Beruflich Dokumente
Kultur Dokumente
Submitted by
Sajesh Maharjan
Faculty of Management
Pokhara University
Kathmandu
April, 2013
2
Acknowledgements
I would like to record my sincere appreciation and gratitude towards all the officials
and employees of J.B. Rajbhandary & DiBins, Durbarmarg, Kathmandu, without
whose kind assistance, my internship program would not have succeeded. The facts
and other vital information provided by them have contributed towards making this
project as comprehensive as possible. I am indeed thankful to them.
I am also very thankful and grateful towards my seniors, colleagues and authorities of
Ace Institute of Management for their support, encouragement, and valuable
suggestions for the completion of this project as well as for their generosity and co-
operation.
Last but not the least, I would like to express my sincere thanks to all my family
members, friends and well-wishers for their immense support and best wishes
throughout the internship duration and the preparation of this report.
I believe that this report will be a valuable asset not only for academic institution, but
will also be useful for all those who are interested to learn about internship
experiences in auditing and consulting firm.
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List of Tables:
List of Figures:
1. Organizational Structure 12
4
Table of Contents
Chapter I
Organization Profile
1.1 Background: 5
Chapter II
Chapter III
References 30
Annexure 31
5
Chapter I
Organization Profile
1.1 Background:
After the end of 6th semester, we were entitled to indulge in Internship Programme as
per the schedule of BBA-BI course of Pokhara University. Most of my colleagues
joined banks, especially “A class” licensed financial institutions for their internship.
Everyone was eager to have first hand experience in banking sector because we were
doing BBA-BI course. But unlike others, I wanted to do something different,
something not just limited to single sector and also that would go hand in hand with
my under going degree simultaneously.
I chose J.B. Rajbhandary & DiBins for my internship programme because I wanted to
have general ideas on audit firms and their activities. I joined J.B. Rajbhandary &
DiBins to get exposed to the real world of accounting and to have first hand
experience on the same since I am a student of Management faculty. I wanted to know
how business firms do accounting and what role does it play in the growth and
development of business activities.
J.B. Rajbhandary & Dibins is a partnership firm established in 1994 A.D. The firm
provides auditing, due diligence, account outsourcing, project management and
consulting services. The firm specializes in consulting services in areas of: Country
Strategic Papers, Restructuring policies and Internal Control System Development,
Mergers/Demergers, Financial Controller/ Due Diligence Review/Special Review of
various Infrastructure projects on behalf of commercial banks; Forensic Audits, etc.
The firm is situated at Second Floor, North Wing, Sherpa Mall, Durbar Marg,
Kathmandu that occupies around 1600 sq ft of office premise.
Vision - The firm's vision is to be the premier auditing, accounting, tax and business
consulting firm by every measure that matters.
Values
The values of the organization are as follows:
Valuing People
We believe that our success depends first and foremost on people. By respecting
people in everything we do, we will develop and maintain high quality, mutually
beneficial relationships with our clients, professional colleagues, referral sources,
vendors, community members and each other.
Building Client Relationships
We seek to earn long-term client loyalty by developing a deep understanding of
each client's business and personal goals, by demonstrating unwavering reliability
and integrity in our work and by acting as an independent and objective advisor to
our clients.
Upholding Quality and Integrity
We will maintain an environment where a commitment to quality, honesty,
respect, fairness and professional ethics governs the actions and decisions of
everyone within our firm.
Keys to Success
The keys to success for J.B. Rajbhandary & Dibins are:
Objectives:
The objectives of J.B. Rajbhandary & Dibins are:
The overall objective is to focus the activities towards its specialized services
(auditing, accounting, tax and business consulting) and to become a leader in this
niche in the country.
Growth - To expand the business at a rate that is both challenging and
manageable, serving the market with innovation and adaptability.
The firm has provided consulting and auditing services to major Banks and Financial
Institutions in Nepal including Nepal Rastra Bank (NRB) and Rural Micro Finance
Development Center (RMDC). Firm has also involved in advisory works, auditing
and as a counterpart with local consultancy and also in the capacity of independent
expert for donor agencies like Danida, UNDP, Action Aid Nepal, ADB, CIDA, etc.
The list of major customers of the organization is long; however to name the few, they
are categorized as follows:
Ltd.
Citizens Investment Trust Hotel Grand Pvt. Ltd.
DCBL Bank Ltd. Shangri-La Energies
Ltd.,
Ace Development Bank Khudi Power Ltd.
Vibor Development Bank Hotel De’l Annapurna
Pvt. Ltd.
Bhaju Ratna Finance Co. Upper Chaku “A” Hydro
Power Project (22.2
MW)
Professional Dev Bank Lower Modi 1
Hydropower Project
(10.0 MW)
Diyalo Bikash Bank ServingMinds Pvt. Ltd.
Nepal Clearing House Ltd. World Learning Inc. Pvt.
Ltd.
Nepal Banking Training Machhapuchhre Herbal
Institute Pvt Ltd.
Lumbini General Insurance DANIDA
Sagarmatha Insurance UNDP
Neco Insurance Ltd. ADB
Nepal Investment Bank
Ltd.
The major products and services provided by the firm are auditing, due diligence, account
outsourcing, project management and consulting services which are as follows:
Audit
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. The various types of auditing services provided by the
organization are Statutory Audit, Due Diligence Audit, Internal Audit, External Audit,
Financial Audit, Forensic Audit etc. The most common types of audit are briefly
explained below:
Financial Audits: In a financial audit, the assertions about which the auditor
seeks objective evidence relate to the reliability and integrity of financial and,
occasionally, operating information. This type of audit usually covers the basic set
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Account Outsourcing:
Outsourcing is gaining popularity as a way to reduce financial and operational risks
by making them easier to manage. Keeping this in mind, the firm provides accounting
services to various organizations. Business organizations can alleviate the burden of
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staying on top of frequent changes to tax codes and accounting regulations and
provide increased levels of information transparency, visibility of controls and clarity
of accountability by outsourcing of accounting system.
Company Establishment: The firm also extends its services towards establishment
of organizations and corporation. The firm helps in registration in company registrar
office as per the company act 2063, acquiring of certificate of commencement of
business, etc.
Tax Management: The firm also helps in tax management for organizations.
Organizations can acquire services like calculation of income tax, management of
Value Added Tax (VAT), Tax Deducted at Source, timely filing and payment of tax
to Inland Revenue Department, etc.
The firm has around 51 staffs which includes 5 full time chartered accountants
besides 2 partners who are also chartered accountants. Firm has 2 full time ACCAs, 2
MBAs and 36 staff which includes senior managers, CA Finalists, article trainees and
four secretarial staff.
single department and the work processes are done through creation of teams/unit for
particular work and service. The senior managers create a team comprising of junior
managers and Articleships/trainees. The size and duration of team depends upon the
nature of service offered and the requirement of the clients. The orders, command and
decisions flows from top to bottom while the reporting is done through bottom to top.
Junior Managers
Articleships/Trainees
Since, J.B. Rajbhandary & DiBins is a private partnership company, all the financial
information and reports are kept strictly confidential and handled by the partners only.
So, financial structure of the organization could not be identified since the
organization denied providing any sorts of financial information.
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From my viewpoint, to the best of my knowledge and ability, I found the overall
performance of the organization above satisfactory level measured on following
criteria.
Financial:
Since, the financial data and information were not accessible; I am unable to measure
the actual financial performance of the organization. However, looking at the rush of
work and the nature of the services all round the year and throughout the country,
there is no doubt that the organization has sound financial performance. Moreover, the
firm is the auditing and consulting firm run/managed by the chartered accountants
who are experts in the field of finance. Hence, there is very less chance of the firm
incurring losses.
Customer:
Wherever I was assigned to work, I found the customers there; mostly give priority to
the quick delivery of the required services and reporting rather than the quality of
work and reports. I must say that the delivery performance of the organization is
better as they do not cross the estimated time period and most often the necessary
work and reporting is completed before the prescheduled deadline.
I feel that the quality of the work is good from the perspective of number of times the
report gets checked and verified before the final report is handed over to the customer.
Moreover, the quality of work not only depends upon the employees’ work
performance but also depends upon the role played by the customers. Because of the
quality of the work, delivery process and period, and the degree of customization
provided as per the need of the customers, I found high degree of customer retention.
Based on the customer retention rate and the delivery performance, I came to
conclusion that the customers are fairly satisfied with the services they acquire.
Chapter II
Vouching:
Vouching is the act of checking evidential documents to find out errors and frauds and
to know the authenticity, accuracy and reliability of books of accounts. According to
F R M De Paula, “Vouching does not mean merely the inspection of receipts with the
cash book, but includes the examination of the transactions of a business together with
documentary and other evidence of sufficient validity to satisfy an auditor that such
transactions are in order, have been properly authorized and are correctly recorded in
the books.”
I performed vouching at Shiva Shree Hydropower Pvt Ltd (Upper Chaku “A”
Hydroelectric Project 22.2 MW), Bluebird Investment Pvt Ltd and Machhapuchhre
Herbals Pvt Ltd.
I conducted vouching for a period from 13 Feb 2012 to 15 February 2013 at Shiva
Shree Hydropower Pvt Ltd since J.B. Rajbhandary & DiBins was appointed as the
financial consultant by the Lead Bank, Citizens Bank International Ltd for Capital
Expenditure Certification and Equity Certification for the partial disbursement of loan
under consortium financing.
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Similarly, I did vouching for a period from 29th Mangsir 2068 to 31st Ashadh 2069 in
case of Bluebird Investment Pvt Ltd, for the preparation of preliminary trial balance
and financial statements for general accounting and tax purpose.
For Machhapuchhre Herbals Pvt Ltd, I performed vouching from 1st Baisakh 2069 to
15th Chaitra 2069 for the purpose of Fixed Assets Valuation and Net worth valuation
of the company for the purpose of term loan disbursement from Civil Bank Ltd.
Therefore, it can be said that vouching is the heart of auditing because without the
work of vouching, the work of auditing cannot be performed.
I prepared audit working papers simultaneously while doing vouching. The doubtful
matters/transactions/entries were noted on the working papers. The entries without
supporting documents and evident were noted down. Similarly, transactions/entries
that require thorough checking of its supporting documents such as memorandum of
understanding (MoU), agreement papers, insurance policies etc were noted for the
purpose of reminder for checking of these supporting in detail later. It was necessary
to prepare working papers while doing vouching. However, I could not learn the way
of coding and indexing of working papers for the purpose of filing and referencing
and cross referencing during report writing due to limited duration of my internship
programme. I prepared working papers form Shiva Shree Hydropower Pvt. Ltd,
Bluebird Investment Company and Machhapuchhre Herbals Pvt. Ltd.
The audit working papers constitute the link between the auditor’s report and the
client’s records. Documentation refers to working papers prepared or obtained by the
auditor and retained by him in connections with performance of his audit.
They constitute a permanent record of the objectives and scope of the audit, as
well as the work performed during the audit. Work papers organize and coordinate
all phases of the audit.
They contain the back-up material in support of the audit findings, conclusions,
opinions, and comments.
They contain the basic material from which the audit report is prepared.
They reflect the quality and reliability of the work performed by the auditor;
substantiate and explain in detail the opinions and findings presented.
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I was assigned to prepare the preliminary trial balance and financial statements of the
Bluebird Investment Pvt Ltd for the first year of its operation i.e. from 29th Mangsir
2068 to 31st Ashadh 2069.
Preliminary Trial Balance is a summary of the balance of all accounts in the chart of
accounts to, firstly, make sure the books are balanced. Then, these account balances
are used to prepare financial statements such as Profit and Loss Account, Balance
Sheet and Cash Flows Statement. The trial balance is a worksheet on which all the
general ledger accounts with their debit or credit balance are listed. It is a tool that is
used to alert errors in the books of account. The total debits must equal the total
credits. If they don't equal, there is an error that must be tracked down.
As the name indicates the profit and loss statement (also known as a statement of
financial performance or an income statement) measures the profit or loss of a
business over a specified period. A profit and loss statement summarizes the income
for a period and subtracts the expenses incurred for the same period to calculate the
profit or loss for the business. It reflects the past performance of the business and is
the report most often used by small business owners to track how their business is
performing.
Cash Flow Statement is that financial statement which provides aggregate data
regarding all cash inflows a company receives from both its ongoing operations,
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financing and external investment sources, as well as all cash outflows that pay for
business activities and investments during a given quarter.
Income statement uses accrual accounting method and its benefit is that it strives to
show a more accurate picture of the companies’ profitability. However, focusing on
accrual based profitability without looking at cash inflows and outflows is very
dangerous, not only because companies can more easily manipulate accounting profits
than they can cash profits, but also because not having a handle on cash can
potentially make even a healthy company go bankrupt. The key to financial analysis is
to use both statements together. If there is incredibly high net income, such net
income should be supported by strong cash flow from operations and vice versa. If
this is not the case then investigation and follow up on such discrepancies should be
done.
I have also filled up the forms of e-returns on the website of Inland Revenue
Department, Government of Nepal for World Learning Inc Pvt. Ltd. In order to know
what is filing of e- returns we have to know the provision for payment of tax under
Income Tax Act 2002.
Every installment payer has to submit for the income year ahead an estimate of his tax
payable. For that the estimated tax returns are to be utilized. The submission is due to
be made by the date for payment of the first installment, i.e. it shall be filed together
with the first installment. Since the first estimate has to be submitted after the income
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year is half, the estimate should include the actual taxpayer’s facts of the first half of
the income year so that there is some thorough basis for the estimation of the possible
profit of the second half of the income year. In this estimate the following amounts
are to be specified:
the assessable income to be derived for the income year from employment,
business, and investment
the source of this income
the taxable income to be derived for the income year
the tax to become payable calculated without reduction for any medical tax credit
40 % of the tax as estimated for the current income year less paid tax, i.e. less
amounts that have already been paid by the end of the month Poush
70 % of the tax as estimated for the current income year less paid tax, i.e. less
amounts that have already been paid by the end of the month Chaitra
100 % of the tax as estimated for the current income year less paid tax, i.e. less
amounts that have already been paid by the end of the month Ashad
If the amount of an installment calculated as above is less than Rs. 2000, the
installment is not required to be paid. If at the end of the year a final tax liability
remains to be paid, as, for example, a result of the income tax return filed at the end of
the year the income tax paid by installments is credited against this liability.
By contrast to the estimate, this final return is based on the tax facts of the previous
year so that possible misjudgments or wrong estimates are then corrected. Therefore,
the taxpayer has, first, to submit an estimate for the year ahead. Second, as explained
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above the taxpayer should scrutinize and adjust this estimate on the occasion of the
payments of the second and third installment. Third, at the end of the income year the
taxpayer has to file a tax return based upon the facts of the previous year. That leads
to an adjustment of the estimates and to a final tax liability. For the income tax return
the respective forms provided by the tax authorities are to be utilized. The income tax
return needs to be signed by the taxpayer or the manager. Furthermore, to be included
is a statement that the return is complete, true and accurate.
Table 2: Fines and Penalty on Failure to submit advance tax and tax return
*Gross Assessable income of a person for a period means assessable income of the person for the
period calculated by including all the items of taxable income and ignoring all allowable expenses, for
the period.
The Labour Act 1992 has made provision for gratuity facilities to the permanent
employees to be provided by the employer under Chapter 6 section 39. According to
Labour Act 1992, every firm needs to maintain Gratuity fund for its permanent
employees. The gratuity fund is required to be deposited in NRB licensed/permitted
banks of financial institutions only.
In the event that any permanent worker or employee of the establishment who has
completed three years or more of service retires because of age or after having his
resignation approved, or leaves the service of the establishment in any other way, he
shall be entitled to gratuity in a lump sum at the following rates:
Total
Time Rate Years of service Gratuity
3-8 years 1/2 of 1 month Current date – date of appointment of Rate * Years
Basic Salary permanent employee of Service
8-15 years 2/3 of 1 month Current date – date of appointment of Rate * Years
Basic Salary permanent employee of Service
15 years and 1 of 1 month Current date – date of appointment of Rate * Years
above Basic Salary permanent employee of Service
Gratuity for the year, say FY 2012/2013 = Total Gratuity till 2012/2013 - Total
Gratuity till 2011/2012
I was lucky to get opportunity to learn gratuity calculation and also witnessed the
gratuity calculation of Fishtail Hotel, Lakeside, Pokhara. Gratuity fund is to be
calculated as the above mentioned procedure. However, since Fishtail Hotel had not
created any Gratuity fund in the past, the Gratuity fund was calculated on the
following way so that the Gratuity deposit can be financed by operating cash flows.
Particulars Amount
Opening Balance of Gratuity Liability XXX
Less: Payment Before the Year XXX
Previous Year Balance XXX
Add: Current year Gratuity XXX
Total Gratuity Liability XXX
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Particulars Amount
Opening Balance Of Gratuity Fund XXX
Add: Current Years Gratuity Deposit XXX
Add: Previous Gratuity Liability Deposit XXX
Closing Balance Of Gratuity Fund XXX
Interest on Gratuity fund account (%)
Add: Interest on Gratuity fund account (amount) XXX
Total Bank Balance of Gratuity Fund XXX
Less: Payment for the year XXX
Remaining Bank Balance of Gratuity Fund XXX
However, while I was not assigned to any customer/client, I was given the job of
review of internal audit report of National Trading Ltd which was typed in Nepali font
by the receptionist whether the typing had any sorts of errors. I just needed to make
sure that the printed report was same as that of the hand written report which was
prepared by the team of junior managers and artilcles and already been verified by the
senior managers. However, I pointed out a calculation mistake which was overlooked
by the junior managers as well as senior managers during report review and
verification besides many numerous typing mistakes. Because of that, calculation
error/mistake that had been overlooked was corrected before the internal audit report
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was submitted to National Trading Limited. Had the report with calculation error was
submitted, it would have created a negative impact on the image and reputation of the
organization.
Similarly, while I was assigned at Shiva Shree Hydropower Pvt Ltd, there once
occurred a problem of carrying a huge file consisting of all the working papers and
documents to the office after 5 p.m. By the time we would have reached the office,
the office would have been closed. So, I told my senior colleague that I would take the
responsibility of the file and would bring the file in office next day. So, we didn’t
have to leave our confidential documents at the customer’s office because of my
initiative.
When my team had just finished the assigned work at the client, until I was re-
assigned to other team for other customers, I had to stay in the office. I reached the
office at sharp 10:00 a.m. and found that no other articles and trainees had come to
office by that time. When I entered the meeting room, where articles and trainees used
to gather if they had no work, I found meeting room quite messy with many files and
documents spread over the tables and the sofa. So, I arranged the documents and put
the documents inside the respective files and stacked them in one of the corners of the
meeting room. It didn’t look quite messy after my little effort.
The most important thing I found noticeable was the nature of treatment received by
the new employee/trainee from the other employees. I was little worried since I knew
nothing about auditing and knew no other person in the organization. I was the first
one to do internship in that audit firm as only the CA students perform their
Articleships after the completion of CAP II or intermediate levels. I was quite worried
about whether I would be easily accepted as their colleagues or not. But I found
totally different. I received great deal of co-operation and friendly behavior from all
the employees, including Junior Associates and Senior Managers. During internship
period, I never felt I am different than them. Rather, I started to feel like I was also
one of them (one of the CA student doing Articleship not internship). I really feel
lucky to receive such kind of treatment and behavior from other employees. I think
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that for such kind of friendliness and rapport, there is great role of informal talks. The
organization had a culture of having breaks time and again. Employees at levels used
to go outside the office premise to have some tea and cigarettes time and again. This
provided great opportunity for the new comers like me to get acquainted with the
organization and the employees.
Another important thing I got to observe during my internship was the punctuality at
workplace. I observed that employees tend to come to office mostly between 10:30
a.m. and 11:00 a.m. although the official time was 10:00 a.m. Since I had to attend
class till 9:00 a.m. and after having light breakfast near the college premise, I always
reach office before 10:00 a.m. and always had to sit alone for around half an hour
before some one arrives. When I was assigned for the job at one of the customers, I
found the same not only with my seniors but also with the employees of the client
organization. Thus, what I came to conclude is that we have become very lazy and
don’t give importance to time and its value. We always find the other person or
activity to blame for our lateness and our habit or laziness.
The next thing I got to observe was the way audit firm operates. Before my internship
I had literally no idea how audit firm operates. I used to think that audit firms were
big organizations like that of banks and other financial institutions. But I found totally
different. Audit firms need not necessarily have big buildings and infrastructures. I
realized that their biggest assets are the human resources. Even if the audit firms are
small that can be accommodated to 4 – 5 small rooms, audit firms provides
employment to large number of people. Although J.B. Rajbhandary & DiBins was
accommodated at merely 1600 sq ft, it provided employment to around 55 employees.
It is possible because employees work at the client’s office most of the time. If all the
employees were to work at office at the same time, no work would have been
completed as there would be no place even for standing. I got the opportunity to learn
the normal day to day operations of the audit firm. Audit firms provide various
auditing and consulting services to the customers based on the need of the customers.
Based on the nature and type of service to be offered, a team of expert comprising of
senior managers, junior managers and articles are created by the junior associate and
are assigned certain duties and responsibilities. Based on the instruction, the team
member performs their duties at the client’s organization and prepares report
accordingly. The report prepared is reviewed and verified by the junior associates and
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finally reviewed by the senior partner/s before the report is duly signed and submitted
to the client.
Another thing I got to notice was the investment behavior of employees of the
organization. Since all the employees are either chartered accountant, students of
chartered accountant, registered auditors, etc. I found huge degree of investment
behaviours and practices among them. They had investments on common stocks,
initial public offerings, mutual funds, etc. Since they are financial analysts, they
invests on stocks and securities based on the past organizational performance their
potential future performances rather than on speculation and other people’s behaviour.
Chapter III
Team work:
During my internship, I was inducted as a team member and was assigned various
activities that had to be performed in a team. It taught me how activities are to be
performed in a team and impact of behaviour of one on the work and performance of
the other team member. I realized what we studied was real. The proper team work
lead to synergy benefits. On the contrary, loafing by some team members could lead
to huge negative impacts on the overall team performance. I learned the importance of
team work and some general skills required while working in a team.
on the eyes of customers and external people who visits the office. So proper filing
would help in avoiding such situation.
Internship programme would have been more fruitful and successful if there had
been arrangement for separate time schedule for internship programme rather than
conducting regular classes simultaneously.
I believe that the current duration of internship programme i.e. 6-8 weeks is not
sufficient enough for the students to implement class room learning in the real
workplace. The period of 6-8 weeks gets completed only when the students start
to get acquainted with the real world. So I would like to recommend the college
authority and the concerned department of the university to extend the duration of
internship to at least 4 -6 months if possible.
There should have been timely supervision and guidance for report writing by the
internship supervisors.
I would like to suggest the concerned college and university to give more priority
to learning activities and get real world experience rather than forcing them to
focus on the financial structure and financial information on the organization
where they indulge in internship programme.
The initiative by the college management for field visit to the respective
organization where the students were undertaking their internship programme
during internship hour was highly appreciable. However, I was disappointed since
nobody came for the field visit where I did internship.
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References
Adhikari, M. D. (2011). Nepal Tax Facts. Kathmandu: Baker Tilly Nepal Pvt Ltd.
Importance of Vouching. (2012, February). Retrieved April 11, 2013, from Blogspot:
http://accountlearning.blogspot.com/2012/02/importance-of-vouching.html
Inland Revenue Department. (2002). Income Tax Act 2002 Handbook. Kathmandu:
Inland Revenue Government.
Annexure
2. Investment
3. Current Assets
(a) Closing Stock
(b) Commercial and Other receivables
(c) Cash & Bank Balance
(d) Advance & Deposit
Less: Current Liabilities & Provisions
(a) Current Liabilities
(b) Commercial and other payable
(c) Short-term Loan
(d) Term Loan Payable in current period
(e) Provisions-Income tax
Net Current Assets
Expenditures to the extent not written off
Total
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