“Role of Auditing in Business

Organization- A Study based on

Garhshankar”

A Project Report
Rayat Bahra Institute of Management, Hoshiarpur

For the
Partial Fulfillment of the Degree of
Master of Business Administration

Supervised by: -
Mr. Jagdish Singh
FCA
Garhshankar.

Submitted to: - Submitted by-

Shelley Khosla Ankita Rani
Associate Professor 1812454
RBIM MBA

Rayat Bahra Institute of Management, Bohan

Hoshiarpur
Year- 2019

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 DECLARATION

I ANKITA RANI student of Rayat Bahra Institute Of Managemant hereby declare that
research project report “Role of Auditing in Business Organization-A Study Based on
Garhshankar” is an original work and data provided in the study is authentic to the best of my
knowledge. This report has been not submitted to any other institute for award of any other
degree.

ANKITA RANI

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 PREFACE

The MBA is not an end in itself, but a means to an end. It is a degree design ed to give us
the ability to deve lop our career to its fullest potential, at an accelerated pace. To become a
successful manager i n this competitive era the fi rst and foremost task is to have a real li fe
experience abou t the corporate world. We are very much fortunate that in ou r syllabus there is
a provision for Summer Training of six week s in the public sector or pri va t e sector. We have
mad e our su mmer train ing u n d e r C A J A G D I S H S I N G H g u i d a n c e . During this we have
been given the necessary training regarding their organization and working also we have been
given the necessary inputs regardi ng our project work. It is a splendid experience to work with
the profess ionals. In our training we have come to know a lot and I believe those will pave
ou r way duri ng our working in the corporat e world.

I am very much glad to present my project report on “ R o l e o f A u d i t i n g i n B u s i n e s s

organization – A Study based on Garhshankar”.

This project is a sincere attempt to study and un derstand the overall Audi t functions its prospects.

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 ACKNOWLEDGEMENT

It is a matter of great pleasure to be able to thank all those people who helped me in this
project success. First of all, I would like to express my deep gratitude to the faculty member,
who provided me this great opportunity to do this project.

I would also like to thank other faculty members or my friends who helped me in this project
for its successful completion.

ANKITA RANI

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 ABSTRACT

In the era of dynamically changing environments, globalization and increasing legislation companies
need to re-visit their strategy on a continuous basis. Consequently, this requires the redesign of the
organization, processes, and systems, all of which are often executed through (large) projects. With
increasing demands from management on the audit profession. the question is raised of how the auditor
role can be redefined, as it shifts from the more traditional assurance role to being involved as a
proactive partner in projects, without losing its independent position. Potentially the advisory and
participative roles might conflict with the assurance role of the auditor.
However, if for this reason the auditor role is restricted to the compliance aspect only, the added value of
the auditor may be substantially reduced. This article is based on research aiming to provide a practical
relevance to audit profession and industry. It describes the different types of roles that can be fulfilled by
the auditor, taking into consideration the shift from the traditional assurance role toward more proactive
roles in projects: advisory and participative roles without jeopardizing the auditor`s position.

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 LIST OF TABLES

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 LIST OF FIGURE

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 TABLE OF CONTENTS

Chapter No. Contents Page No.

1. Introduction

1.1 Company Profile 8-9

1.4 Introduction of unit 10-35

2. Review of literature 37-39

3. Research Methodology 39-41

4. Data analysis & Interpretations 43-55

5. Conclusion 56-57

6. Findings 57-58

7. Suggestions and recommendations 61-62

8. Bibliography 64-65

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 CHAPTER- 1

INTRODUCTION
TO
COMPANY

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The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of
Parliament, viz. The Chartered Accountants Act, 1949 for regulating the profession of Chartered
Accountancy in the country.

The Institute, functions under the administrative control of the Ministry of Corporate Affairs,
Government of India. The ICAI is the second largest professional body of Chartered Accountants in the
world, with a strong tradition of service to the Indian economy in public interest. 

The affairs of the ICAI are managed by a Council in accordance with the provisions of the Chartered
Accountants Act, 1949 and the Chartered Accountants Regulations, 1988. The Council constitutes of 40
members of whom 32 are elected by the Chartered Accountants and remaining 8 are nominated by the
Central Government generally representing the Comptroller and Auditor General of India, Securities
and Exchange Board of India, Ministry of Corporate Affairs, Ministry of Finance and other
stakeholders.

Over a period of time the ICAI has achieved recognition as a premier accounting body not only in the
country but also globally, for maintaining highest standards in technical, ethical areas and for sustaining
stringent examination and education standards. Since 1949, the profession has grown leaps and bounds
in terms of members and student base.

 Regulate the profession of Accountancy

 Education and Examination of Chartered Accountancy Course
 Continuing Professional Education of Members
 Conducting Post Qualification Courses
 Formulation of Accounting Standards
 Prescription of Standard Auditing Procedures
 Laying down Ethical Standards
 Monitoring Quality through Peer Review
 Ensuring Standards of performance of Members
 Exercise Disciplinary Jurisdiction
 Financial Reporting Review
 Input on Policy matters to Government

Chartered Accountancy is a challenging profession that offers practice or job opportunities in the areas
of accounting, auditing, corporate finance, project evaluation, and company and other business laws,
taxation and corporate governance. The multi-faceted knowledge a chartered accountant enjoys through
unique academic programmer blended with practical training is what the business and industry need in
the advent of liberalization, privatization and globalization of Indian economy.
With the rapid growth in economy, careers in finance and accounts have gained tremendous popularity
and the most prestigious career option in this field is that of Chartered Accountant. Chartered
Accountancy is a dynamic, challenging and rewarding profession. All the countries have their own

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Accountancy Association which regulates the quality and quantity of the professionals in this field.
Chartered Accountancy Course is a professional course in Accounting introduced in our country in
1949, with the enactment of the Chartered Accountants Act. The Institute of Chartered Accountants of
India (ICAI) was formed the same year.

This Institute is both an examining and a licensing body. It is the responsibility of the institute to
conduct the Chartered accountancy (CA) Course. The course involves a blend of theoretical education
and practical training which run concurrently for a period of three years and equips a student with
knowledge, ability, skills and other qualities required of a professional accountant.

Chartered accountant is one who is specialized in accounting, auditing and taxation. He also serves as a
management and corporate caretaker. In recent times, accountancy has become popular as a profession.
The service of a CA is required in money matters even in a small business. Moreover, according to the
Company Act only CA's in professional practice are allowed to be appointed as auditors of companies in
India. A chartered accountant is a person who is accepted as a member of the Institute of Chartered
Accountants of India (ICAI) after having passed the Final examination of the Chartered accountancy
course conducted by the institute.

CA program is of two years apart from the training period. It has three sections, Competency
Professional Test (CPT), Integrated Professional Competence Course (IPCC) and Final examination.
The registration for CPT and IPCC is open throughout the year. A student may register at any time
during the year. However, as the examination of CPT will be held twice a year in June and December
and IPCC in May & November, it is necessary that a student must register at least two months before &
IPCC ten months before, the examinations. After passing the IPCC candidates are eligible for
registration as articled clerks/audit clerks for practical training. After successful completion of article
ship student may appear for CA-Final exam.

Articled clerk is a trainee attached to a practicing chartered accountant under a Deed of Articles for the
duration three years. During this period the articled clerk will also need to continue studies for the CA
exam. An audit clerk is a person who has served as a salaried employee for a minimum period of one
year under a practicing chartered accountant. During the training period, candidates would be required to
work in different areas learning the basics of auditing and taxation. This training enables them to learn
the technical details of the job as well as to get an idea of the working environment of the profession.

The scope for this lucrative career is bright in an economically developing nation like ours and as such
the career can be termed as challenging and rewarding for competent professionals in the field.
Nowadays, the profession of Chartered Accountancy or CA. has become an eminent and reputed
profession in the spreading corporate culture. This is a profession that acts with integrity and is
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committed to supporting financial responsibility, transparency and accountability at all levels of society-
from individuals, to business, to Governments.

As a chartered accountant, he has to perform the following duties: -

 Manage financial systems and budgets.

 Undertake financial audits (an independent check of an organization’s financial position).
 Provide financial advice.
 Liaise with clients (individuals or businesses) and provide financial information and advice.
 Review the company's systems and analyses risk.
 Perform tests to check financial information and systems.
 Advice clients on tax planning (within current legislation to enable them to minimize their tax
liability) and tax issues associated with activities such as business acquisitions and mergers.
 Maintain accounting records and prepare accounts and management information for small
businesses (accountancy).
 Advise clients on business transactions, such as mergers and acquisitions (corporate finance).
 Counsel clients on areas of business improvement, or dealing with insolvency
 Detect and prevent fraud (forensic accounting).
 Manage junior colleagues.
 Liaise with internal and external auditors (where applicable) and deal with any financial
irregularities as they arise.
 Produce reports and recommendations following internal audits or public-sector audits.
 Prepare financial statements, including monthly and annual accounts.
 Arrange financial management reports, including financial planning and forecasting.
 Advise on tax and treasury issues.
 Negotiate terms with suppliers.

The Chartered Accountancy qualification opens the door to a vast range of exciting career
opportunities, in every sector of business and finance, both in Ireland and internationally.
Chartered Accountants are in constant demand both at home and abroad, being recognized for
their technical competence, professional standards, and veracity.

Becoming a Chartered Accountant combines innovative education with mentored work

experience, to produce accountants who possess a greater ability to analyses and interpret

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 business problems and develop dynamic solutions. Perhaps that’s why Chartered Accountants
have the edge over their counterparts: they rise further and faster into more diverse and
important roles in organizations.

Requirements for becoming a Chartered Accountant: -

Under the existing chartered accountancy scheme of education, training and examination, the
requirements for becoming a chartered accountant are as follows:

 Enroll with the Institute for Common Proficiency Test (CPT) after passing class 10th
examination conducted by an examining body constituted by law in India or an examination
recognized by the Central Government as equivalent thereto.
  Appear in CPT after appearing in the senior secondary examination (10+2 examination)
conducted by an examining body constituted by law in India or an examination recognized by the
Central Government as equivalent thereto and after completion of specified period (60 days) from
the date of registration for CPT with the Board of Studies as on the first day of the month in which
examination is to be held, viz., students registered on or before 1st April/1st October will be
eligible to appear in June/December examination, as the case may be. However, candidate should
pass both CPT and 10+2 before registering for Integrated Professional Competence Course
(IPCC). As per recent amendments to the curriculum, a student with minimum 60% in
graduation is eligible for direct enrolment in the IPCC course along with article ship, without
appearing for CPT.
  Enrol for Group I or Group II or for both Group I and Group II of Integrated Professional
Competence Course (IPCC) to become "Chartered Accountant".
  Successfully complete 9 months of study course from the date of IPCC registration.
 Successfully complete Orientation Course of one week spanning 35 hours and covering topics,
such as personality development, communication skills, office procedure, business environment,
general commercial knowledge, etc., before commencement of articled training
 Successfully complete 100 hours Information Technology Training (ITT) before commencement
of articled training.
 Appear and pass Group I as well as Group II of Integrated Professional Competence
Examination (IPCE). Group I is composed of four papers and Group II is composed of three
papers.
 Register as Articled Assistant for a period of 3 years, on passing either Group I or both the
Groups of IPCE.
 Register for CA Final Course and prepare for CA Final Examination.
 Undergo General Management and Communication Skills (GMCS) (15 days) course while
undergoing Final Course and serving the last 12 months of articled training.
 Complete 3 years’ period of articled training.
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  Appear in the Final Examination on completion of the practical training or while serving last 6
months of articled training on or before the last day of the month preceding the month in which the
examination is to be held.
 Pass final examination and complete GMCS, if not completed earlier.
 Enroll as a member of ICAI and designate as "Chartered Accountant". 

CHAPTER-2
INTRODUCTION TO TOPIC

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2.1 Defining The Problem: -

AUDITING

MEANING: -

. The audit is one of the most dynamic areas of the accounting sciences. The word “audit” has Latin origins
(audio, audire, means listening). During the time this word has known a lot of definitions and classifications. In
general, it is a synonym to control, check, inspect, and revise

Auditing is an examination of the books of accounts and vouchers of the business by an independent
person who should be qualified for the job, in order to ascertain their accuracy. for any All the public
listed firms have to get their accounts audited by an independent auditor before they declare their results
quarter.

The auditor is given a free hand to the books, accounts, statements enabling him to thoroughly check
them and if satisfied to certify that books have been properly drawn up and represent a true view of the
financial position of the business. He gives his special attention to the direction of errors which may be
innocently or intentionally committed

In the case of former the auditor discovers the errors by vouching the transactions and by comparing and
tallying the balances between and amongst various books. But in the case of latter such errors are
classified as frauds as it leads to defrauding the proprietors. The frauds could be detected by a thorough
checking of the books and documents such as cash book, vouchers, invoices.

Companies prepare financial statements of their activities, which represent their overall performance.
These financial statements are examined and evaluated by independent persons, who assess them
according to the industry’s generally accepted standards.

This examination and evaluation is an audit.

Thus, an audit is an examination and verification of a company’s financial and accounting records and
supporting documents by an independent professional against established criteria.

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Definition of Auditing

A precise definition of the term ‘auditing’ is difficult to give. Some of the definitions given by different
authors are as follows:

According to the International Federation of Accountants (IFAC); An auditing is the independent

examination of financial information of an entity, whether profit oriented or not and irrespective of its
size, or legal form, when such an examination is conducted with a view to expressing an opinion
thereon.

Spicer and Pegler, have defined audit as; “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 give a true and fair view of the state of the affairs of the business, and whether the Profit and Loss
Account gives a true and fair view of the profit or loss for the financial period, according to the best of
his information and the explanations given to him and as shown by the books; and if not, in what respect
he is not satisfied”.

According to the American Accounting Association (AAA); “Auditing is a systematic process of

objectively obtaining and evaluating evidence regarding assertions about economic actions and events to
ascertain the degree of correspondence between those assertions and established criteria and
communicating the results to interested users”.

According to Montgomery; “Auditing is a systematic examination of the books and records of a

business or the organization in order to ascertain or verify and to report upon the facts regarding the
financial operation and the result thereof”.

It is clear from the above definitions that;

 auditing is the systematic and scientific examination of the books of accounts and records of a business,
 enables the auditor to judge that the Balance Sheet and the Profit and Loss Account are properly drawn up
so it exhibits a true and fair view of the financial state of affairs of the business and profit or loss for the
financial period.

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 Scope of Auditing

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 examination.

The scope of an audit is;

 Legal Requirements.
 Entity Aspects.
 Reliable Information.
 Proper Communication.
 Evaluation.
 Test.
 Comparison.
 Judgments.

Legal Requirements

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 state can frame rules for determining the scope of audit work. In the same way, professional bodies
can make rules to conduct the audit.

Entity Aspects

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.

The audit report should cover all functions so that the reader may know about all the working of a
concern.

Reliable Information

The auditor should obtain reasonable assurance as to whether the information contained in the
underlying accounting records and other source data is reliable and sufficient as the basis for preparation
of the financial statements.

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The auditor can use various techniques to test the validity of data. All auditors while doing the audit
work usually apply the compliance test and substance test. The auditor can show such information in the
report.

Proper Communication

The auditor should decide whether the relevant information is properly communicated in the financial
statements.

Accounting is an information system so facts and figures must be so presented that the reader can get
information about the business entity. The auditor can mention this fact in his report.

The principles of accounting can be applied to decide about the disclosure of financial information in the
statements.

Evaluation

The auditor assesses the reliability and sufficiency of the information contained in the underlying
accounting records and other source data by making a study and evaluation of accounting system and
internal controls to determine the nature, extent, and timing of other auditing procedures.

Test

The auditing assesses the reliability and sufficiency of the information contained in the underlying
accounting records and other source data by carrying out other tests, inquiries and other verification
procedures of accounting transactions and account balances as he considers appropriate in the particular
circumstances.

There are compliance test and substantive test in order to examine the data. The vouching, verification
and valuation technique is also used.

Comparison

The auditor determines whether the relevant information is properly communicated by comparing the
financial statements with the underlying accounting records and other source data to see whether they
properly summarized the transactions and events recorded therein.

The auditor can compare the accounting records with financial statements in order to check that the
same has been processed for preparing the final accounts of a business concern.

Judgments

The auditor determines whether the relevant information is properly communicated by considering the
judgment that management has made in preparing the financial statements, accordingly.
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The auditor assesses the selection and consistent application of accounting policies, the manner in which
the information has been classified and the adequacy of disclosure.

Objectives of Auditing:
The basic objective with which auditing is done are:

1. Verification of accounts and statements.

2. Detection of errors or frauds.

3. Prevention of errors or frauds.

ADVANTAGES OF AUDITING

1.Audit helps to detect and prevent errors and frauds

An auditor's main duty is to detect errors and frauds, preventing such errors and frauds and taking care
to avoid such frauds. Thus, even though all organizations do not have compulsion to audit, they make
audit of all the books of accounts.

2. Audit helps to maintain account regularly

An auditor raises questions if accounts are not maintained properly. So, audit gives moral pressure on
maintaining accounts regular

3.Audit helps to get compensation

If there is any loss in the property of business, insurance company provides compensation on the basis of
audited statement of valuation made by the auditor. So, it helps to get compensation

4.Audit helps to obtain loan

Especially financial institutions provide loan on the basis of audited statements. A business organization
may obtain loan considering the audited statement of last five years. So, an organization should make
audit compulsory to obtain loan.

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5.Audit facilitates the sale of business

Valuation of assets is made by the auditor. On the basis of valuation of assets and liabilities,
businessman can sell his business. It helps to determine the price of business.

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6.Audit helps to assess tax
Tax authorities assess taxes on the basis of profit calculated by the auditor. In the same way sales tax
authority calculate the tax.

7.Audit facilitates to compare

An auditor instructs an accountant in the same way which helps to compare books of accounts of current
year with the accounting of the previous year. So, comparing the accounts of

8.Audit helps to get compensation

If there is any loss in the property of business, insurance company provides compensation on the basis of
audited statement of valuation made by the auditor. So, it helps to get compensation.

9.Audit helps to Obtain loan

Especially financial institutions provide loan on the basis of audited statements. A business organization
may obtain loan considering the audited statement of last five years. So, an organization should make
audit compulsory to obtain loan.

11.Audit helps to present a proof

If any case is filed against the auditor regarding negligence, auditor can present audited report as a proof
to settle such case. So, it helps to present proof to settle such cases.

12.Audit provides information about profit or loss

A businessman wants to know profit or loss of his business after a certain period of time. So, the owner
of the business can get information about profit or loss after auditing the books of accounts.

13. Audit helps to prepare future plan

All the audited statements remain true and correct. Such true and correct account helps to prepare for the
future plans.

14.Audit helps to increase goodwill

Auditing shows the profitability and financial position of an organization which creates faith of public
over the business. Thus, auditing helps to increase goodwill of an organization.

15.Audit Helps to Amalgamate the Company

Sometimes, same nature of organization may be amalgamated. Auditing makes valuation of assets and
liabilities which helps to amalgamate the company. Purchaser of the company can accept such business
organization.

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16.Gathering information about profit or loss

This gathering will help in discussing the profit and loss of the company. Here employees can disclose
their ideas upon which they are lacking and how can they overcome those obstacles.

17.Confidentiality

During the process of the external audit, there is more private information such as internal employee
salary, CPF etc. It may be significant for the person to learn about the organization. It is because the
auditor makes the consideration and conducts the meetings that are to be held regarding the audit.

18.Reports

It produces the report of the truth and fairness of the reported audit. It involves financial statements that
are more compatible when a person goes through the documents and reports of the audit.

19.Maintaining the reputation of the organization:

Over the course of completion of an external audition, the reputation of the company is enhanced in the
meanwhile ensuring the growth of the organization. It reviews the multitude of the regulations since it
maintains the reputation in the community.

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Role of auditing in business organization
Auditors play a critical role in validating your company's finances. Potential lenders and
investors often require externally audited financial statements before extending credit or
providing funds for your business. If it is discovered that an auditor failed to detect material
misstatements, it reflects poorly on the firm and the profession in general. For that reason,
various accounting bodies release auditing standards and expectations to define the role of
external audit firms.

1.Financial audit Providing an Opinion on Statements

Some managers assume external audit firms will create financial statements, when that actually is the
job of company managers. External audit firms are responsible for providing reasonable assurance
that the financial statements are free from material misstatements and prepared according to an
accounting framework.

External auditors are not there to fix the problems, although many will provide you with
recommendations. External audit firms also are not responsible for providing absolute assurance of
perfect financial statements; they only test enough data to provide reasonable assurance.

2.Understanding the Entity and Its Environment

Although accounting is typically seen as number crunching, auditors recognize that financial statements
don't exist in a vacuum. External auditors are charged with obtaining a thorough understanding of your
work environment, operations and internal controls. To do this, auditors will perform an initial risk
assessment.

External auditors will often examine the electronic accounting information system to ensure that data
isn't being compromised. They'll compare your business to others in the industry to identify any
irregularities that could stem from incorrect financial reporting.

3. Obtaining Sufficient Evidence to Form an Opinion

External auditors base a huge portion of their opinion on the evidence they examine during the audit. To
ensure they've collected the sufficient amount of evidence, auditors should rate the riskiness of your
enterprise. The higher risk your business is, the more evidence they should collect before issuing an
opinion.

The quality of the evidence is also crucial. Some evidence must be obtained from reliable third-party
sources, such as banks and lenders, to corroborate your financial information.

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4. Independence from Clients

The audit firm is responsible for maintaining an independent attitude and an appearance of independence
your business. A lack of from independence means that the auditor might fail to address audit problems,
which lowers the credibility and assurance of an external audit. The auditor should not serve as an
officer for your business or participate in company management.

Audit firms also shouldn't have any sort of financial interest in your work. Audit firm partners should
ensure that none of their auditors have joint ventures or significant investments in your company before
starting an audit.

5. Confidentiality

During the process of the external audit, there is more private information such as internal employee
salary, CPF etc. It may be significant for the person to learn about the organization. It is because the
auditor makes the consideration and conducts the meetings that are to be held regarding the audit

6. Audit provides information about profit or loss

A businessman wants to know profit or loss of his business after a certain period of time. So, the owner
of the business can get information about profit or loss after auditing the books of accounts.

7. Audit facilitates the sale of business

Valuation of assets is made by the auditor. On the basis of valuation of assets and liabilities,
businessman can sell his business. It helps to determine the price of business

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 WHO IS AUDITOR
Auditor is an independent person who vouches for the correctness of books of accounts. He reports on
the true & fairness of the financial statement. He may be appointed by the organization itself or may be
appointed by the government authority under a law.

There are various types of audit conducted in a business and depending on those the auditors differs. A
business can have multiple functions, based on that there may be different audit for each function.

The main types of auditors:

Internal Auditor: These are the auditor who conducts internal audit and check internal controls of an
organization. They are appointed by the management and they report to the management. There is a
compulsion to appoint internal auditor for listed companies.

External Auditor: They are appointed under the law. It is compulsory for every company to appoint a
statutory auditor. They report to the shareholders of a company in predefined format. an independent
accountant who inspects the books of a company or other organization.

RIGHTS OF AUDITOR

1. Right of Access to Books of Accounts:

Every auditor of a Company has a right of access at all times to the books of accounts and vouchers of
the company whether kept at the head office of the company or elsewhere.

Thus, the auditor may consult all the books, vouchers and documents whenever he so likes. This is his
statutory right. He may pay a surprise visit without informing the Directors in advance but in practice,
the auditors inform the Directors before they pay their visits.

2. Right to obtain Information and Explanations:

He has a right to obtain from the Directors and officers of the company any information and explanation
as he thinks necessary for the performance of his duties as an auditor.

This is another important power in the hands of the auditor. He will, however, decide as to which information or
explanations he thinks necessary to obtain. It the Directors or officers of the company refuse to supply some
information on the ground that in their opinion it is not necessary to furnish it, he has a right to mention the fact in
his report.

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3. Right to Correct any Wrong Statement:

The auditor is required to make a report to the members of the company on the accounts examined by
him and on every Balance Sheet and Profit and Loss Account and on every other document declared by
this Act to be part of or annexed to the Balance Sheet or Profit and Loss Account which are laid before
the company in General Meeting during his tenure of office. The Directors have a duty to prepare them
and present them to the auditor.

4. Right to visit Branches:

According to section 228, if a company has a branch office, the accounts of the office shall be audited
by the company’s auditor appointed under section 224 or by a person qualified for appointment as
auditor of the company under section 226.

Where the Branch Accounts are not audited by a duly qualified auditor, the auditor has a right of access
at all time to the books, accounts and vouchers of the company and thus, may visit the branch, if he
deems it necessary.

5. Right to Signature on Audit Report:

Under section 229, only the person appointed as auditor of the company, or where a firm is so
appointed, only a partner in the firm practicing in India, may sign the auditor’s report, or sign or
authenticate any other document of the company required by law to be signed or authenticated by the
auditor.

6.Right of being indemnified:

Under section 633, an auditor (being an officer of a company), has a right to be indemnified out of the
assets of the company against any liability incurred by him defending himself against any civil and
criminal proceedings by the company if it is proved that the auditor has acted honestly or the judgement
delivered is in his favour.

7. Right to have Legal and Technical Advice:

He has a right to seek the opinion of the experts and, thus, take legal and technical advice. This is
necessary to give his opinion in his report. (Re. London and General Bank Case, 1895).

He has a right to receive his remuneration provided he has completed the work which he undertook to
do.

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Rights of Company Auditor; The Companies Act, 1956.
 Rights to access the books and records.
 Right to get explanations from company staff.
 Right to receive notice of general meetings.
 Right to visit branches.
 Right to seek legal and technical advises.
 Right to claim remuneration.
 Right to refuse to commence the audit.
 Right to question the board.
 Right to qualify his report.
 Right of indemnity.

DUTIES OF COMPANY AUDITOR: -   Duties of an auditor are as under: -

1. To make the report to the members of the company on the accounts examined by him which
should contain all the matters as the company’s act.
2. Auditor should perform his duties as per articles of association of the company.
3. He should certify the statements included in prospectus whenever the same is issued.
4. He should certify the contents of the statutory report.
5. To comment on all such material violations of the law or sound accounting practices which can
reasonably effect directly or indirectly the fortune of the accounts of the company.
6. An auditor must know the provisions of memorandum and articles of association of the
company.
7. He not only should verify the arithmetic accuracy of the accounts but should check the fairness
of accounts as well.

The main duties and responsibilities of a cost auditor are:

(i) He is liable to the Company if he does not perform his duties properly or is guilty of negligence.

(ii) He also owes a legal responsibility to third parties who might have been misled by his audit
certificate and acted in reliance thereon.

(iii) He should maintain his working papers as an evidence of his having carried out his duties.

(iv) He should not disclose any confidential information which he might have acquired in the course of
his work and should not use such information for personal gain or gain of a third party.

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(v) He is responsible to answer any query required by the Central Government on a scrutiny of the cost
audit report submitted by him.

vi) He is criminally liable for falsification of books. If he is found guilty of falsification, he shall be
punishable with imprisonment for a term which extends to seven years and he shall also be liable to
fine in addition.

Basic Principles Governing An Audit:

SA 200 issued by ICAI gives the following basic principles that govern the auditor’s responsibilities
whenever an audit is carried out:

 Integrity, objectivity and independence: - The auditor should be straight-forward,

honest, sincere and free form any influence on his audit work.

 Confidentiality: - He should not disclose the client’s information to anybody without the
client’s permission or under any regulatory requirement.

 Skills and competence: - The audit should be performed and audit report be prepared by
adequately trained, experienced and competent person.

 Work performed by others: - The auditor should carefully supervise the work performed
by others (such as his subordinates, other auditors, experts etc.) as remains responsible for the
work delegated by him to his assistants, other auditors or experts.

 Documentation: - Proper working papers should be maintained by the auditor to evidence the
audit work.

 Planning: - The auditor should obtain the knowledge about client’s business to determine the
nature timing and the extent of the audit procedures.

 Accounting system and internal controls: - An understanding of the accounting system

and the related internal controls help in determining the nature, timing and extent of other audit
procedures.

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  Audit conclusions and reporting: - On the basis of conclusions drawn from the audit
evidence obtained the auditor should give unqualified report or qualified report or adverse report
or the disclaimer report.

Process of audit

Requesting Document
After notifying the organization of the upcoming audit, the auditor typically requests documents listed
on an audit preliminary checklist. These documents may include a copy of the previous audit report,
original bank statements, receipts and ledgers. In addition, the auditor may request organizational charts,
along with copies

Preparing an Audit Plan

The auditor looks over the information contained in the documents and plans out how the audit will be
conducted. A risk workshop may be conducted to identify possible problems. An audit plan is then
drafted.

Scheduling an Open Meeting

Senior management and key administrative staff are then invited to an open meeting during which the
scope of the audit is presented by the auditor.

Conducting Fieldwork
The auditor takes information gathered from the open meeting and uses it to finalize the audit plan.
Fieldwork is then conducted by speaking to staff members and reviewing procedures and processes

Drafting a Report
The auditor prepares a report detailing the findings of the audit.

Setting Up a Closing Meeting

The auditor solicits a response from management that indicates whether it agrees or disagrees with
problems in the report, a description of management's action plan to address the problem and a projected
completion date.

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TYPES OF AUDIT

1: External Audit

The external audit is a type of audit service that audit firm provides Assurance Service, Consultant
Service, Tax Service, Legal Service, Financial Advisory, and Risk Management Advisory.

External auditors are normally referring to audit staffs who are working in audit firms.

This type of audit required to maintain the professional code of ethics and strictly follow International
Standards on Auditing and/or local standards as required by local law.

2: Internal Audit

Internal Auditing is independence and objectivity consulting service which is design to add value to the
business and improve the entity’s operation. It provides a systematic and disciplined approach to
evaluating and assessing risks management, internal control, and corporate governance.

Scope of internal audit is generally determined by the audit committee, the board of directors or
directors that have equivalence authorization. And if there is no audit committee and board of directors,
internal audit normally reports to the owner of the company.

Internal audit activities are normally covered internal control reviewing, operational reviewing, fraud
investigation, compliant reviewing, and other special tasks assigned from the audit committee.

3: Statutory Audit

Statutory audit is referring to an audit of financial statements for the specific type of entities that
required by law or local authority. For example, all banking sectors required their financial statements to
be audited by qualified audit firms approved by their central bank.

The statutory audit might be the difference from financial statements auditing as the financial audit is
referring to the audit of all types of entity’s financial statements including both meet or not meet the
government’s requirement.

However, statutory audit refers to only auditing of the entity’s financial statements that required by local
law. The statutory audit is normally performed by external audit firms and the audit report will be issued
by the auditor and submit to government body by the entity.

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4: Financial Audit

Financial audit refers to the audit of the entity’s financial statements by an independence auditor where
audit opinion will be provided on those financial statements.

Some country requires an audit firm to follow its audit standards while some other countries
have adopted the international standards and transform it to be local.

5: Tax Audit

Tax audit is a type of audit that performing by government tax department or tax authority. Tax audit
could be performed as the result of in-compliant found by a government agency or the schedule set by
the government tax department.

An entity needs not to invite or engage with the tax authority to come to perform a tax audit. They will
come by themselves. To minimize the penalty as the result of the tax audit, the entity is recommended to
follow all the requirement set by tax law and for those areas that they are not sure, the entity should
engagement with tax consulting .

6: Information System Audit or Information Technology Audit (IT Audit)

An information system audit is sometimes called the IT audit. This type of audit assesses and check the
reliability of the security system, information security structure, and integrity of the system.

Sometimes, financial auditing also requires to has IT auditing as now technology is increasing and most
of the client’s financial reports are recording by complex accounting software. Audit approach also
changed due to the changing of management’s approach in recording and reporting their entity’s
financial information.

Normally, before relying on information system (software) that use for producing financial statements,
auditor required to have IT, audit team, to test and review that information system first.

This kind of audit also offers and request separately from the financial audit. As you can know, most of
the big firms have this kind of services. They do not only provide IT audit but also offering consultant
on the information system areas

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7: Compliance Audit

A compliance audit is a type of audit that checks against internal policies and procedures as well as law
and regulation. Law and regulation here we mean the government’s law where the business is operating.

For example, in the banking industry, there are many kinds of regulation required bankers to follow and
comply with. Most of the central banks required commercial banks to set up the complaint review
(assessment) or compliance audit to make sure that they are complying those law and regulation set.

The entity may also assign its internal audit function to review whether the entity’s internal policies and
procedures are complying and effectively follow.

A compliance audit is part of the system that use by the entity’s management to enforce the
effectiveness of the implementation of the government’s law and regulation, and the entity’s internal
policies and procedures.

8: Integrated Audit

Integrate audit is happening when there are two different areas of audit requirements. For example, there
is a financial audit along with social audit or there are some areas need to be confirmed with the
financial audit.

For example, the NGO requires their financial statements to be audited along with technical areas that
those NGO spending the money for.

For example, NGO is working on public health and most of the money spend are related to public
health. Besides the expenses reports that present the expenses that NGO paid for and need to be audited
by the financial auditor, there is the number of technical reports like health reports which need to be
verified by technical auditors that have experienced in assessing health report.

This is called an integrated audit. The integrated audit also happens when the entity operates in many
different countries and the financial statements are an audit by different audit firms.

9: Final audit

A final audit is also called as Completed Audit or Periodical Audit. Final audit is done after the close of

the financial year, i.e. after the books of accounts have been closed and the final accounts are drawn

up. In this type of audit, the client gives the possession of books of accounts to the auditor for audit and

routine checking and other audit procedures begin only after that.

25
10: CONTINOUS AUDIT

Continuous audit involves the detailed examination of all the transactions by the auditor continuously
throughout the year or at regular intervals, say fortnightly or monthly. A continuous audit is one which
is commenced and carried on before the close of the financial year to which it relates. It involves
the constant engagement of auditor’s staff at the client office throughout the period under review.

Continuous audit is suitable in cases where the final accounts are desired to be presented soon after
the close of the financial year or there is great volume of transactions or the system of internal check
is weak.

Aspects to Be Covered in Auditing

The principal aspects to be covered in an audit concerning the final statements of accounts are as:

(i) Accounting and Internal Control System - The auditor should obtain an understanding of the
accounting and the internal control system operating in the enterprise. Such an understanding will
enable the auditor to ascertain the degree to which reliance can be placed on the information
obtained during the audit. Further, the auditor should review the system from time to time to ascertain
its adequacy and comprehensiveness.

(ii) Examination of books, records etc.- The auditor should check the arithmetical accuracy of the
books of accounts as well as the authenticity and the validity of transactions entered into the books
of accounts. He should ensure that the entries in the books of accounts are adequately supported
by underlying papers, documents and other evidence. Further, none of the entries in the books of
accounts have been omitted in the process of compilation and nothing which is not in the books of
accounts have found place in the financial statements.

(iii) Compliance with the Generally Accepted Accounting Standards and Applicable Statutory
Regulations - The financial statements should be prepared in accordance with the requirements
of applicable laws and should comply with the relevant accounting standards, guidance notes
issued by ICAI etc. For example, a proper distinction should be made between the items of capital
and revenue nature, in case a company declares dividend it should comply with the requirements
of the Companies Act and the relevant Rules.

(iv) Reporting - Once the audit is carried out, the audit findings need be communicated to the
appropriate personal body (e.g. shareholders in case of company). An audit report states the

26
 opinion of the auditor as to the true and fair view of the financial position and operating results of
the enterprise.

DEMERITS AND DISADVANTAGES OF AUDITING

The main risk in the audit program is towards the assurance services that derive wrong
conclusions. Assurances are to be provided within the related certification. Here are some of
the limitation of an audit.

a. Evidence:

Evidence that are identified are more pervasive than conclusive. The strength of submission
of audited accounts makes major changes in the accounts of distribution of profits.

b. Harassment of staves:

Since the employees cannot express their own in terms of auditing, these changes are
calibrated and the employees will fell harassed due to the changes that are caused. Even if
they try to express their knowledge of new ideas, the organization may not entertain the
employees in these types of situations.

c. Unsuitable changes:

The rules and regulations of business may vary from time to time. It remains unstable when
the program begins. It is obvious that the company’s policies may not change periodically
whereas the rules and regulations may.

d. Chances of fraud:

Since the information delivered after the audit procedure is credential then there becomes
more chances of getting the situations where an individual will be force to commit the crime.
It harasses the auditors to commit crime after the audit gets over.

27
 e. Small concerns:

Small-scale industries may usually proceed with transactions that are usually completed
within the shorter period of time. Thus, auditing is not too important.

f. Problems in remedial measures:

Here the problem is created in remedial measures that are enhanced by the detailed interface
of the data of remedial measures. These remedial measures are not included in the audit
program.

g. Insufficient considerate:

The education curve will be contented about the business and insufficient relaxed networks
and also offers systematic internal recruitment These may gravely obstruct the expense of
all the employees.

h. Not guaranteed:

Auditing cannot provide any data that are analyzed and prepared. It has cial accounts for the
data that are provided. It is disclosed based on the information and explanations that are
agreed on by company.

i. Extra cost:

Testing involves the extra cost to the organization which is considered as a burden. It
involves the disruptions of multiple cases. The auditor has to concentrate more even though
there are disruptions. Before the audit begins the auditor must get the attention of all the staff
members of the organization.

28
WHO CAN REQURIED TO AUDIT THEIR ACCOUNT

Under section 44AB, a compulsory tax audit is required to be completed by a Chartered

Accountant if a business has total sales turnover or over Rs.1 crore. In case of a profession, if
the profession has total gross receipts of more than Rs.50 lakhs, then tax audit by a Chartered
Accountant is mandatory
So according to section 44B and under company act 2013 a person liable for auditing whose
annual profit and turnover exceed 2 crores. If they are not audit their account, then they are
liable for penalty and punishment under company act 2013.

29
: Objectives of Study:

The primary objective of the study is to assess the role of auditing in business organization. Based on
this primary objective, other specific and detailed objectives are drawn as under:

The basic objective with which auditing study is done are:

1. Increase Financial reliability.

2. Detection of errors or frauds.

3. Prevention of errors.

4.Identification of weakness in accounting.

30
: Scope of Study

We conducted out audit in accordance with the AAS generally accepted in India. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.

31
* Limitations of study: -

1) Due to Garhshankar being a large city, it was not possible to interact with various clients
of auditor formal over the city.

2) Few clients are very cooperative but at the same time some says that are very busy so
they can not able to fill the questions.

3) Time period was limited.

4) Interaction with clients was also difficulty as they were busy with their customers most of
the time.

5) As the internship was the first practical experience, it was not possible for me to know all and
everything of audit procedure.
6) Approached 100 respondents but only 50 gave their response.

It is the reason of wastage of time when clients of auditor say that please wait for our few minutes.

32
 CHAPTER NO. 3

REVIEW OF

LITERATURE
 The chapter consists of two parts. Part one highlights the related
research studied conducted in India and the later part throws light on
the studies carried out at International Level. The researcher has
attempted to incorporate in this chapter every chosen aspect of the
study.

 Review of Literature is the crucial part of any research. This helps the
researcher avoid reinventing past contributions and results. This
focuses on the past literature in the field of research and its
classification under different angles

 “Literature adds to reality; it does not simply describe it. It enriches

the necessary competencies that daily life requires and provides; and
in this

33
respect, it irrigates the deserts that our lives have already become”

34
Kassem and Higson (2016):-
conducted a study aiming to determine the role of external auditor’s in corporate corruption, besides
determining the implications for external audit regulators.

Depending on the theoretical approach, the paper discussed the responsibilities of external auditor’s in
relation to corporate corruption and the impact of corruption on the financial statements by providing
evidence
from prior literature. In addition, the paper examined the impact that corporate corruption might have on the
audit profession by providing evidence from actual corruption cases.

The results revealed that external auditors are responsible for detecting material misstatements arising
from corruption that would have a material impact on the financial statements.

DiGabriele and Ojo (2014): -

highlighted the dual roles of external auditors and its impact on the objectivity and independence, in addition
to examining whether it is suitable for the external auditors to incorporate internal auditor’s responsibility or
not.

The methodology of the study depends on the theoretical approach by discussing the key attributes in the
performance of external and internal audits, principles relating to the supervisory expectations relevant to the
internal audit function, changing roles of internal and external auditors and post-Enron consequences,
limitation
on the use of internal audit roles. In addition, the paper discussed the impact of internal auditor compensation
on external auditor’s objectivity and independence.

The results revealed that the dual roles of external auditors have a significant impact on the objectivity and
independence, and it adds high value to the organizations.

Tawfeq and Jabali (2014):

aimed in their study to know the relationship between the information systems of accounting, auditing, and
how to provide reliable information to characterize the service auditor.

To achieve the goals of the study, it depends on the theoretical approach by reviewing the previous studies
and discussing the concept of accounting information systems and their components, the importance of the
review in light of computerized information systems, in addition to discussing the auditor function in light of
accounting information systems.

The results illustrated that there is a relationship between the information systems of accounting and
auditing. It was found also that most of the accountants do not know enough about computer operations, and
do
not have enough understanding about the automatic and manual accounting system.

Alarbeed et al. (2014):

investigated the role of governance rules in improving the auditor’s ability to detect fraud in the financial
statements in Syria.

The research sample consists of the total auditors who are accredited by the Syrian Exchange and Securities
Commission, and their number was 31 auditors in 2013. A questionnaire has been distributed to the sample
of the study, and the number of returned questionnaires was 22, which represents 70.97% of the total
distributed questionnaires.

The results showed a positive significant role of governance rules in improving the auditor’s ability to
detect fraud in the financial statements.

Almeshal (2014):

studied the role of auditor independence in achieving governance requirement and its impact on accounting
information in Palestine.

To achieve the purpose of study, a questionnaire had been developed and distributed to the sample of the
study which consists of 79 members who work in audit firms.

The results investigated a positive significant role for the auditor independence in achieving governance
requirement. Also, it was found that there is a positive significant role for the auditor independence in
enhancing the creditability of accounting information.

Ahmed and Shil (2013):

studied the role of internal auditors in protecting existing and prospective investors in Bangladesh.

To achieve the goal of study, four different survey questionnaires had been developed and distributed for
internal auditors, finance and accounting department executives, investors and board of directors in 100
companies, and the number of the investors was 500, but the returned questionnaires were 400.
The results revealed that there is a strong and significant relationship between independence of internal
auditors and independence of finance and accounts department. Furthermore, the results revealed a strong
and
significant relationship between the independence of finance and accounting departments and corporate
governance.

Salem (2012):
examined the auditor’s responsibility to detect fraud on financial statements.To achieve the aim of the study,
it depends on the theoretical methodology by reviewing the previous related researches.

The study found that the amount of fraud that is detected appears to have declined because of the use of
more advanced technology. Also, the result found that auditors have limited legal expertise and they need
special training that identifies all illegal activities.

Matar (2012):
investigated the impact of legal responsibility of external auditors on auditing quality and investment level in
Kuwait.

To achieve the aim of study, a questionnaire has been distributed to the sample of the study which
consisted of 105 members who use the financial reports in brokerage firms, investment firms, commercial
banks, and stock exchange. Another questionnaire has been distributed to the auditors who work in 50 local
auditing firms and international auditing firms, and their number was 184, where the number of the retuned
questionnaires were 98.

The results of the users’ questionnaire illustrated that trust in financial information will be enhanced
through increasing auditor liability. Also, it was found that the users need auditing services, and they require
auditors to provide collateral for their investment process in order to increase their investment level.

On the other hand, the results of auditors’ questionnaire revealed that the auditors do not agree that them
liability should be increased since this will make auditing services costlier. Also, it was found that auditors
believe that the existence of legal liability rules will make financial statement users more trustful in financial
information.
Jovković, Ljubisavljević, and Obradović (2012):

highlighted the role, importance, and objectives of the external audit in banks in Serbia.

To achieve the purpose of study, survey questionnaire had been developed and distributed to the sample of
the study which consists of the employees who work in 28 banks operating in Serbia.

To achieve the purpose of study, survey questionnaire had been developed and distributed to the sample of
the study which consists of the employees who work in 28 banks operating in Serbia.

The results revealed that the primary service that auditors provide to banks is the audit of financial
statements, then the review of other financial information and the assessment of the risk facing the bank. The
results also showed that banks rarely use the services of tax calculation, non-financial performance
measurement, and traditional accounting services.

Alqaraleh (2011):

examined the impact of using information technology on the credibility of financial statements as perceived
by the external auditors in Jordan.

To achieve the purpose of study, a questionnaire had been developed and distributed to the sample of the
study which consists of 220 external auditors.

The results showed a statistical significant impact for using information technology and electronic disclosure
risk on the credibility of financial statements from the point of view of the external auditor’s in Jordan.

Gurdeep Singh Batra, Narinder Kaur: (2010)

Emerging Dimensions of Audit Accountability: A Case Study of Public Enterprise Management and
Efficiency Audit in India ‘this paper finds that audit control over public enterprises varies from case to case,
and the CAG should interpret this power according to the need of situation, and there should be external
efficiency audit for public enterprises.

Government of Saskatchewan News Release: (2009)

Results of Independent Forest Management Audit Released, this article refers to the results of the second
independent sustainable forest management audit conducted under Saskatchewan's updated legislation were
released today, highlighting requirements for monitoring and reporting of forest practices in the province.
CHAPTER NO. 4

RESEARCH

METHODOLOGY
The process used to collect information and data for the purpose of making business
decisions. The methodology may include publication research, interviews, surveys and other
research techniques, and could include both present and historical information.

A research methodology or involves specific techniques that are adopted in research process
to collect, assemble and evaluate data. It defines those tools that are used to gather relevant
information in a specific research study. Surveys, questionnaires and interviews are the
common tools of research.

4.1 RESEARCH DESIGN

The research design was descriptive in nature because it is used when there is same
comprehension of the problems and objectives are defined and research questions are clearly
formulated.

4.1.1 DESCRIPTIVE RESEARCH

Descriptive research is “aimed at casting light on current issues or problems through a
process of data collection that enables them to describe the situation more completely than
was possible without employing this method.”
An important characteristic of descriptive research relates to the fact that while descriptive
research can employ a number of variables, only one variable is required to conduct a
descriptive study. Three main purposes of descriptive studies can be explained as describing,
explaining and validating research findings.
4.2 DATA COLLECTION METHODS

Data collection is a process of collecting information from all the relevant sources to find
answers to the research problem, test the hypothesis and evaluate the outcomes. Data
collection methods can be divided into two categories: primary methods of data collection
and secondary methods of data collection.

4.2.1 PRIMARY METHOD

A primary data can be defined as data which is in the raw form or more precisely first-hand
data which can be used for analyzing and building research model. There are three main
methods used for collecting primary data which are personal interviews, observation method
and questionnaire.

4.2.2 SECONDARY METHOD

Secondary data is a type of data that has already been published in books, newspapers,
magazines, journals, online portals etc. There is an abundance of data available in these
sources about your research area in business studies, almost regardless of the nature of the
research area. Therefore, application of appropriate set of criteria to select secondary data to
be used in the study plays an important role in terms of increasing the levels of research
validity and reliability.

In this research, primary method of collecting data has been used. The main source of
collecting the data from the respondents was the questionnaire method. A questionnaire was
filled up by the respondents related to role of auditing in business organization. Apart from this, the
secondary data has also been used in this research project to collect the relevant information.
CHAPTER NO.5

DATA ANALYSIS

AND

INTERPRETATION
This is data collected by internet and personal approach with auditor`s clients who are in
Punjab and Garhshankar. So all the data collected by me is primary as well as secondary.
Questioner filled by auditor`s clients by personal approach and by social media. The collected
data were not easily understandable, so I like to analyze the collected data in a systematic
manner and interpreted with simple method.

The analysis and interpretation of the data involves the analyzing of the collected data and
interpretation it with pictorial representation such as bar charts, pie charts.
 MATHEMATICAL FINIDINGS

No. of respondents
Highly agree
Agree
Neutral
Dis agree

RESPONDENT No of respondents

Highly agree 60%

Agree 20 %

Neutral 9%

Disagree 11%
INTERPRETATION

As per the data 60% Auditor`s clients are strongly agree 20% are agree 9% auditors are neutral
11% are disagree with the data.

STATEMENT 1 : Is Auditing made more transparency?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 5
Agree 3
Neutral 1
Disagree 1

INTERPRETATION

As per the data 50% clients are strongly agree 30% are agree 1% clients are neutral 1% are
disagree with the data.
 STATEMENT 2: Is Auditing made more efficient and effective performance?

No of respondents

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 6
Agree 2
Neutral 0
Disagree 2

INTERPRETATION

As per data 60% auditor`s clients are strongly agree ,20% are agree only,0% clients are neutral
and 2% are disagree with the data.
STATEMENT 3: Is it well established in Punjab?

Highly agree Agree Neutral Disagree

Respondent No of respondents
Highly agree 5
Agree 3
Neutral 0
Disagree 2

INTERPRETATION

As per the data 50% clients are strongly agree 0% are agree 0% clients are neutral 2% are
disagree with the data.
STATEMENT 4: Is it costly in Punjab?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 7
Agree 1
Neutral 2
Disagree 0

INTERPRETATION

As per the data 70% clients are strongly agree 10% are agree 2% clients are neutral 0% are
disagree with the data.
STATEMENT 5: Is auditing effect the investor behaviour?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 5
Agree 3
Neutral 2
Disagree 1

INTERPRETATION

As per the data 50% clients are strongly agree 30% are agree 20% clients are neutral 10% are
disagree with the data.
STATEMENT 6: Is auditing effect the financial markets?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 5
Agree 1
Neutral 2
Disagree 2

INTERPRETATION

As per the data 50% clients are strongly agree 10% are agree 2% clients are neutral 1% are
disagree with the data.

STATEMENT 7: Does auditing reduced bias in Finance reporting?

 Hi
gh
ly
a
gr
ee
Ag
re
e
Ne
ut
ra
lDi
sa
gr
ee

Respondent No of respondents
Highly agree 7
Agree 2
 Neutral 0
Disagree 1

INTERPRETATION

As per the data 70% clients are strongly agree 20% are agree 0% clients are neutral 10% are
disagree with the data.
STATEMENT 8: Is it help to reduce fraud and scams?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 5
Agree 3
Neutral 2
Disagree 0

INTERPRETATION

As per the data 50% clients are strongly agree 30% are agree 20% clients are neutral 10% are
disagree with the data.
STATEMENT 9: Is Auditing increasing financial reliability and integrity?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 7
Agree 2
Neutral 0
Disagree 1

INTERPRETATION

As per the data 70% clients are strongly agree 20% are agree 0% clients are neutral 10% are
disagree with the data.
STATEMENT 10: Auditing helps to identify weakness of the accounting?

Highly agree
Agree
Neutral
Disagree

Respondent No of respondents
Highly agree 7
Agree 2
Neutral 0
Disagree 1

INTERPRETATION

As per the data 70% clients are strongly agree 20% are agree 0% clients are neutral 10% are
disagree with the data.
 *Limitations

Costly/expensive
Low income
Alteration in figures
Interruption in work
Mechanical work
Small business
can’t afford
CHAPTER NO. 6

FINDINGS, SUGGESTIONS

AND CONCLUSION
* FINDINGS
The findings generated from an audit or inspection will point out errors or hazards presented by
the process or by the equipment. They will not point out the solutions to the problems, only the
problems themselves. It is up to the company management to address the findings and improve
safety and health in the workplace. Frequently, management will appoint someone to oversee the
implementation of improvement projects that are determined based on the findings.
Occasionally, there are a great many findings, many of which have simple solutions that can be easily and
inexpensively addressed.
 FINDING NO. 1
Involving in an audit engagement without having proper knowledge of client’s business.
Fact:
In most cases, when the firm gets a new client, partner/partners select one of the managers as the supervisor of the
audit team. Then supervisor selects some of the students as the members of the audit team for such audit engagement
and the most senior student is selected as the in charge of the team. Sometimes supervisor does not give all the
members of the team an overall idea of the client, nature of its business, its operation etc. Only in charge is informed
about the client and in charge also does not discuss the details of the client’s business and its nature before going to
the client.

Effect:
a. As the members do not know anything about the client, client’s business, they have to give much time to
understand client’s business and then they can start their audit tasks. So the audit tasks take much time. b. Because of
members’ lacking in knowledge about the client’s business, they sometimes fail to deal with the client and they have
to depend on them in charge for doing any audit task.
FINDING NO. 2
Work programs are not followed properly.
Fact:
Work programs contain step by step instructions to carry out the audit work. In ACNABIN, we have separate work
programs for different sectors of business. Work programs are also developed for different account heads to make our
audit tasks easier. But in most of the cases, work programs are not followed properly. In some cases, we just touch
each account head but do not go to the deep of the head to save our time.

Effect:
a. Because of avoiding work programs, we are not able to obtain proper idea about each account head.
b. We may sometimes miss some important issues to be discusses
. FINDING NO. 3
Lack of supervision.
Fact:
According to the audit standards, all the audit tasks must be supervised properly. Appropriate supervision ensures the
quality of the audit engagement. But practically, this does not happen in ACNABIN. In most of the cases, in charge
distributes different account heads to different students and gives them some idea about such heads. But later, in
charge does not supervise his juniors’ works properly.
Effect: Juniors may do something wrong or may collect some unnecessary documents, may fail to collect necessary/
required documents and that cannot be checked and corrected because of lack of supervision. As a result, when the
partner/partners check the working paper files, junior students have to face some problems.
FINDING NO. 4
Limited time to complete an audit engagement.
Fact:
We have to carry out and complete our audit tasks within a limited time period. Sometimes, Client creates pressure to
complete the audit and provide the audit report within very limited time as it he/she has to submit the audit report and
audited financial statements to the Stock Exchange or Registrar of Joint Stock Companies (in case of private limited
companies) within a fixed date. Sometimes, engagement partner of such engagement also creates pressure to complete
audit work as early as possible.

Effect: Because of time limitation, we complete the audit engagement and provide the audit report very quickly. So, it
is not possible to ensure the quality of the audit work. Sometimes some account heads may be untouched.
.
FINDING NO. 5
Difficulties in obtaining required audit evidences.
Fact:
Auditing standard suggests that sufficient and competent audit evidences must be collected and must be analyzed
properly. Because of time limitation, it is not possible to test all the transactions. We identify some transactions having
significant amounts or we feel significant, and test them and provide our opinion on the basis of such transactions. So,
we try to collect all the evidences related to those transactions. But in some cases, management of clients are not
interested or do not want to provide all the necessary or required documents because of their lack of knowledge about
audit or they want to hide some illegal or wrong works done by them. Sometimes, we have to wait 2/3 days to get our
required documents. Sometimes, client lost the documents that are helpful for our tasks.

Effect:
If the client fails to provide the required and necessary documents, it is difficult for us to give or issue an appropriate
audit opinion and provide the appropriate audit report.
* SUGGESTIONS AND RECOMMENDATIONS:

1. Before going to the client, supervisor or in charge should give some brief idea

about the client’s business to all the members of the audit team.

2. Work programs must be properly introduced to the juniors/ new students and

must be followed as much as possible in each audit engagement.

3 In charge of an audit team must be ordered and properly instructed to supervise

the work of his juniors.

4. An audit team should be given appropriate time (neither much nor less) to carry

out the entire audit work properly.

5. Higher authority of the client must order or instruct the management to provide

Auditors the required documents.

 * Conclusion

The auditing quality of the electronic prescriptions can be improved through measures like
improving the electronic prescription auditing system, enhancing pharmacist auditors' general
quality, etc.
The traditional audit paradigm is outdated in the real time economy. Innovation of the traditional audit
process is necessary to support real time assurance. Practitioners and academics are exploring continuous
auditing as a potential successor to the traditional audit paradigm. Using technology and automation,
continuous auditing methodology enhances the efficiency and effectiveness of the audit process to support
real time assurance. its defines that how continuous auditing methodology introduces innovation to practice
in seven dimensions and proposes a four- stage paradigm to advance future research. In addition, we
formulate a set of methodological propositions concerning the future of assurance for practitioners and
academic research.
CHAPTER NO.7

BIBLIOGRAPHY AND

REFRENCES
1.Observation

2.Analytical Review (comparison of data with previous year, budget, industry standards)

3. Inspection of Documentation

4.Confirmations (i.e. ask someone outside/inside the company)

5. Enquiry (i.e. ask someone inside the company)

Following are the journals and magazine from where I collected the data

1.ACCOUNTING, AUDITING AND ACCOUNTABILITY JOURNALS

2.AICPA NEWSLETTER
3.CAE BULLETIN

Newspapers are:
ECONOMICS TIME
HINDU NEWSPAPER
THE TRIBUNE

Websites are:
https.//cakmowledge.com
org//top-accounting-firms
 CHAPTER NO .8

ANNEXURE

QUESTIONNAIRE:

Dear SIR/MADAM.

I am conducting a survey entitled “ROLE OF AUDITING IN BUSINESS

ORGANIZATION-A STUDY BASED ON GARHSHANKAR”. Please give your valuable
information, your information will be kept confidential and will be used only for academic
purpose.

ANKITA RANI

MBA.
Name…

Address…

Age: ……

Contact…

1. Is Auditing made more

transparency? Yes No

2.Is Auditing made more efficient and effective

performance? Yes No

3. Is it well established in Punjab?

Yes No

4.Is it costly in Punjab?

Yes No

5.Is auditing effect the investor

behaviour? Yes No

6.Is auditing effect the financial

markets? Yes No
7. Does auditing reduced bias in Finance

reporting? Yes No

8.Is it help to reduce fraud and

scams? Yes No

9.Is Auditing increasing financial reliability and

integrity?

Yes No

10.Auditing helps to identify weakness of the

accounting? Yes No