Answer
Balance Sheet Audit consists of the verification of all the balance sheet items together with the examination of expense and income accounts which are closely related to these items. The Balance sheet Audit as against the conventional vouch and post audit has developed along with the development of internal control system and phenomenal growth in the activities of business entities. Balance Sheet Audit encompasses the following:
Examining the existence and ownership of assets included in the balance sheet.
Satisfying that all assets owned on the balance sheet date have been included.
Verifying the inclusion of assets in the balance sheet in accordance with the generally accepted accounting principles.
Ascertaining inclusion of all liabilities in the balance sheet and at proper amounts.
Examining all opening, closing and adjustment entries.
Satisfying that distinction between capital and revenue has been properly maintained.
Satisfying that the capital amount has been properly reflected.
Analyzing the charges and credits to revenue accounts and inclusion of the resultant balance sheet.
Reviewing that internal controls on all material areas are satisfactory.