A statutory due crosses the six-month-overdue line unnoticed because the check for how long it's been outstanding is, in most companies, performed exactly once a year — during statutory audit preparation — rather than as a running calculation updated each month as payables age. A GST, TDS, PF, or ESI liability that's disputed, stuck in a reconciliation, or simply unpaid due to cash flow pressure keeps ageing in the background every month that passes, and nobody is specifically watching the calendar on it until the annual exercise looks backward and finds it already well past six months.
How a due actually ages past six months without anyone flagging it
- The liability sits in a general statutory dues payable account without a per-item ageing breakdown, so the account balance looks routine even as individual components inside it age.
- A disputed amount is excluded from routine payment runs pending resolution, and the dispute drags on for months with no interim check-in on how long it's been outstanding.
- Multiple small statutory liabilities across different states or registrations (GST, PF for different branches) are each individually small enough not to draw attention, while some specific ones have been overdue for well over six months.
- A liability gets partially paid, resetting the visual impression of "recent activity" on the account even though a specific older component remains unpaid and ageing.
Regulatory requirement
CARO's statutory dues clause specifically requires reporting on amounts outstanding as at the balance sheet date that have been outstanding for more than six months from the date they became payable — the test is the ageing of each specific amount, not whether the overall statutory dues account looks current.
What actually prevents this
An ageing schedule maintained per statutory liability type, updated monthly rather than reconstructed once a year at audit time, is what catches a due approaching the six-month mark while there's still time to act on it — instead of discovering, during year-end fieldwork, that it already crossed the line months earlier.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- CARO & Companies ActCARO statutory dues clause: testing approachHow to test timely deposit of statutory dues for CARO reporting, handle disputed dues disclosure, and avoid redoing work already done in the GST and payroll sections.
- Payroll & employee costPF and ESI compliance testing in a statutory auditApplicability, challan matching, due-date testing, and the employer-versus-employee contribution reconciliation — the PF and ESI compliance checks a payroll audit needs.
- Payroll & employee costTDS on salary: audit testing approachRecomputing TDS for a sample against the declared regime, matching to Form 24Q, and reconciling TDS deducted to deposited and to the payroll register.
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