You are on page 1of 14

CHAPTER-I

1.1 INTRODUCTION

It is concerned with making an analytical and critical analysis of the books of


accounts, checking and verification of evidence in support of entries appearing in the books
of accounts, and ascertaining the authenticity of the financial statements. It is also concerned
with the examination of accounting data to determine the extent of an audit examination is
too made on the basis of evidential document such as invoice, money receipts and other
records by the authorized representative of the client. Auditor has used to send for the
accountants and hear whatever they had to say in connection with the accounts. The auditor
has to look into the facts behind figures and he must certify their accuracy.
Auditing is to ascertain the balance sheet and profit and loss account that they show a
true and fair view of the financial state of affairs of a concern. The Institute of Charted
Accountants of India has issued a number of statements of standard auditing practices and
accounting standards for guidance of Auditor. An audit may be said to be such an
examination of the books, accounts and vouchers of a business, as will enable the auditor to
satisfy himself that the balance sheet is properly drawn up, so as to exhibit a true and fair
value of the state of the affairs of the business, whether the profit and loss account gives a
true and fair value of the profit and loss for the financial year.

1.2 OBJECTIVES OF THE STUDY


 Examining the system of internal check.
 Checking arithmetical accuracy of books of accounts, verifying posting, casting,
balancing etc.
 Verifying the authenticity and validity of transactions.
 Checking the proper distinction between capital and revenue nature of transactions.
 Confirming the existence and value of assets and liabilities.
 Frauds are those mistakes which are committed knowingly with some vested interest
in the direction of top-level management.
 Management commits frauds to deceive tax.
 Detection of fraud is the main job of an auditor.
 The top level executives of the business.
 To provide information to income tax authority.

1
1.3 LIMITATIONS OF THE STUDY
 All transactions cannot be checked.
 Evidence is not conclusive.
 Not easy to detect some frauds.
 Audit cannot assure about profitability or efficiency of management.
 Rely on experts.
 The conclusions are persuasive rather than conclusive.
1.4 SCOPE OF THE STUDY

The scope of an audit is the determination of the range of the activities and the period of
records that are to be subjected to an audit. The scope of an audit are; Legal Requirements,
Entity Aspects, Reliable Information, Proper Communication, Evaluation, Test. The auditor
can determine the scope of an audit of financial statements in accordance with the
requirements of legislation, regulations or relevant professional bodies.
The audit should be organized to cover all aspects of the entity as far as they are relevant
to the financial statements being audited. A business entity has many areas of working. A
small entity may have few functions while a large concern has many functions. The auditor
has the duty to go through all the functions of the business.

2
CHAPTER-II

2.1 PROFILE OF THE AUDITOR

Name Accountant :

Year of establish :

Address :

Mobile :
Email :

Area of Services :

3
2.2 AUDITORS

Auditors can be either internal or external.


INTERNAL AUDITORS:
 work for professional firms outsourced by client companies
 work in-house as part of an organization’s accounting team
 work for large private companies, organizations and charities.

Internal auditors work largely in the private sector to improve the efficiency of businesses
and identify where processes are not working as they should. As well as reviewing financial
accounts, they also look at aspects of the company such as ethics, environmental
sustainability, reputation and growth.
EXTERNAL AUDITORS:
 Work with private firms of accountants, or in the public sector for the National Audit
Office
 Carry out obligatory audits of the public sector and governmental bodies
 May be called to examine the finances of private businesses, especially those working
in association with governmental bodies.
External auditors play a vital role in ensuring that money raised by taxes is used effectively
and efficiently.
KEY SKILLS FOR AUDITORS

 Self-motivation, determination and confidence


 Ability to divide your time between work and study
 Meticulous attention to detail
 A strong aptitude for maths
 Excellent problem-solving skills
 A keen interest in the financial system
 Ability to work to deadlines, under pressure
 Ability to work on your own initiative and as part of a team
 Strong IT skills
 Excellent interpersonal and communication skills, including good presentation and
report writing skills.

4
2.3 TAX AUDITOR
Tax auditors are responsible for reviewing a company’s tax-reporting procedures. These
professionals have one goal: to ensure that all employees comply with local, state and federal
tax laws as they go about their daily business operations. In order to analyze past filings and
anticipate future tax bills, tax auditors will consult with the in-house senior tax manager.
Pursuing a career as a tax auditor requires an individual to earn a bachelor’s degree in
finance, accounting or taxation, and tax advisors are encouraged to earn the Enrolled Agent
(EA) credential provided by the Internal Revenue Service.

 Examines financial statements to be sure that they are accurate and comply with laws
and regulations.
 Computes taxes owed, prepares tax returns, and ensures that taxes are paid properly
and on time.
 Inspects account books and accounting systems for efficiency and use of accepted
accounting procedures
 Organizes and maintains financial records.
 Assesses financial operations and makes best-practices recommendations to
management.
 Suggests ways to reduce costs, enhance revenues, and improve profits.

5
A hierarchy is an arrangement of items (objects, names, values, categories, etc.) in which
the items are represented as being "above," "below," or "at the same level as" one another
and with only one "neighbour" above and below each level. These classifications are made
with regard to rank, importance, seniority, power status, or authority. A hierarchy of power
is called a power structure.

 Partners
 Directors
 Senior Managers
 Managers
 Supervisors
 Senior Trainee Students
 Junior Trainees
Partners are often the founders of the firms. Most of the firms’ names are associated with
the names of partners. They are basically the main parties who issue and sign any report
(specifically audit report) on behalf of the firm. Partners mostly communicate with the
Senior Managers. In other words, the progress of any report and any inquiry is made from
the Senior Managers and hierarchal structure is strictly followed to avoid any disruption.

Managers are inquired of by Senior Managers and mostly manager manage audit field
works etc and after field work managers with cooperation of senior managers makes and
finalize any audit report to be issued. Senior Manager is a qualified Chartered accountant
having more than 10 year working experience.

Field work and information collection and implementation of policies by adopting changes
in rules & regulations is the main responsibility of supervisors and trainees. They use
different kind of techniques for error and fraud detection.

RDC Association Auditing Office Is having its head office in Udumlapet. Almost all the
controls and regulations are dealt at head office in Chennai. All the offices constitute
different number of departments who basically handle their respective functions. The major
departments include.

 Audit and Assurance Department:


Firm provides audit and assurance services to wide range of clients which include
performing audits of financial statements of limited companies, NGOs and partnerships.

6
Firm also performs special assignments which include management audits, internal audits
and investigations. Audit focuses on business issues and the matters that can impact on the
financial statements, whilst also retaining the basic audit procedures that test the
information contained in the financial statements. Services are aimed to comply with the
legal requirements as defined under the various laws and regulations in India. In doing so
firm not only identify the non-compliances but also assists clients in its rectification,
designing remedial measures and provides guidance to adhere with the laws and
regulations. Firm always endeavour to meet reporting deadlines as set out by the laws and
regulations or as mutually agreed with clients, without compromising the professional, legal
and ethical requirements.

Firm emphasis on delivering high quality services to clients, adding value to their business
through identification of existing and potential control risks and suggesting best possible
measures in the given circumstances. Firm always place priority in deploying audit teams to
clients who are well equipped with the specific industry knowledge, experience and are
professionally sound.

 Tax & Corporate Department: Firm delivers taxation services to clients and assists them
in obtaining optimal tax benefits available under the laws. Firm also assist clients to comply
with the tax rules and regulations and always keep them updated with the latest
developments and amendments. Tax personnel are qualified professionals, experienced and
knowledgeable. We maintain a comprehensive tax library which always provides ready
references and timely solution in complex situations. Firm provides a comprehensive range
of tax services which includes;
 Preparation and submission of annual tax returns
 Compliance services
 Tax advisory services
 Representation and litigation with tax authorities
 Personal income tax services
In RDC Association Auditing Office same staff is handling with tax matters as well as
corporate sector. While in corporate firm provides different kinds of services relating to
corporate sector from incorporation to winding up of a Company.

Computer Department: Department handles the computer related matters and assists
other departments in working properly and efficiently. Department deals with online filing

7
of returns of income for tax department and finalize audit reports in proper format in a
presentable manner. It deals with networking of computers in office and all other problems
which may be faced by computer users time to time.

 Correspondence Department: It handles with all the correspondence of the firm by


sending the solicited and unsolicited information from time to time. Effectively and
efficiently manage the day-to-day operations of the Correspondence. Interact with clients to
resolve policy and customer issues. Identify trends and remove obstacles in Statement
production and delivery by properly maintaining record of all communication for future
reference.
 HR Department: This department is mainly concerned with the recruitment, hiring/firing
of the firm and this department presents the timely reports on effective utilization of the
resources by the firm. A purpose of the human resource is to keep the trained employees
and recruit new energetic staff to work. Another purpose of this department is to provide a
good working environment for staff and try to make by facilitating them and arranging
some recreational activities for them. HR knows the real worth of its employees so cares for
them and motivate them to work more efficiently and diligently.
The hierarchy adopted by RDC Association Auditing Office is in accordance with the legal
structure a CA firm shall have. Although the ICAI rules permit of not having the
supervisors and does not make it mandatory having senior manager and manager, yet this
goes as additional benefit for the firm of having such an extensive hierarchy.

8
CHAPTER-III

3.1 ORGANIZATION CHART

MANAGING DIRECTOR

HR MANAGER

FRONT OFFICE ADMIN BACK OFFICE ADMIN

GST FILLING DIGITAL SIGNATURE


TDS,IT FILLING FOR FOR SALES TAX
INCOMETAX

EMPLOYEE

9
CHAPTER-IV

4.1 TDS

Tax deducted at source (TDS) is a tax that is deducted from income that a company in
India pays to a recipient or supplier if the income amount exceeds a specific statutory
limit in a financial year.

The types of income that are subject to TDS include:

 Salary.
 Interest and dividends.
 Winnings from the lottery.
 Insurance commission.
 Rent.
 Fees from professional and technical services.
 Payments to contractors and subcontractors.

The withholding amounts for TDS can be deducted from an invoice submitted by a
supplier or from the payment that is issued to the recipient or supplier. Examples of
recipients and suppliers include contractors, providers of professional services, employees,
and real estate landlords. Companies submit a TDS certificate to each supplier on a monthly
or yearly basis. The certificate includes the payments, as well as information about the
company and supplier. Companies must also submit an annual return to the government
for each recipient or supplier for the financial year.

TDS must also be deducted from payments issued to third parties by both corporate
and no corporate entities. The entity must deposit the amount owed for withholding at
any of the designated branches of banks that are authorized to collect taxes on behalf
of the government of India. The entity must also submit the TDS returns, which contain
details about the payments and the challan for the tax deposited to the Income Tax
Department (ITD).

10
4.2 GST

AUDIT GST

AUDIT BY AUDIT BY GST


TAXABLE TAX
PERSON AUTHORITIES

AUDITED GENERAL AUDIT


ACCOUNTS

Audit under GST is the process of examination of records, returns and other
documents maintained by a taxable person. The purpose is to verify the correctness of
turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess the
compliance with the provisions of GST.

4.3 DIGITAL SIGNATURE

A Digital Signature Certificate is mandatory for e-filing by a certain section of businesses,


families, and individuals. For individuals businesses not covered by the latest mandate, a
Digital Signature Certificate assures greater convenience while filing tax returns, and greater
security during any electronic transactions. Digital Signature Certificate authenticates your
identity electronically. It also provides you with a high level of security for your online
transactions by ensuring absolute privacy of the information exchanged using a digital
certificate. You can use certificates to encrypt information such that only the intended
recipient can read it. You can digitally sign information to assure the recipient that it has not
been changed in transit, and also verify your identity as the sender of the message.

11
CHAPTER-V

5.1 FINDINGS
 All aspects of faculty or service operations should be clearly documented in an up-to-
date procedures manual.
 Written procedures are an important training tool for new or temporary staff and for
current employees who fill in when colleagues are sick or on vacation.
 Faculties and services benefit from reviewing their administrative processes to avoid,
for example, improper duplication of responsibilities in job descriptions and
cumbersome processes with useless, time-consuming steps.
 Employees need to ensure they are coding expenses to the proper General Ledger
account.
 Boarding passes to support flights taken, copies of conference programs and
registration receipts are required when employees attend a conference.
 Credit-card or debit-card receipts are usually insufficient to support restaurant
expenses, so they need to be accompanied by the original bill.
 The GST paid on its purchases. Faculties and services may want to refer to Financial
Services to know and understand specific GST requirements and calculations.

12
5.2 SUGGESSION

The audit partners and professional staff. The effectiveness of a firm’s audit process,
methodologies, policies and tools. The reliability and usefulness of audit reporting. The
business and regulatory environment in which the CPA firm and their clients operate.
Independence and ethics. Market placement and specialization. Engagement performance,
professional skepticism and judgement. Quality control and consult. The delivery of
consistent results. Have sufficient technical personnel on hand at your firm or have access to
external experts, specialists and consultants who can provide you with the appropriate advice
when facing challenging issues. The auditor deliver an appropriate professional opinion that
was supported by sufficient evidence and objective.

13
5.3 CONCLUSION

An audit involves the following steps: Gathering of audit evidence, evaluation of the
evidence, deciding on their reliability and acceptability, drawing a conclusion based on such
evaluations, forming an opinion based on a set of conclusions and expressing an opinion. The
auditor should get sufficient and appropriate audit evidence both at the transaction level, as
well as the account level. He should evaluate the adequacy of the evidence in his possession,
both in terms of quality and quantity. The auditor should draw a conclusion on each of the
line items of the financial statements, based on the transactions examined by him. A set of
conclusions, on such line items, leads to forming an opinion on the financial statements as a
whole, both at the transaction level as well as at the account level.

14