CHAPTER-I

1.1 INTRODUCTION
An audit may be said to be such an examination of the books, accounts and vouchers
of a business as will enable the auditor to satisfy himself that the balance sheet is properly
drawn-up, so as to give a true and fair view of the state of the affairs of the business, and
whether the profit and Loss Accounts gives a true and fair view of 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"
R.B. Bose has defined as audit as "the verification of the accuracy and correctness of
the books of account by independent person qualified for the job and not in any way
connected with the preparation of such accounts." M.L. Shandily has defined auditing as
"inspecting, comparing, checking, reviewing, vouching ascertaining scrutinising, examining
and verifying the books of account of a business concern with a view to have a correct and
true idea of its financial state of affairs
1.2 OBJECTIVES OF THE TRAINING

 Normally such frauds are committed by the top level executives of the business. So,
the explanation is given to the auditor also remains false.
 So, an auditor should detect such frauds using skill, knowledge, and facts.
 To provide information to income tax authority.
 To have a moral effect.

1.3 LIMITATIONS OF THE STUDY

 The frauds committed in such circumstances are not revealed. The audited accounts
could not show the true and fair outlook.
 The certificates may not provide the true information.
 The management may not provide correct clarification.
 The auditor cannot guide management for better use of capital.

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 CHAPTER - II

2.1 PROFILE OF THE AUDITOR

Name Accountant :

Year of establish :

Owner :

Address :

Mobile :

Email :

Area of Services :

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 COMPANY PROFILE
2.1 OVERVIEW OF THE INSTITUTIONS

K. S. Jagannathan & Co, Chartered Accountants, (KSJ) is a leading accounting firm

rendering comprehensive professional services which include Independent Audit &
Assurance, Foreign Exchange and Regulatory Consulting, Restructuring and Valuations,
Accounting and Corporate Support, Personnel Recruitment, Legal and Secretarial Support
and Management Consulting and Tax Consultancy, Tax Audit and Advice on Indirect Taxes.
KSJ was established in Chennai in 1979. KSJ was founded by late Shri. K.S. Jagannathan, a
pioneer in auditing profession in India.
KSJ is one of the few audit firms in India to be selected for review by the “Peer
Review Board” of the Institute of Chartered Accountants of India, Delhi. The review was
done in the year 2005. The review was conducted successfully and KSJ has been issued
necessary certificate in this regard. This certification gives an assurance that the audit
procedures and processes followed by KSJ are of high standard. The firm boasts of a very
prestigious clientele, which includes corporate houses & MNC's from across industries and
continents, project offices of foreign companies, branches of foreign enterprises, partnership
firms, high net-worth individuals, public charitable trusts & others.
Engagements for the above clients include audit & assurance services, due diligence
reviews, investigations, advisory services on Foreign Exchange related areas and Legal
Advisory Services besides undertaking certification of foreign exchange remittances, royalty
payments, commission income from foreign principals, export earnings. KSJ undertakes
restructuring and valuations for private sector companies. KSJ's professional work is spread
all over the country and abroad. Within the country, KSJ reaches out not only to the metros
and large cities but even to many remote locations etc.
KSJ clients' have global operations through their Branches / Marketing set-ups in
USA, UK, Far-East, Middle East and Australia, Korea & China. KSJ also helps with
selection and recruitment of top level finance personnel for clients including those requiring
placement abroad. KSJ clients are diversifying their activities by entering into technical
collaborations with business giants in the world and forming Subsidiary Companies within
India and abroad through Joint Ventures. KSJ assists clients who are inbound investors and
outbound investors in a comprehensive manner. KSJ assists well known Non-Governmental
Organizations (NGOs) in their needs.

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 CHAPTER-III

3.1 ORGANIZATION CHART

CLIENT /
ORGANIZATION

REPORTING AUDIT PLANNING

PROFESSIONAL
FIELD WORK
JUDGEMENT

ANALYSIS

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 CHAPTER - IV

4.1 INTRODUCTION OF AUDITING

The purpose of contract auditing is to assist in achieving prudent contracting by
providing those responsible for Government procurement with financial information and
advice relating to contractual matters and the effectiveness, efficiency, and economy of
contractors’ operations. Contract audit activities include providing professional advice on
accounting and financial matters to assist in the negotiation, award, administration, repricing
and settlement of contracts.
Topics that contractors and Program Managers (PM) should be aware of with regards to
Auditing include:

 Audit Plan
 Government Audit Standards
 Performing Audit Services
 Requesting Access to Records

An Auditor represents the cognizant audit office designated by the DCAA or Service audit
activities for conducting audit reviews of the contractor’s accounting system policies and
procedures for compliance with the criteria
4.2 FINANCIAL REPORT AUDITS

An auditor has to express an opinion about whether the report is prepared in all
material respects in accordance with a Financial reporting framework (ASA 200, para. 11;
ISA 200, para 11. Financial reports have to be prepared in accordance with Australian
Accounting standards and any relevant legislation such as the corporations act 2001.
Listed companies or large companies are required to prepare and issue to shareholders
a financial report and directors’ report annually. The reports must include a directors’
declaration that includes: whether, in the directors’ opinion, there are reasonable grounds to
believe that the company will be able to pay its debts as and when
They become due whether the Financial statements and notes comply with accounting
standards, and give a true and fair view of the Financial position and performance of the
company and any consolidated entity, and if your company is listed, whether the directors
have been given the declarations required by the chief executive o1cer (CEO) and chief
Financial o1cer (CFO).

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 The audit expectation gap occurs when there is a difference between expectations of
assurance providers and financial report users. The gap occurs when user beliefs do not align
with what an auditor has actually done. In particular, the gap is caused by unrealism user
expectations such as; the auditor is providing complete assurance, the auditor is guaranteeing
the future viability of the entity, an unmodified audit opinion is an indicator of complete
accuracy, the auditor will definitely find any fraud, the auditor has checked all transactions.
The reality is that an auditor provides ;reasonable assurance does not guarantee the
future viability of the entity an unmodified opinion indicates that the auditor believes that
there are no material (significant) misstatements (errors or fraud) in the financial report the
auditor will assess the risk of fraud and conduct tests to try to uncover any fraud, but there is
no guarantee that they will find a fraud, should one have occurred the auditor tests samples
of transaction
4.3 DEMAND FOR AUDIT AND ASSURANCE SERVICES

 The users of the financial statements are not limited to the shareholders or owners of
the business.
 Other users can include:
 Investors: can include current or potential investors. Decisions include to buy, hold or
sell
 Stake in the organization.
 Suppliers: may want to assess whether the entity can pay them back for goods
supplied.
 Customers: may look into going concern if it is to rely on the entity for goods.
 Lenders: to assess whether loan repayments can be made as and when they fall due.
 Employees: to assess whether they can pay entitlements, and stability may be assessed
for
 Job security.
 Governments: whether the entity is complying with regulations and paying
appropriate taxes.
 General public: whether they should associate with the entity (future employee,
customer or supplier,) what it does and plans to do in future.

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4.4 AUDITORS

EXTERNAL

An external audit program requires an independent auditor to perform a

comprehensive financial statement audit which offers information on internal controls
over financial reporting. External auditors review accounting, payroll, and purchasing
records. Common areas of concern for external auditors involve the classification
and pay of a company’s employees. In some instances, external auditors are called in
to perform a thorough investigation of a company whose shareholders doubt the
accuracy or legitimacy of a company’s financial claims.
INTERNAL
Internal Auditors check for any mismanagement of an organizations funds. The
primary role of Internal Auditors is to objectively review and evaluate financial
activities in order to maintain or improve the efficiency and effectiveness of a
companies risk management, internal controls, and corporate governance. Internal
Auditors evaluate the effectiveness of accounting operations, determine whether a
company complies with laws and regulations, and investigates whether or not a
company is taking the proper steps to address control deficiencies and audit report
recommendations.
TYPES OF EMPLOYMENT FOR AUDITORS

Accountants and auditors held about 1.3 million jobs in 2008. Most accountants and
auditors work in urban areas, where public accounting firms and central or regional
offices of businesses are concentrated. According to the United States Bureau of
Labor Statistics, a majority of accountants and auditors work in the offices of major
corporations, although some are able to complete work from home. Nearly 24 percent
of auditors work in accounting, tax preparation, bookkeeping and payroll services.
Another 8 percent work for financial and insurance companies.

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ADDITIONAL RESOURCES
The Institute of Internal Auditors is the internal audit professions representation,
leader, and advocate. Members of this organization work in the areas of internal
auditing, risk management, governance, internal control, information technology
audit, education, and security. Internal Audit Benchmarking Association is a free association
of corporations with internal auditing departments. This Association conducts a variety of
benchmarking studies in order to identify methods of obtaining improved operations within
an organization.
Association of Government Accountants is an organization dedicated to
supporting the careers and professional development of government finance
professionals working in federal, state and local governments as well as the private
sector and academia. National Association of State Auditors, Comptrollers, and Treasurers is
an organization for state officials who work within the financial management of state
government.
Association of Certified Fraud Examiners is the worlds largest anti-fraud
organization and provider of anti-fraud training, professional development and
education. The Path to IT Audit provides comprehensive information on the education,
training, and experience needed to become an IT Auditor.

4.5 TAX

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INTRODUCION
The rang of CA firm in the area of taxation covers personal and corporate tax
planning supplemented by representation on behalf to client before the central board of
revenue obtaining clarification etc, and before Assessing and Appellate Authorities.
These services are in follows

 Tax planning.
 Personal taxation.
 Corporate taxation

At the time of separation the highest and the administrative executive authority for
revenue collection in India is the central Board of Revenue (C.B.R), which was constituted
under CBR Act 1924. It is a statutory body appointed by the central government for the
purpose of tax collection in the country. The Board consists of few members and all the
revenue authorities are subordinate to it. Central board of Revenue is responsible for
collection of revenue income come from income tax\, sales tax, and wealth tax and excise
duty and there are various departments like income tax and sales tax departments for the
collection of such taxes.
Chartered Accountant firm deals in the area of income tax, sales tax and wealth tax
on behalf of its clients including individuals, firm and corporation etc, we will discuss tax,
income tax, wealth tax and sales tax In separate sections.
 Income Tax
 Sales Tax

These areas are discussed below.

4.6 INCOME TAX

Income tax is the major source of revenue collection by C.B.R income tax
departments is responsible in the country for the collection of income tax law provides
guideline for the proper administration of the whole system. The Income Tax audit is an
examination of an individual’s or organization’s tax returns by any outside agency to verify
that all the income, expenditure and deduction information are filed correctly. Tax audits
have been made mandatory by the Income Tax Act that states that all taxpayers are required

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to get the accounts of their business or organization audited according to the provision of the
act.

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 CHAPTER-V

5.1 CONCLUSION
An auditor should be thorough in his efforts to gather the audit evidence, and be
impartial in its evaluation. Substantive procedures such as enquiry, information,
confirmation, observation, compilation, verification and valuation, etc. are used to
substantiate the transactions. Carrying out such procedures on a reasonable number of
transactions provides a basis for drawing a conclusion on a particular head of account (line
item). Having gathered the audit evidence by substantive procedures, the auditor should
ensure that the entity has complied with the necessary requirements such as requirements of
law, applicable Accounting Standards issued by the ICAI/ NACAS , accounting policies
adapted by the entity from time to time, and internal control systems.

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