An audit becomes difficult when accounting is treated as a year-end event. Directors can make the process faster and more useful by preparing throughout the year.
What the annual audit is not
An audit is not a substitute for bookkeeping, management oversight or tax planning. The auditor examines financial information and evidence; the company remains responsible for maintaining the records and preparing reliable accounts.
Records to prepare
- Complete general ledger or bookkeeping records.
- Bank statements and reconciliations for all accounts.
- Sales invoices and collection records.
- Purchase bills, expense vouchers and contracts.
- Payroll and employee-related records.
- PAN/VAT/TDS and income-tax filings applicable to the business.
- Fixed-asset register and major purchase documentation.
- Loan agreements and interest calculations.
- Share capital, shareholder current accounts and board/shareholder minutes.
Issues that repeatedly delay audits
Unreconciled bank accounts, cash balances that do not make commercial sense, missing bills, undocumented shareholder withdrawals, unrecorded loans and differences between tax returns and the accounting system are common causes of delay.
A monthly close is cheaper than annual reconstruction
Even a small business should reconcile bank accounts, review receivables/payables and file supporting documents every month. This reduces year-end professional fees and gives management better information during the year.
Director’s checklist before sending the file
- Confirm every bank account has been recorded.
- Explain unusual cash or shareholder balances.
- Collect missing invoices.
- Reconcile tax filings to the books.
- Identify related-party transactions.
- List pending disputes, guarantees or major commitments.
Frequently asked questions
Do companies in Nepal need an annual audit?
OCR’s post-incorporation guidance states that companies must appoint an auditor to audit annual transactions, subject to the Companies Act and applicable rules.
What should I give the auditor?
The exact list depends on the company, but commonly includes bank statements, sales and purchase records, tax filings, payroll, fixed assets, loans, shareholder transactions, contracts and supporting documents.
Official sources & further reading
- Office of Company Registrar — Activities Required After Incorporation
- Nepal Law Commission — Companies Act, 2063
Rules, thresholds, rates and filing processes can change. Check the current law and official portal before relying on an older guide.
Need help getting the records ready?
MSBS can help organise and reconcile the accounting records before they go to the company’s independent statutory auditor.