DETAILED CONCEPT ON AUDITING

1. INTRODUCTION
AUDIT
Auditing is defined as a systematic and independent examination of data,
statements, records, operations and performances of an enterprise for a stated
purpose. It is an unbiased examination and valuation of the financial
statements of an organization to form an independent opinion. The purpose is
then to give an opinion on the adequacy of controls within an environment
they audit, to evaluate and improve the effectiveness of risk management,
control, and governance processes.
AUDITOR
An auditor is someone who is responsible for evaluating the validity and
reliability of a company or organization's financial statements. He is an
individual who inspects and verifies the accuracy of a company's operational
and financial records. Qualification of Auditor - Sec 141(1) & Sec 141(2)
Eligible to be appointed as auditor only if he is CA. Firm with majority of
partners practicing in India are qualified for appointed - may be appointed by
firm name to be auditor of co.
OBJECTIVES OF AUDITING
The main objective of auditing is to verify the accounts and financial
statements examine the reliability and validity of financial statements and
also detect and prevent the fraud and errors in the company.

2. IMPORTANCE OF AUDIT
 The audit helps in the detection and prevention of errors and frauds.
 The audit helps in maintaining the records and verification of books of
the books of accounts.
 The independent opinion of the auditor is extracted through auditing
which is extremely essential for the management of the company.
 Audit creates confidence among stakeholders such as creditors,
debenture holders, and banks, etc.
 Audited statements ensure compliance with legal requirements such as
listing requirements of stock exchange etc.
 Auditing reinforces and strengthens internal control and provides
suggestions necessary in the internal control system.
TYPES OF AUDIT
1. External audits are performed by an external third party. External
parties provide more unbiased opinions since they are not subject to
conflicts of interest.
2. Internal audits are performed by internal employees of a company or
organization. They are not usually distributed outside the company, and
therefore are mostly for internal use.
3. Government audits are performed by government entities to ensure that
the prepared financial records do not misrepresent taxable income.

3. PROFILE OF THE COMPANY
Name - Rajiv M Jain & Associates
Address - No.105/2, Sethiya Complex, 1st Floor Laxman Rao Road,
20th Cross, Balepete, Bengaluru, Karnataka 560053, India
Date of Establishment - 31st
July 2011
Contact - 080-41722323
Email - carajivmjain@gmail.com
Type of Profession – Chartered Accountant
Total no. of employee - 10
Services offered - Advisory and consultancy, Income Tax and Internal
and External Audit, Audit and Assurance.
Mission – To provide excellent professional services with highest
standards of integrity, commitment and confidentiality and
work towards improving the quality of service.
Vision – To be recognized for delivering the best integral advisory
Services to our clients with effective results and with the
utmost in confidentiality.

4. ABOUT THE COMPANY
RAJIV M JAIN & ASSOCIATES.
MR. Rajiv is chartered accountant with 15 years of experience in a corporate
world, and also holds a degree of B.com and now owns an audit firm ‘RAJIV
M JAIN & ASSOCIATES’ and he had developed a network with various
other consultants in the industry.
They are constantly dedicated in providing complete accounting and taxation
solutions to the clients through the expert team and assure that tax and
regulatory shall be handled with care, quality and speed, firm also provide
article ship to the students who are pursuing CA. They provide
recommendations to improve weak internal controls and investigate the fraud
and perform reconciliations of financial and operating information, Monitor
the records based on the industry standards, laws, and guidelines and
Evaluate whether processes and procedures are functioning properly.
TEAM
The team is closely knitted and co-ordinate all the activities of the firm with
the positive binding culture. The firm has over 10 members, including 2
Qualified Accountant, 6 Interns and 2 MBA graduates. Team has a young
member which brings in energy, lateral thinking and a combination of
strategy and action.

5. LEARNING EXPERIENCE
1.VOUCHING
Vouching is concerned with examining documentary evidence to ascertain
the authenticity of entries in books of entries in books of accounts. It is an
inspection by the auditor of evidence supporting and substantiating the
transaction made in the books.
Tally prime
Tally prime is software which helps to record the business transactions on
daily basis. It is automate and integrate all the business operations such as
Sales, Finance, Purchase, stock, it also calculate the profit and loss account
and balance sheet in no time. It is reputed software and almost used by all the
companies and CA firms for accounting purposes.
I learned how to do entries of purchases, sales, debit note, credit note and
bank statement. The audit firm collects the sales and purchase data of each
particular month and make a record of it and after doing the entries, the data
is exported to the excel and then print out is taken, then checking is done like
the date of the bill, Invoice no. of the bill, GST pin, amount etc does match
with the available data and to find any errors.
After recording and checking GST Return filing is done. The business which
is registered under GST have to file returns monthly, quarterly and annually
based on the category of business through the Government of India's GST

6. portal. They have to provide the details of the sales and purchases of
goods and services along with the tax collected and paid. There are mainly 3
important type of GSTR Filling which are GSTR 1 - in this the businessman
which is registered taxpayer should fill a return of Outward supplies i.e. sales
within 10th
of next month, GSTR 2 - in this the businessman which is
registered taxpayer should fill a return of Inward supplies i.e. Purchase with
in 15th
of next month and lastly, GSTR 3- in this the businessman which is
registered taxpayer should fill a return of both Inward and Outward supplies
(sales and purchase) with in 20th
of next month. If the business have not
made any outward supply (sales) and have not received any inward supply
(purchase) of any goods and do not have any tax liability in that month then
they should file NIL return in GST portal.

7. A late fee will be levied on taxpayers if they fail to file GST return on time.
The interest rate is 18% per annum. A late fee of Rs.200 will be charged per
day, from which Rs.100 each will be charged as CGST and SGST. The
penalty fee can go as high as up to Rs. 5,000. For nil return late fees would
be Rs. 20 per day for which it would be Rs.10 under CGST and Rs. 10 under
SGST.
I also created a new account (company) in a tally of an individual person
called Veena Jain and created a necessary ledger and passed the bank
statement. Also prepared the capital account and balance sheet in excel to fill
the IT Returns. Other than this account I had closed the capital account of the
firm and individual as well. Closing capital account beginning of the year is

8. necessary because amount get summed up with the previous year amount and
It doesn’t show the opening balance by this it also affect the capital account
and balance sheet.
E-WAY BILL
E-way bill (Electronic-way bill) is a document introduced under the GST
regime that needs to be generated before transporting or shipping goods
worth more than INR 50,000 within state or inter-state. The physical copy of
e-way bill must be present with the transporter or the person in charge of the
conveyance and should include information such as goods, recipient,
consignor and transporter. If a consignment is found without an e-way bill,
the concerned person should pay a penalty of Rs. 10,000 or the equivalent
amount of tax evaded whichever is higher.
E-way bill has 2 parts - Part A contains the following: GSTIN of
the recipient, Place of delivery (PIN Code), Invoice/Challan number and the
date of issue, Value of goods, HSN code, and Transport document number,
Reasons for transportation. Part B contains the details of the transporter like:
their vehicle number. I have done 5 E-way bills with the confirmation of the
seniors, it was easy to understand but error of a small thing can cause the
penalty of huge amount.
ABSTRACT
After recording the purchase data in tally, the data is transferred to an excel
and that data is compare with data available in GST portal. The portal would

9. already have the data of GSTR 2 of the recipient because the supplier would
have already uploaded its GSTR 1 data, so automatically G
STR 2 data will be available. With the available information, the tally data is
compared. This process helps to find the missing bills which are missing in
tally and bills which are not uploaded in a portal. Sometimes last month
ending bills are uploaded in beginning of a next month and some also upload
their bill quarterly. So while in the process of comparing bills one should
check the existing, last month and quarterly bills.
2. DETECTION OF FRAUDS AND ERRORS
Errors are unintentional misstatement or omission of disclosure of amounts
in the financial statements and fraud refers to intentional misstatement or
omission of disclosure of amounts in financial statements.
Types of Errors:
 Errors of Principle: Such errors are committed when some fundamental
principle of accounting is not properly observed in recording a
transaction
 Clerical Errors: Such an error arises on account of wrong posting.
 Errors of Commission: When amount of transaction or entry is
incorrectly recorded in accounting books/ledger.
 Errors of Omission: When the transactions are not recorded in the
books of original entry or posted to the ledger.

10.  Compensating Errors: When two or more errors are committed in such
a way that the result of these errors on the debits and credits is nil.
 Error of Duplication: When a transaction is recorded more than once.
Types of Frauds
 Misappropriation of Cash: It is very common in big firms and can take
place usually through:
 Suppressing receipts
 Recording less amount than the actual amount of receipt
 Fictitious payments
 Recording more amount than the actual amount of payment.
 Misappropriation of Goods: This is common, especially, when goods
are of high value but not bulky.
 Falsification or Manipulation of account: Accounts may he
manipulated by those responsible persons who are in top management
of the organization in order to achieve certain specific objectives.
 Window dressing: When accounts are prepared in such a way that
apparently on the face of it, they indicate a much better picture than
actually what they are.
 Secret Reserves: When accounts are prepared in such a way that
apparently on the face of it, they disclose a worse picture than actually
what they are.
RECTIFYING ERRORS

11. I have faced all this type of error in my tenure of internship, while doing
continuous vouching individual make errors so to rectifying the errors the
rechecking procedure is necessary, I have stated above how rechecking
procedure is done. Some firms do have hand written sales book, due to
handwriting error the GSTIN is recorded in tally go wrong. So the GSTIN is
searched on the GST portal with some alternatives and similar looking of the
alphabets. If the GSTIN will be correct the portal will show the information
of the firm like name of the firm and proprietor of the firm etc. So by the
name of the firm in the portal can be used to compare with the sales book. I
rectified around 10 GSTIN.
3. VERIFICATION AND VALUATION OF ASSETS AND
LIABLITITES
Spicer and Pegler, is “An enquiry into the Value, Ownership, Title,
Existence, possession and presence of any charge on the assets”. Verification
is a function of examining assets & liabilities to check (i) Value (2)
Ownership (3) Title (4) Existence (5) Possession and (6) to see whether the
assets are free from any charge or encumbrance etc. Verification of assets
and liabilities means proving the truth about the existence and the correctness
of the money value of the assets and liabilities appearing in the balance sheet
of the business Valuation means estimation of various assets and liabilities. It
is the duty of Auditor to confirm that assets and liabilities are appearing in
the balance sheet exhibiting their proper and correct value. In the absence of

12. proper valuation of assets and liabilities, they will exhibit either overvalued
or under-valued.
AUDITING
Audit is the inspection of various books of accounts by physical checking of
inventory. It is done to ascertain the accuracy of financial statements
provided by the organization. It is a long process, in which the auditors have
to do checking of each and every details of the invoice. I was a part of this
process and it took two days to complete the auditing of a one company.
Through this process we can find out the missing bills and any errors in date,
invoice no., amount etc.
There are 5 Auditing procedures: Inspection – Under this, the auditor checks
every transaction against written steps, procedures to ensure accuracy.
Observation – Under this, the auditor usually tries to inspect others doing/
performing a particular process. Confirmation – This type is applied to
ensure the correctness of financial statements either from internal sources
within the auditee organization or from external sources. Recalculation –
Under this, the auditor usually crosses checks information presented by the
client. It is generally used in case of checking mathematical accuracy.
Reperformance – Using this procedure, the auditor re-perform the entire
process which is performed by the client to find out gaps, audit findings, etc
IT FILING
Income Tax Return (ITR) is a form which a person is supposed to submit to
the Income Tax Department of India. It contains information about the

13. person’s income and the taxes to be paid on it during the year. IT filing is
done by using the software called WINMAN CA ERP.
Winman CA-ERP contains the following feature - Income Tax Software (IT
software), Trial Balance software, Balance sheet software, Audit reports
software (Form 3CD e-return) and other useful tools. The income tax
software includes Income Tax computation, Income tax returns generation,
e-filing tax returns and other useful features. The software also facilitates
generation of ITR e-returns as per the e-filing schema prescribed by the
Income tax department, Government of India. The software is specifically
developed to revolutionize the Income tax computation, Indian tax return
filing procedures, preparation of balance sheet and other functions of CAs in
India and therefore is the leading 'CA office software' in the Indian market
And as I stated above about the creation of a company called Veena Jain, I
filed this individual filed in Winman with the help of senior. It was really
interesting process. Every IT filing should be filed before 31st
December of
each year. Filing ITR post the deadline, the individual will be liable to pay a
maximum penalty of Rs.5000.

14. 4. DUTIES, RESPONSIBILITIES AND POWER OF AN AUDITOR
 DUTIES
 Report to members - The auditor is required to make a report to the
members of the company
 Examination of accounts – auditor have to give brief description about
report.
 Reporting on true & fair view - The primary duty of the auditor is to
express his opinion whether the balance sheet shows true & fair view of
the state of company’s affair as at the end of the financial year

15.  Report as to additional matters - In exercise of this power, the Central
Government has issued Companies (Auditor’s Report) Order CARO,
2003. The auditor has to make a statement on each of the matters
specified in the order.
 Duty to sign report - It is the duty of the auditor to 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.
RIGHTS & POWERS OF AUDITOR
 Right of access to Books of account & Vouchers [Sec. ...
 Right to obtain information & explanation [Sec. ...
 Right to visit branch offices & access to branch account.
 Right to receive notice & attend general meeting.
 Right to make representation.
 Right to report to members.
RESPONSIBILITY
The auditor has a responsibility to plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement, whether caused by error or fraud. Because of the
nature of audit evidence and the characteristics of fraud, the auditor is able to
obtain reasonable, but not absolute, assurance that material misstatements are
detected.

16. 5. PREPARATION OF AUDIT REPORT
When preparing for an audit report it's important to understand audit report
format, spend time looking for a good audit report examples, and understand
the purpose of an audit report as well as an audit opinion.
The auditor’s report should contain these items:
 Company name and the accounting method used for the assessment
 A rundown of the auditor’s duties and responsibilities
 The auditor’s reservations (if applicable)
 The auditor’s conclusion
 A copy of the management’s internal financial report and other related
documents that are needed for an efficient assessment
 The date of the audit and the auditor’s signature
CONCLUSION
The internship has offered me the opportunities to learn and develop myself
in many. It has helped me in preparing myself to be ready to serve the needs
of industry. This internship also gave me real life experience and thus

17. gaining exposure of working in the real world granting the opportunity to
learn more about myself potentials and abilities.
This internship program was a great opportunity for me to interact with the
colleagues and learn the new things. It gave me understanding about the
process of auditing, GST filing, IT filing. It also gave me the understanding
of importance of an auditor. It thought me how to manage time and submit
the work before the period. It helped me to know what skill and knowledge I
have to improve in the coming time. At last this internship has given us new
insights and motivation to do more internship in my career and gained more
experience.
THANK YOU