CHAPTER-1 INTRODUCTION

Economic decisions in every society must be based upon the information available at the
time the decision is made. For example, the decision of a bank to make a loan to a business is
based upon previous financial relationships with that business, the financial condition of the
company as reflected by its financial statements and other factors.
If decisions are to be consistent with the intention of the decision makers, the information
used in the decision process mu!1st be reliable. Unreliable information can cause inefficient
use of resources to the detriment of the society and to the decision makers themselves. In the
lending decision example, assume that the barfly makes the loan on the basis of misleading
financial statements and the borrower Company is ultimately unable to repay. As a result the
bank has lost both the principal and the interest. In addition, another company that could
have used the funds effectively was deprived of the money.
As society become more complex, there is an increased likelihood that unreliable information will be provided to decision makers. There are several reasons for this: remoteness of
information, voluminous data and the existence of complex exchange transactions
As a means of overcoming the problem of unreliable information, the decision-maker must
develop a method of assuring him that the information is sufficiently reliable for these decisions. In doing this he must weigh the cost of obtaining more reliable information against the
expected benefits.
A common way to obtain such reliable information is to have some type of verification (audit) performed by independent persons. The audited information is then used in the decision
making process on the assumption that it is reasonably complete, accurate and unbiased.
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1.1 ORIGIN AND EVOLUTION

The term audit is derived from the Latin term audire, which means to hear. In early days an
auditor used to listen to the accounts read over by an accountant in order to check them
Auditing is as old as accounting. It was in use in all ancient countries such as Mesopotamia,
Greece, Egypt. Rome, U.K. and India. The Vedas contain reference to accounts and auditing.
Arthasashthra by Kautilya detailed rules for accounting and auditing of public finances.
The original objective of auditing was to detect and prevent errors and frauds
Auditing evolved and grew rapidly after the industrial revolution in the 18zcentury With the
growth of the joint stock companies the ownership and management became separate. The
shareholders who were the owners needed a report from an independent expert on the accounts of the company managed by the board of directors who were the employees.
The objective of audit shifted and audit was expected to ascertain whether the accounts were
true and fair rather than detection of errors and frauds.
In India the companies Act 1913 made audit of company accounts compulsory. With the increase in the size of the companies and the volume of transactions the main objective of audit shifted to ascertaining whether the accounts were true and fair rather than true and correct. Hence the emphasis was not on arithmetical accuracy but on a fair representation of the
financial efforts
The companies Act.1913 also prescribed for the first time the qualification of auditors. The
International Accounting Standards Committee and the Accounting Standard board of the
Institute of Chartered Accountants of India have developed standard accounting and auditing
practices to guide the. accountants and auditors in the day to day work

The later developments in auditing pertain to the use of computers in accounting and auditing. In conclusion it can be said that auditing has come a long way from hearing of accounts
to taking the help of computers to examine computerised accounts

1.2DEFINITION
The term auditing has been defined by different authorities.
1. Spicer and Pegler: "Auditing is such an examination of books of accounts and vouchers
of business, as will enable the auditors to satisfy himself that the balance sheet is properly
drawn up, so as to give a true and fair view of the state of affairs of the business and that
the profit and loss account gives true and fair view of the profit/loss for the financial period, according to the best of information and explanation given to him and as shown by
the books; and if not, in what respect he is not satisfied."
2. Prof. L.R.Dicksee. "auditing is an examination of accounting records undertaken with a
view to establish whether they correctly and completely reflect the transactions to which
they relate.
3. The book "an introduction to Indian Government accounts and audit" "issued by the
Comptroller and Auditor General of India, defines audit an instrument of financial control. It acts as a safeguard on behalf of the proprietor (whether an individual or group of
persons) against extravagance, carelessness or fraud on the part of the proprietor's agents
or servants in the realization and utilisation of the money or other assets and it ensures on
the proprietor's behalf that the accounts maintained truly represent facts and that the expenditure has been incurred with due regularity and propriety. The agency employed for
this purpose is called an auditor.
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1.3 FEATURES OF AUDITING

a.

Audit is a systematic and scientific examination of the books of accounts of a business;

b.

Audit is undertaken by an independent person or body of persons who are duly qualified for the job.

c. Audit is a verification of the results shown by the profit and loss account and the state
of affairs as shown by the balance sheet.
d.

Audit is a critical review of the system of accounting and internal control.

e.

Audit is done with the help of vouchers, documents, information and explanations
received from the authorities.

f. The auditor has to satisfy himself with the authenticity of the financial statements and
report that they exhibit a true and fair view of the state of affairs of the concern.
g. The auditor has to inspect, compare, check, review, scrutinize the vouchers supporting the transactions and examine correspondence, minute books of share holders, directors,
Memorandum of Association and Articles of association etc., in order to establish correctness
of the books of accounts.

1.4 OBJECTIVES OF AUDITING

There are two main objectives of auditing. The primary objective and the secondary or incidental objective.

a. Primary objective as per Section 227 of the Companies Act 1956, the primary duty (objective) of the auditor is to report to the owners whether the balance sheet gives a true and
fair view of the Companys state of affairs and the profit and loss A/c gives a correct figure
of profit of loss for the financial year.
b. Secondary objective it is also called the incidental objective as it is incidental to the satisfaction of the main objective. The incidental objective of auditing are:
i.

Detection and prevention of Frauds, and

ii.

Detection and prevention of Errors.

Detection of material frauds and errors as an incidental objective of independent financial

auditing flows from the main objective of determining whether or not the financial statements give a true and fair view. As the Statement on auditing Practices issued by the Institute
of Chartered Accountants of India states, an auditor should bear in mind the possibility of the
existence of frauds or errors in the accounts under audit since they may cause the financial
position to be mis-stated.
Fraud refers to intentional misrepresentation of financial information with the intention to
deceive. Frauds can take place in the form of manipulation of accounts, misappropriation of
cash and misappropriation of goods. It is of great importance for the auditor to detect any
frauds, and prevent their recurrence. Errors refer to unintentional mistake in the financial information arising on account of ignorance of accounting principles i.e. principle errors, or
error arising out of negligence of accounting staff i.e. Clerical errors.

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CHAPTER-2 ADVANTAGES AND DISADVANTAGES OF

AUDIT

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2.1 ADVANTAGES OF AUDIT

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2.2 GENERALLY FOLLOWING ARE THE LIMITATIONS OF

AUDITING
1. Non-detection of errors/frauds:- Auditor may not be able to detect certain frauds which
are committed with malafide intentions.
2. Dependence on explanation by others:- Auditor has to depend on the explanation and
information given by the responsible officers of the company. Audit report is affected adversely if the explanation and information prove to be false.
3. Dependence on opinions of others:- Auditor has to rely on the views or opinions given
by different experts viz Lawyers, Solicitors, Engineers, Architects etc. he can not be an
expert in all the fields
4. Conflict with others: - Auditor may have differences of opinion with the accountants,
management, engineers etc. In such a case personal judgement plays an important role. It
differs from person to person.
5. Effect of inflation : - Financial statements may not disclose true picture even after audit
due to inflationary trends.
6. Corrupt practices to influence the auditors :- The management may use corrupt practices to influence the auditors and get a favourable report about the state of affairs of the
organisation.
7. No assurance :- Auditor cannot give any assurance about future profitability and
prospects of the company.

8. Inherent limitations of the financial statements :- Financial statements do not reflect

current values of the assets and liabilities. Many items are based on personal judgement
of the owners. Certain non-monetary facts can not be measured. Audited statements due
to these limitations can not exhibit true position.
9. Detailed checking not possible :- Auditor cannot check each and every transaction. He
may be required to do test checking.

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2.3 ADVANTAGES OF AN INDEPENDENT AUDIT
The fact that audit is compulsory by law, in certain cases by itself should show that there
must be some positive utility in it. The chief utility of audit lies in reliable financial statement on the basis of which the state of affairs may be easy to understand. Apart from this
obvious utility, there are other advantage of audit. Some or all of these are of considerable
value even to those enterprises and organization where audit is not compulsory, these advantages are given below:
(a) It safeguards the financial interest of persons who are not associated with the management of the entity, whether they are partners or shareholders.
(b) It acts as a moral check on the employees from committing defalcations or embezzlement.
(c) Audited statements of account are helpful in setting liability for taxes, negotiating loans
and for determining the purchase consideration for a business.
(d) This are also use for settling trade disputes or higher wages or bonus as well as claims in
respect of damage suffered by property, by fire or some other calamity.
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(e) An audit can also help in the detection of wastage and losses to show the different ways
by which these might be checked, especially those that occur due to the absence of inadequacy of internal checks or internal control measures.
(f) Audit ascertains whether the necessary books of accounts and allied records have been
properly kept and helps the client in making good deficiencies or inadequacies in this respects.
(g) As an appraisal function, audit reviews the existence and operations of various controls in
the organizations and reports weakness, inadequacy, etc., in them.
(h) Audited accounts are of great help in the settlement of accounts at the time of admission
or death of partner.
(i) Government may require audited and certificated statement before it gives assistance or
issues a licence for a particular trade.

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CHAPTER -3 THE IMPORTANCE OF AN AUDIT SYSTEM TO COMPANIES AND ACCOUNTING STANDARDS

3.1 THE IMPORTANCE OF AN AUDIT SYSTEM TO COMPANIES
Auditing is a means of evaluating the effectiveness of a company's internal controls.
Maintaining an effective system of internal controls is vital for achieving a company's
business objectives, obtaining reliable financial reporting on its operations, preventing fraud and misappropriation of its assets, and minimizing its cost of capital. Both
internal and independent auditors contribute to a company's audit system in different
but important ways.
Business Objectives
Having an effective audit system is important for a company because it enables it to
pursue and attain its various corporate objectives. Business processes need various
forms of internal control to facilitate supervision and monitoring, prevent and detect
irregular transactions, measure ongoing performance, maintain adequate business
records and to promote operational productivity. Internal auditors review the design
of the internal controls and informally propose improvements, and document any material irregularities to enable further investigation by management if it is warranted
under the circumstances.
Risk of Misstatement
Auditors assess the risk of material misstatement in a company's financial reports.
Without a system of internal controls or an audit system, a company would not be
able to create reliable financial reports for internal or external purposes. Thus, it
would not be able to determine how to allocate its resources and would be unable to
know which of its segments or product lines are profitable and which are not. Additionally, it could not manage its affairs, as it would not have the ability to tell the status of its assets and liabilities and would be rendered undependable in the marketplace due to its inability to consistently produce its goods and services in a reliable
fashion. Accordingly, an audit system is crucial in preventing debilitating misstatements in a company's records and reports.
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Fraud Prevention
Internal audit serves an important role for companies in fraud prevention. Recurring
analysis of a company's operations and maintaining rigorous systems of internal controls can prevent and detect various forms of fraud and other accounting irregularities.
Audit professionals assist in the design and modification of internal control systems
the purpose of which includes, among other things, fraud prevention. An important
part of prevention can be deterrence, and if a company is known to have an active and
diligent audit system in place, by reputation alone it may prevent an employee or
vendor from attempting a scheme to defraud the company.
Cost of Capital
The cost of capital is important for every company, regardless of its size. Cost of capital is largely comprised of the risk associated with an investment, and if an investment has more risk, an investor will require a higher rate of return to invest. Strong
audit systems can reduce various forms of risk in an enterprise, including its information risk (the risk of material misstatement in financial reporting), the risk of fraud
and misappropriation of assets, as well the risk of suboptimal management due to insufficient information on its operations.

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3.2 ACCOUNTING RECORDS AND FINANCIAL STATEMENT MAINTAINED BY THE COMPANY

Good record keeping is an important part of monitoring business performance. It also
makes it easier for small business owners to meet their taxation obligations. Appropriate and up-to-date financial records provide the necessary information for managing the business efficiently and making sound business decisions.
To help you maintain your daily financial records, you should consider:
Setting up either a manual or electronic record keeping system that suits your
needs,
Recording your business transactions accurately and promptly, How to keep
daily financial records
Preparing a summary account (including income and expenditure) at the end of
each month.
Maintaining good financial records starts with a good system and well-organized
business records. The system can be a simple one and does not need to be complicated.
Disclosure of Accounting Policies
To ensure proper understanding of financial statements, it is necessary that all
significant accounting policies adopted in the preparation and presentation of
financial statements should be disclosed.
Such disclosure should formpart of the financial statements.
It would be helpful to the reader of financial statements if they are all disclosed as such in one place instead of being scattered over several statements,
schedules and notes.
Examples of matters in respect of which disclosure of accounting policies
adopted will be required are contained in paragraph 14. This list of examples is
not, however, intended to be exhaustive.
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 Any change in an accounting policy which has a material effect should be disclosed. The amount by which any item in the financial statements is affected
by such change should also be disclosed to the extent ascertainable. Where
such amount is not ascertainable, wholly or in part, the fact should be indicated. If a change is made in the accounting policies which has no material effect
on the financial statements for the current period but which is reasonably expected to have a material effect in later periods, the fact of such change should
be appropriately disclosed in the period in which the change is adopted.
Disclosure of accounting policies or of changes therein cannot remedy a
wrong or inappropriate treatment of the item in the accounts.

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Main Principles
All significant accounting policies adopted in the preparation and presentation
of financial statements should be disclosed.
The disclosure of the significant accounting policies as such should form part
of the financial statements and the significant accounting policies should normally be disclosed in one place.
Any change in the accounting policies which has a material effecting the current period or which is reasonably expected to have a material effect in later
periods should be disclosed. In the case of a change in accounting policies
which has a material effect in the current period, the amount by which any
item in the financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such amount is not ascertainable,
wholly or in part, the fact should be indicated.
If the fundamental accounting assumptions, viz. Going Concern, Consistency
and Accrual are followed in financial statements, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact
should be disclosed.
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3.3 MEANING AND DEFINE OF AUDIT REPORT AND AUDIT CERTIFICATE

Audit Report
An auditor, under Section 227 (2) of the Companies Act, 1956, is required to make a
report to the shareholders of the company whether the books of accounts examined by
him exhibit true and fair view of the state of affairs of the business.
The auditor submits his report to his client giving clear and concise information of the
result of audit performed by him. The fact or information contained in the auditor's
report is not available from any other source.
The statutory auditor of a company has to express his professional opinion about the
truth and fairness of the state of affairs of the company as shown by the Balance
Sheet and of the profit or loss as shown by the Profit and Loss Account in addition to
other information in his report.
Audit Certificate - Definition
The general purpose of an audit certificate is to give to the Commission reasonable
assurance that eligible costs (and, if relevant, the receipts) charged under the project
are calculated and claimed by the contractors in accordance with the relevant legal
and financial provisions of the FP6 legal texts, including contractual provisions.
When an auditor certifies a financial statement, it implies that the contents of the
statement are reliable as the auditor has vouched for the exactness of the data. The
term certificate is, therefore, used to mean confirmation of the truth and correctness
of something after a verification of certain exact facts. An auditor may therefore certify the circulating figures of a newspaper or the value of imports and exports of a
company.
The term certificate should not be confused with the term report'. While a certificate affirms the truth and correctness of a fact, figure or a statement, a report is generally a statement of facts or an expression of opinion regarding the truth and fairness
of the facts, figures and statements.
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Difference between Audit Report & Audit Certificate

1. A report means simply an expression of opinions Whereas a Certificate means that
the person issuing or signing the certificate vouchsafes the truth of the statement
made by him
2. The Auditor Report is based on facts, estimates and assumptions whereas Auditor's
Certificate is based on actual facts
3. Auditor Report is not a guarantee of the absolute correctness & accuracy of the
books of accounts. But the auditor certificate serves as a guarantee of the absolute
correctness & accuracy of the books of accounts
4. If the Auditor Report is later on found to be wrong, he cannot be held responsible
since he has given merely his opinion on the state of affairs of the company. But if the
duly signed certificate is found as wrong, he will be held responsible.

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3.4 TYPE OF AUDIT REPORT

An audit report is an appraisal of a small businesss complete financial status. Completed by an independent accounting professional, this document covers a companys
assets and liabilities, and presents the auditors educated assessment of the firms financial position and future. Audit reports are required by law if a company is publicly
traded or in an industry regulated by the Securities and Exchange Commission (SEC).
Companies seeking funding, as well as those looking to improve internal controls,
also find this information valuable. There are four types of audit reports.
1. Unqualified Opinion
Often called a clean opinion, an unqualified opinion is an audit report that is issued
when an auditor determines that each of the financial records provided by the small
business is free of any misrepresentations. In addition, an unqualified opinion indicates that the financial records have been maintained in accordance with the standards
known as Generally Accepted Accounting Principles (GAAP). This is the best type of
report a business can receive.
Typically, an unqualified report consists of a title that includes the word independent. This is done to illustrate that it was prepared by an unbiased third party. The
title is followed by the main body. Made up of three paragraphs, the main body highlights the responsibilities of the auditor, the purpose of the audit and the auditors
findings. The auditor signs and dates the document, including his address.
2. Qualified Opinion
In situations when a companys financial records have not been maintained in accordance with GAAP but no misrepresentations are identified, an auditor will issue a
qualified opinion. The writing of a qualified opinion is extremely similar to that of an
unqualified opinion. A qualified opinion, however, will include an additional paragraph that highlights the reason why the audit report is not unqualified.

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3. Adverse Opinion
The worst type of financial report that can be issued to a business is an adverse opinion. This indicates that the firms financial records do not conform to GAAP. In addition, the financial records provided by the business have been grossly misrepresented.
Although this may occur by error, it is often an indication of fraud. When this type of
report is issued, a company must correct its financial statement and have it re-audited,
as investors, lenders and other requesting parties will generally not accept it.
4. Disclaimer of Opinion
On some occasions, an auditor is unable to complete an accurate audit report. This
may occur for a variety of reasons, such as an absence of appropriate financial
records. When this happens, the auditor issues a disclaimer of opinion, stating that an
opinion of the firms financial status could not be determine.

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3.5 ESSENTIALS OF GOOD AUDIT REPORT

The essentials of good audit report are as follows:
1. Title
An auditor report must have appropriate title, such as Auditors Report. It is helpful
for the reader to identify the auditors report. It is easy to distinguish it from other reports. The management can issue any report about the business performance. The title
o the report is essential.
2. Addressee
The addressee may be shareholder or board of director of a company. The auditor can
audit financial statements of any business unit as per agreement. The report should be
appropriately addressed as required by engagement letter and legal requirements. The
report is usually addresses to the shareholders or the board of directors.
3. Identification
The audit report should identify the financial statement that have audited. The financial statement may include trading profit and loss accounts, balance sheet and statement of changes in financial position and sources and application of frauds statement.
The report should include the name of the entity. Moreover the data and period covered by the financial statement are also stated in it.
4. Reference to Auditing Standards
The audit report should indicate the auditing standard or practice followed in conducting the audit. The international auditing guidelines need assurance that the audit
has been conducted as per set standards.
5. Opinion
The auditors report should clearly state the auditors opinion on the presentation in
the financial statement of the entitys financial position and the result of its operations. The statement give a true and fair view is an auditors opinion. This opinion is
usually based on national standard or international accounting standards.
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6. Signature
The audit report should be signed in the name of the audit firm, the personal name of
the auditor or both as appropriate.
7. Auditors Address
The address of auditor is stated in the audit report. The name of city is stated in the
report for information of the readers.
8. Date of Report
The report should be dated. It informs the reader that the auditor considered the effect
on the financial statements and in his report of events or transactions about which he
become aware the occurred up to that date.

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Qualified audit reports
It is necessary to firstly identify the circumstances which can give rise to a qualification.
These are as follows:
Uncertainty arising from either a limitation upon the scope of the auditors work or an
inability to obtain any evidence regarding doubts which exist in relation to an unresolved matter.
Disagreements arising from factual discrepancies, unsuitable accounting policies, inadequate or misleading disclosures given in the financial statements or failure to
comply with an accounting standard or legislation. Some of these types of disagreement should be resolved fairly easily with the client so that a qualification can be
avoided, for example a factual disagreement should lead to the financial statements
being amended to reflect the correct view. Other types of disagreement which are
perhaps more subjective will be much more difficult to resolve such as those relating
to the suitability of an accounting policy.
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Secondly, it is necessary to decide upon the effect of the circumstances discussed

above.
These are classified as:
Those having a material but not fundamental effect upon the financial statements
Those having a fundamental effect upon the financial statements.
Fundamental means that the matter is such as to seriously distort or undermine the
view which is given by the financial statements to the extent that they could mislead
user groups.
An except for qualification will be given when the matter is a material but not fundamental uncertainty or disagreement. An example of an uncertainty could be the destruction of a part of the clients accounting records leading to a limitation of scope
being imposed upon the auditors work because audit evidence is then unavailable. An
example of a disagreement under this heading could be a failure by a client to apply a
reasonable depreciation policy to a particular class of fixed assets, however in both of
these examples the effect is not pervasive to the view which the financial statements
give as a whole.

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3.6 GENERALLY ACCEPTED AUDITING STANDARDS

The generally accepted auditing standards (GAAS) are the standards you use for auditing private companies. GAAS come in three categories: general standards, standards of fieldwork, and standards of reporting.
Keep in mind that the GAAS are the minimum standards you use for auditing private
companies. Additionally, the Public Company Accounting Oversight Board (PCAOB)
has adopted these standards for public (traded on the open market) companies. Each
audit engagement you work on may require you to perform audit work beyond whats
specified in the GAAS in order to appropriately issue an opinion that a set of financial
statements is fairly presented. You need to use professional judgment and exercise
due care in following all standards.
General standards: The first three GAAS are general standards that address your
qualifications to be an auditor and the minimum standards for your work product:
As an auditor, you must have both adequate training and proficiency.
You are independent in both fact and appearance.
You exercise due professional care in performing your auditing tasks.
Standards of fieldwork: The next three GAAS govern how you actually do your job:
Your work is adequately planned, and all assistants are properly supervised.
You gain an understanding of the client and its environment, including internal
controls, to assess the risk of material misstatement in the financial statements
and to plan your audit.
The evidence you gather during the audit is appropriate and sufficient to evaluate managements assertions on the financial statements.
Standards of reporting: The last four GAAS concern information you must consider
prior to issuing your audit report:
You have to state whether the financial statements are prepared using generally
accepted accounting principles (GAAP).
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 Just as important is to report whether GAAP are consistently applied for all
financial accounting. Should this not be the case, you have to report any departures.
You also have to make sure that disclosures any additional information
needed to explain the numbers on the financial statements are provided.
Lastly, you have to include your opinion as to whether the financial statements
present fairly in all material respects the financial position of the company under audit.

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CHAPTER-4 CASE STUDY

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TAJ HOTELS

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Taj Hotels
Parent
Company

Indian Hotels Corporation

Category

Hotels

Sector

Tourism and Hospitality

Tagline/
Slogan

Indias leading hospitality chain

USP

Extravagant Indian Interiors

STP

Segment

Leisure and business travelers

Target Group

Upper class, business travelers

Positioning

Prime location, luxury living with

Indian values

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4.1 INTRODUCTION

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The Indian Hotels Company (IHC) is the parent company of Taj Hotels Resorts
and Palaces. It was founded by Jamsetji N. Tata onDecember16, 1903. Currently the Taj
Hotels Resorts and Palaces comprises 57 hotels at 40 locations across India. Additional
18 hotels are also being operated around the globe. During fiscal year 2006, the total
number of hotels owned or managed by the Company was 75. The Taj hotels are categorized as luxury, leisure and business hotels. The Taj Luxury Hotels offer a wide range
of luxurious suites with modern fitness centers, rejuvenating spas, and well-equipped
banquet and meeting facilities. The Taj Leisure Hotels offer a complete holiday package
that can be enjoyed with the whole family. It provides exciting activities ranging from
sports, culture, environment, adventure, music, and entertainment.The Taj Business Hotels provide the finest standards of hospitality, which helps the business trips to be productive.They offer well-appointed rooms, telecommunication facilities, efficient service,
specialty restaurants and lively bars,well-equipped business centres, and other conference facilities.

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4.4 DRAFT OF AN AUDIT REPORT

INDEPENDENT AUDITORS REPORT
To, The Members

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Report on Financial Statements:
1. We have audited the accompanying Financial Statements of (the Company)
which comprise the Balance Sheet as at 31st March 2013 and Statement of Profit and
Loss for the year ended on that date, and a summary of significant accounting policies
and other explanatory information.
Managements Responsibility for the Financial Statements:
2. Management is responsible for the preparation of these Financial Statements that
give true and fair view of the financial position and financial performance of the
Company in accordance with the Accounting Standards referred to in sub section
(3C) of section 211 of the Companies Act, 1956 (the Act). This responsibility includes the design, implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors Responsibility:
3. Our responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The Procedures selected depend
on the auditors judgement, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those
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risk assessments, the auditor considers internal control relevant to the companys
preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our Audit opinion.
Opinion:
6. In our opinion, and to the best of our information and according to the explanations
given to us, the financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st
March, 2014; and
(b) in the case of Statement of Profit and Loss, of the Profit for the year ended on that
date.
Report on Other Legal and Regulatory Requirements:
7. As required by section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of the audit.
b. In our opinion, proper books of account as required by law have been kept by the
company so far as appears from our examination of those books.
c. The Balance Sheet and Statement of Profit and Loss dealt with by this report are in
agreement with the books of account;
d. In our opinion, the Balance Sheet and Statement of Profit and Loss comply with
the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956;
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e. On the basis of written representations received from the directors as on 31st

March, 2013 and taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2014 from being appointed as a director in terms of
clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;
f. Since the Central Government has not issued any notification as to the rate at which
the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued
any Rules under the said section, prescribing the manner in which such cess is to be
paid, no cess is due and payable by the Company.

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For XXX
CHARTERED ACCOUNTANTS

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Place : Mumbai

MR. A

Date : 31/08/2014

(Proprietor)
Membership No. 132564

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CONCLUSION

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The project concluded that, given the complexity and development of Company, the overall level of compliances with the standards and codes is of high order.
This project gives the correct ideas about how the major areas can be found by way of
effective auditing system i.e. errors, frauds, manipulations etc. form this auditor get
the clear idea show to recommend on the position. Project also contain that how to
conduct of audit of the company, what are the various procedure through which audit
of company should be done. Form auditing point of view, there is proper follow up of
work done in every organization there no misconduct of transactions is taken places
for that purpose the auditing is very important aspect in todays scenario form company and point of view.

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Bibliography
TYBCom Accountancy Auditing-II
Advanced Auditing Mcom Part-II
www.moneycontrol.com
www.profit.ndtv.com
www.icao.int
http://www.tajhotels.com/Investor-Relations/annual-reports.html

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