay Prepared for a Smooth Audit

In conclusion, the key to a successful audit under the new regime is proactive and thorough preparation. The transition to Ind AS requires a mindset shift from simple record-keeping to comprehensive documentation that justifies every significant figure and judgment call in your financial statements. By understanding your applicability, recognizing the principle-based nature of the standards, and using a detailed checklist, you can effectively manage the complexities of providing documentation for audits under Ind AS. Professional guidance can further de-risk the process, ensuring you meet all statutory requirements without stress.

For expert assistance with your Ind AS audit preparation, get in touch with the TaxRobo team.

Frequently Asked Questions (FAQs)

Q1. Does Ind AS apply to all private limited companies in India?

Answer: No. Ind AS has specific applicability criteria based on listing status and net worth. It is mandatory for listed companies and unlisted companies with a net worth of INR 250 crore or more. Small and Medium-sized Companies (SMEs) typically follow the older Accounting Standards (AS) notified by the MCA.

Q2. What is the biggest challenge in gathering documentation for an Ind AS audit compared to the old Indian GAAP?

Answer: The biggest challenge is documenting management’s judgments and estimates. Ind AS is principle-based and requires significant documentation for areas like fair valuation of financial instruments, impairment testing of assets, and complex revenue recognition scenarios, which was far less detailed and prescriptive under the previous rules-based GAAP.

Q3. Are digital records and cloud-based accounting software acceptable for an Ind AS audit?

Answer: Yes, absolutely. Digital records from recognized, cloud-based accounting software are not only accepted but often preferred by auditors. They provide clear audit trails, reduce manual errors, and allow for easier data access and analysis. The key is to ensure the software is compliant and that all supporting documents (like invoices, contracts, and reports) are digitally archived and readily accessible.

Q4. How can a professional firm like TaxRobo help with the Ind AS audit process?

Answer: TaxRobo can provide end-to-end support. We assist by setting up compliant accounting processes from the start, helping you prepare a comprehensive Ind AS audit documentation checklist India, and conducting pre-audit reviews to identify and rectify any gaps. Furthermore, we act as a crucial bridge between your company and the statutory auditors, ensuring clear communication and a smooth, efficient audit process from start to finish.