Here are some examples you can use
1. Misclassification of Air Conditioners/other appliances as Office Equipment
ACs, whether installed in Factory or in Office should be treated as Plant and Machinery with 15 Years useful life. But they are often misclassified as Office Equipment with 5 years useful life under Schedule II of Companies Act. This causes overstatement of depreciation and understatement of profit
2. Non payment of PF due to Aadhaar linking issues
The online system does not allow you to deposit PF against an employee if there’s any mismatch in Date of Birth or any other field between UAN issued by PF, PAN and Aadhaar. Usually there’ll be at least a few employees with such issues. This amounts to a statutory violation by the company
3. Purchase Order (PO) Splitting
Most large companies have an authorisation matrix e.g. POs above ₹1 Lakh need to be approved by a higher authority in the ERP. To circumvent this, you can create multiple POs of lower values.
4. Payment to MSME vendors beyond 45 days
MSME vendors should be paid within the agreed payment terms or 45 days whichever is lower. There will always be a few MSME vendors for whom this has not been done
5. Non reversal of Input Tax Credit for payment beyond 180 days
ITC availed should be reversed and interest at 18% should be paid whenever a vendor has not been paid for 180 days from Date of Invoice. This interest is usually not paid by companies and is a straight up audit point
6. Discount not availed
Vendors usually give a volume discount and an early payment discount. If the regular payment term is 30 days and the vendor gives a 2% discount for payment within 10 days, you can calculate the financial loss caused to the company by missing this discount.
